Chapter XV: Book III: The Treasury. 1801-1813 (2)

What Mr. Gallatin would have done with the navy, had he been left to deal with it in his own way, nowhere appears. He had opposed its construction, and would not have considered it a misfortune if Congress had swept it away; but he seems never to have interfered with it, after coming into office, further than to insist that the amount required for its support should be fixed at the lowest sum deemed proper by the head of that Department. In fact, Mr. Jefferson's Administration disappointed both friends and enemies in its management of the navy. The furious outcry which the Federalists raised against it on that account was quite unjust. Considering the persistent opposition which the Republican party had offered to the construction of the frigates, there can be no better example of the real conservatism of this Administration than the care which it took of the service, and even Mr. Gallatin, who honestly believed that the money would be better employed in reducing debt, grumbled not so much at the amount of the appropriations as at the want of good management in its expenditure. He thought that more should have been got for the money; but so far as the force was concerned, the last Administration had itself fixed the amount of reduction, and the new one only acted under that law, using the discretion given by it. That this is not a mere partisan apology is proved by the effective condition of our little navy in 1812; but the facts in regard to the subject are well known and fully stated in the histories of that branch of the service,--works in which there was no motive for political misrepresentation.[54]

Mr. Jefferson was in the habit of communicating the draft of his annual message to each head of department and requesting them to furnish him with their comments in writing. On these occasions Mr. Gallatin's notes were always elaborate and interesting. In his remarks in November, 1801, on the first annual message he gave a rough sketch of the financial situation, and at this time it appears that he hoped to cut down the army and navy estimates to $930,000 and $670,000 respectively. His financial scheme then stood as follows:

REVENUE. EXPENDITURE.
Impost, $9,500,000 Interest, &c., $7,200,000
Lands and postage, 300,000 Civil expend., 1,000,000
---------- Military " 980,000
$9,800,000 Naval " 670,000
-----------
$9,800,000

He calculated that the annual application of $7,200,000 to the payment of interest and principal would pay off about thirty-eight millions of the debt in eight years, and, fixing this as his standard, he proposed to make the other departments content themselves with whatever they could get as the difference between $7,200,000 and the revenue estimated at $9,800,000. On these terms alone he would consent to part with the internal revenue, which produced about $650,000.

This, however, seems to have been beyond his power. Few finance ministers have ever pressed their economies with more perseverance or authority than Mr. Gallatin, but he never succeeded in carrying on the government with so much frugality as this, and the sketch seems to indicate what the Administration would have liked to do, rather than what it did. The report of the Secretary of the Treasury a month later shows that he had been obliged to modify his plan. As officially announced, it was as follows:

Revenue. Expenditure.
Impost, $9,500,000 Interest, &c., $7,100,000
Lands and postage, 45,000 Civil expend., 980,000
----------
$9,950,000 Military " 1,420,000
Internal revenue, 650,000 Naval " 1,100,000
---------- -----------
Total, $10,600,000 $10,600,000

The problem of repealing the internal taxes was therefore not yet settled, and it is not very clear on the face of the estimates how it would be possible to effect this object. Mr. Gallatin expected to do it by economies in the military and naval establishments by which he should save the necessary $650,000. It is worth while to look forward over his administration and to see how far this expectation was justified, in order to understand precisely what his methods were.

His first step, as already noticed, was to fix the rate at which the debt should be discharged. This rate was ultimately represented by an annual appropriation of $7,300,000, which at the end of eight years, according to his first report, would pay off $32,289,000, and leave $45,592,000 of the national debt, and within the year 1817 would extinguish that debt entirely. This sum of $7,300,000 was therefore to be set aside out of the revenue as the permanent provision for paying the principal and interest of the debt.

Of the residue of income, which, without the internal taxes, was estimated at about $2,700,000, the civil expenditure was to require one million, the army and navy the remainder. But the tables of actual expenditure show a very different result:

Civil. Military. Naval. Total.
1802 $1,462,928 $1,358,988 $915,561 $3,737,477
1803 1,841,634 944,957 1,215,230 4,001,821
1804 2,191,008 1,072,015 1,189,832 4,452,855
1805 3,768,597 991,135 1,597,500 6,357,232
1806 2,890,136 1,540,420 1,649,641 6,080,197
1807 1,697,896 1,564,610 1,722,064 4,984,570
1808 1,423,283 3,196,985 1,884,067 6,504,335
1809 1,195,803 3,761,108 2,427,758 7,384,669
1810 1,101,144 2,555,692 1,654,244 5,311,080
1811 1,367,290 2,259,746 1,965,566 5,592,602
----------- ----------- ----------- -----------
Total. $18,939,719 $19,245,656 $16,221,463 $54,406,838

From these figures it appears that Mr. Gallatin's proposed economies were never realized, and that his results must have been attained by other means. The average expenditure on the navy during these ten years was $1,600,000 a year. Instead of establishments costing $2,700,000, the average annual expenditure reached $5,400,000, or precisely double the amount named. As a matter of fact, notwithstanding the frugality of Mr. Gallatin and the complaints of parsimony made by the Federalists, it is difficult to see how Mr. Jefferson's Administration was in essentials more economical than its predecessors, and this seems to have been Mr. Gallatin's own opinion at least so far as concerned the Navy Department. On the 18th January, 1803, he wrote a long letter to Mr. Jefferson on the navy estimates, closing with a strong remonstrance: "I cannot discover any approach towards reform in that department, and I hope that you will pardon my stating my opinion on that subject when you recollect with what zeal and perseverance I opposed for a number of years, whilst in Congress, similar loose demands for money. My opinions on that subject have been confirmed since you have called me in the Administration, and although I am sensible that in the opinion of many wise and good men my ideas of expenditure are considered as too contracted, I feel a strong confidence that on this particular point I am right." Again, on the 20th May, 1805, he renewed his complaint: "It is proper that I should state that the War Department has assisted us in that respect [economy] much better than the Navy Department.... As I know that there was an equal wish in both departments to aid in this juncture, it must be concluded either that the War is better organized than the Navy Department, or that naval business cannot be conducted on reasonable terms. Whatever the cause may be, I dare predict that whilst that state of things continues we will have no navy nor shall progress towards having one. As a citizen of the United States it is an event that I will not deprecate, but I think it due to the credit of your Administration that, after so much has been expended on that account, you should leave an increase of, rather than an impaired fleet. On this subject, the expense of the navy greater than the object seemed to require, and a merely nominal accountability, I have, for the sake of preserving perfect harmony in your councils, however grating to my feelings, been almost uniformly silent, and I beg that you will ascribe what I now say to a sense of duty and to the grateful attachment I feel for you."

Nevertheless, the internal duties were abolished as one of the first acts of Mr. Jefferson's Administration, and at the same time Congress adopted Mr. Gallatin's scheme of regulating the discharge of the public debt. The truth appears to be that the repeal of these taxes was a party necessity, and that under the pressure of that necessity both the Secretary of War and the Secretary of the Navy were induced to lower their estimates to a point at which Mr. Gallatin would consent to part with the tax. Mr. Gallatin never did officially recommend the repeal. This measure was founded on a report of John Randolph for the Committee of Ways and Means, and Mr. Randolph's recommendation rested on letters of the War and Navy Secretaries promising an economy of $600,000 in their combined departments. These economies never could be effected. The resource which for the time carried Mr. Gallatin successfully over his difficulties was simply the fact that he had taken the precaution to estimate the revenue very low, and that there was uniformly a considerable excess in the receipts over the previous estimate; but even this good fortune was not enough to save Mr. Gallatin's plan from failure. The war with Tripoli had already begun, and further economies in the navy were out of the question. Government attempted for two years to persevere in its scheme, but it soon became evident that, even with the increased production of the import duties, the expense of that war could not be met without recovering the income sacrificed by the repeal of the internal taxes in 1802. Accordingly an addition of 2-1/2 per cent, was imposed on all imported articles which paid duty _ad valorem_. The result of the whole transaction, therefore, amounted only to a shifting of the mode of collection, or, in other words, instead of raising a million dollars from whiskey, stamps, &c., the million was raised on articles of foreign produce or manufacture. This extra tax was called the Mediterranean Fund, and was supposed to be a temporary resource for the Tripolitan war.

The final adjustment of this difficulty, therefore, took a simple shape. Mr. Gallatin obtained his fund of $7,300,000 for discharging principal and interest of the debt. This was what he afterwards called his "fundamental substantial measure," which was intended to affirm and fix upon the government the principle of paying its debt and of thus separating itself at once from the whole class of corruptions and political theories which were considered as the accompaniment of debt and which were at that time identified with English and monarchical principles. To obtain the surplus necessary for maintaining this fund he relied at first on frugality, and, finding that circumstances offered too great a resistance in this direction, he resorted to taxation in the most economical form he could devise. In regard to mere machinery he made every effort to simplify rather than to complicate it. In his own words: "As to the forms adopted for attaining that object [payment of the debt], they are of a quite subordinate importance. Mr. Hamilton adopted those which had been introduced in England by Mr. Pitt, the apparatus of commissioners of the sinking fund, in whom were vested the redeemed portions of the debt, which I considered as entirely useless, but could not as Secretary of the Treasury attack in front, as they were viewed as a check on that officer, and because, owing to the prejudices of the time, the attempt would have been represented as impairing the plan already adopted for the payment of the debt. I only tried to simplify the forms, and this was the object of my letter [of March 31, 1802] to the Committee of Ways and Means. The injury which Mr. Pitt's plan did was to divert the public attention from the only possible mode of paying a debt, viz., a surplus of receipts over expenditures, and to inspire the absurd belief that there was some mysterious property attached to a sinking fund which would enable a nation to pay a debt without the _sine qua non_ condition of a surplus.... But the only injury done here by the provisions respecting the commissioners of the sinking fund, and by certain specific appropriations connected with the subject, was to render it more complex, and the accounts of the public debt less perspicuous and intelligible. Substantially they did neither good nor harm. The payments for the public debt and its redemption were not in the slightest degree affected, either one way or the other, by the existence of the commissioners of the sinking fund or by the repeal of the laws in reference to them. The laws making permanent appropriations were much more important. Even with respect to these it is obvious that they must also have become nugatory whenever the expenditure exceeded the income. Still they were undoubtedly useful by their tendency to check the public expenses."

The letter on the management of the sinking fund, mentioned in the above extract, will be found in the American State Papers[55] by readers who care to study the details of American finance. These details have a very subordinate importance; the essential points in Mr. Gallatin's history are the rules he caused to be adopted in regard to the payment of the debt, and the measures he took to secure revenue with which to make that payment. The rule adopted at his instance secured the ultimate extinction of the debt within the year 1817, provided he could maintain the necessary surplus revenue. The story of Mr. Gallatin's career as Secretary of the Treasury relates henceforward principally to the means he used or wished to use in order to defend or recover this surplus, and the interest of that career rests mainly in the obstructions which he met and the defeat which he finally sustained.

Nevertheless, it would be very unjust to Mr. Gallatin to imagine that his interest in the government was limited to payment of debt or to details of financial management. He was no doubt a careful, economical, and laborious financier, and this must be understood as the special field of his duty, but he was also a man of large and active mind, and his Department was charged with interests that were by no means exclusively financial. One of these interests related to the public lands.

[Sidenote: 1802.]

As has been already seen, the public land system was organized under the previous Administrations, but it took shape and found its great development in Mr. Gallatin's hands. When the Administration of Mr. Jefferson came into power there were sixteen States in the Union, all of them, except Kentucky and Tennessee, lying on or near the Atlantic seaboard; at that time the Mississippi River bounded our territory to the westward, and the 31st parallel, which is still the northern line of portions of the States of Florida and Louisiana, was our southern boundary until it met the Mississippi. The public lands lay therefore in two great masses, divided by the States of Kentucky and Tenneesee; one of these masses was north of the Ohio River, extending to the lakes, the other west of Georgia, and both extended to the Mississippi. As yet the Indian titles had been extinguished over comparatively small portions of these territories, and in the process of managing her part of the lands the State of Georgia had succeeded in creating an entanglement so complicated as to defy all ordinary means of extrication. One of the first duties thrown upon Mr. Gallatin was that of acting, together with Mr. Madison and Mr. Lincoln, as commissioner on the part of the United States, to effect a compromise with the State of Georgia in regard to the boundary of that State and the settlement of the various claims already existing under different titles. Mr. Gallatin assumed the principal burden of the work, and the settlement effected by him closed this fruitful source of annoyances, fixed the western boundary of Georgia, and opened the way to the gradual development of the land system in the Alabama region. This settlement was the work of two years, but it was so deeply complicated with the famous Yazoo corruptions that fully ten years passed before the subject ceased to disturb politics.

At the same time he took in hand the affairs of the North-Western Territory. The more eastern portion of this vast domain had already a population sufficient to entitle it to admission as a State, and the subject came before Congress on the petition of its inhabitants. It was referred to a select committee, of which Mr. William B. Giles was chairman, and this committee in February, 1802, made a report based upon and accompanied by a letter from Mr. Gallatin.[56] The only difficulty presented in this case was that "of making some effectual provisions which may secure to the United States the proceeds of the sales of the western lands, so far at least as the same may be necessary to discharge the public debt for which they are solemnly pledged." To secure this result Mr. Gallatin proposed to insert in the act of admission a clause to that effect, but in order to obtain its acceptance by the State convention he suggested that an equivalent should be offered, which consisted in the reservation of one section in each township for the use of schools, in the grant of the Scioto salt springs, and in the reservation of one-tenth of the net proceeds of the land, to be applied to the building of roads from the Atlantic coast across Ohio. Congress reduced this reservation one-half, so that one-twentieth instead of one-tenth was reserved for roads; but, with this exception, all Mr. Gallatin's ideas were embodied in a law passed on the 30th April, 1802, under which Ohio entered the Union. This was the origin of the once famous National Road, and the first step in the system of internal improvements, of which more will be said hereafter.

The details of organization of the land system belong more properly to the history of the new Territories and States than to a biography.[57] They implied much labor and minute attention, but they are not interesting, and they may be omitted here. There remains but one subject which Mr. Gallatin had much at heart, and which he earnestly pressed both upon the Administration and upon Congress. This was his old legislative doctrine of specific appropriations, which he caused Mr. Jefferson to introduce into his first message, and which he then seems to have persuaded his friend Joseph H. Nicholson to take in charge as the chairman of a special committee. At the request of this committee, Mr. Gallatin made a statement at considerable length on the 1st March, 1802.[58] The burden of this document was that too much arbitrary power had been left to the Secretary of the Treasury to put his own construction on the appropriation laws, and that no proper check existed over the War and Navy Departments; the remedies suggested were specific appropriations and direct accountability of the War and Navy Departments to the Treasury officers. Mr. Nicholson accordingly introduced a bill for these purposes on April 8, 1802, but it was never debated, and it went over as unfinished business. Probably the resistance of the Navy Department prevented its adoption, for the letters of Mr. Gallatin to Mr. Jefferson, quoted above, show how utterly Mr. Gallatin failed in securing the exactness and accountability in that Department which he had so persistently demanded. Nor was this all. Probably nothing was farther from Mr. Gallatin's mind than to make of this effort a party demonstration. He was quite in earnest and quite right in saying that the practice had hitherto been loose and that it should be reformed, but his interest lay not in attacking the late Administration so much as in reforming his own. Unfortunately, the charge of loose practices under the former Administrations, unavoidable though it was, and indubitably correct, roused a storm of party feeling and even called out a pamphlet from the late Secretary of the Treasury, Wolcott. Mr. Gallatin therefore not only was charged with slandering the late Administration, but was obliged to submit to see the very vices which he complained of in it perpetuated in his own.

These were the great points of public policy on which Mr. Gallatin's mind was engaged during his first year of office, and it is evident that they were enough to absorb his entire attention. The mass of details to be studied and of operations to be learned or watched completely weighed him down, and caused him ever to look back upon this year as the most laborious of his life. The mere recollection of this labor afterwards made him shrink from the idea of returning to the Treasury when it was again pressed upon him in later years: "To fill that office in the manner I did, and as it ought to be filled, is a most laborious task and labor of the most tedious kind. To fit myself for it, to be able to understand thoroughly, to embrace and to control all its details, took from me, during the two first years I held it, every hour of the day and many of the night, and had nearly brought a pulmonary complaint."[59] Fortunately, his mind was not, in these early days of power, greatly agitated by anxieties or complications in public affairs. The whole struggle which had tortured the two previous Administrations both abroad and at home, the internecine contest between France and her enemies, was for a time at an end; Mr. Madison had nothing on his hands but the vexatious troubles with the Algerine powers, in regard to which there was no serious difference of opinion in America; Congress was mainly occupied with the repeal of the judiciary bill, a subject which did not closely touch Mr. Gallatin's interests otherwise than as a measure of economy; Mr. Jefferson's keenest anxieties, as shown in his correspondence of this year, seem to have regarded the distribution of offices and the management of party schisms. After the tempestuous violence of the two last Administrations the country was glad of repose, and its economical interests assumed almost exclusive importance for a time.

It was at this period of his life that Gilbert Stuart painted the portrait, an engraving of which faces the title-page of this volume. Mrs. Gallatin always complained that her husband's features were softened and enfeebled in this painting until their character was lost. Softened though they be, enough is left to show the shape and the poise of the head, the outlines of the features, and the expression of the eyes. Set side by side with the heads of Jefferson and Madison, this portrait suggests curious contrasts and analogies, but, looked at in whatever light one will, there is in it a sense of repose, an absence of nervous restlessness, mental or physical, unusual in American politicians; and, unless Stuart's hand for once forgot its cunning, he saw in Mr. Gallatin's face a capacity for abstraction and self-absorption often, if not always, associated with very high mental power; an habitual concentration within himself, which was liable to be interpreted as a sense of personal superiority, however carefully concealed or controlled, and a habit of judging men with judgments the more absolute because very rarely expressed. The faculty of reticence is stamped on the canvas, although the keen observation and the shrewd, habitual caution, so marked in the long, prominent nose, are lost in the feebleness of the mouth, which never existed in the original. Mr. Gallatin lived to have two excellent portraits taken by the daguerreotype process. Students of character will find amusement in comparing these with Stuart's painting. Age had brought out in strong relief the shrewd and slightly humorous expression of the mouth; the most fluent and agreeable talker of his time was still the most laborious analyzer and silent observer; the consciousness of personal superiority was more strongly apparent than ever; but the man had lost his control over events and his confidence in results; he had become a critic, and, however genial and conscientious his criticism might be, he had a deeper sense of isolation than fifty years before.

In person he was rather tall than short, about five feet nine or ten inches high, with a compact figure, and a weight of about one hundred and fifty pounds. His complexion was dark; his hair black; but when Stuart painted him he was already decidedly bald. His eyes were hazel, and, if one may judge from the painting, they were the best feature in his face.

Of his social life, his private impressions, and his intimate conversation with the persons most in his confidence at this time, not a trace can now be recovered. Rarely separated from his wife and children, except for short intervals in summer, he had no occasion to write domestic letters, and his correspondence, even with Mr. Jefferson, was for the most part engrossed by office-seeking and office-giving. After some intermediate experiment he at last took a house on Capitol Hill, where he remained through his whole term of office. When the British army entered Washington in 1814, a shot fired from this house at their general caused the troops to attack and destroy it, and even its site is now lost, owing to the extension of the Capitol grounds on that side. It stood north-east of the Capitol, on the Bladensburg Road, and its close neighborhood to the Houses of Congress brought Mr. Gallatin into intimate social relations with the members. The principal adherents of the Administration in Congress were always on terms of intimacy in Mr. Gallatin's house, and much of the confidential communication between Mr. Jefferson and his party in the Legislature passed through this channel. Nathaniel Macon, the Speaker; John Randolph, the leader of the House; Joseph H. Nicholson, one of its most active members; Wilson Cary Nicholas, Senator from Virginia; Abraham Baldwin, Senator from Georgia, and numbers of less influential leaders, were constantly here, and Mr. Gallatin's long service in Congress and his great influence there continued for some years to operate in his favor. But the communication was almost entirely oral, and hardly a trace of it has been preserved either in the writings of Mr. Gallatin or in those of his contemporaries. For several years the government worked smoothly; no man appeared among the Republicans with either the disposition or the courage to oppose Mr. Jefferson, and every moment of Mr. Gallatin's time was absorbed in attention to the duties of his Department, on which the principal weight of responsibility fell.

The adjournment of Congress on May 3, 1802, left the Administration at leisure to carry on the business of government without interruption. Mr. Gallatin immediately afterwards took his wife and family to New York, where, as now became their custom, they passed the summer with Commodore Nicholson, and where Mr. Gallatin himself was in the habit of joining them during the unhealthy season of the Washington climate, when the Administration usually broke up. "Grumble who will," wrote Mr. Jefferson, "I will never pass those months on tidewater." Leaving his wife in New York, Mr. Gallatin returned to his work at Washington. On these journeys he usually stopped at Baltimore to visit the Nicholsons, and at Philadelphia to see Mr. and Mrs. Dallas. The society of Washington was small and intimate, but seems to have had no very strong hold over him. He was much in the habit, when left alone there, of dining informally with Mr. Jefferson and Mr. Madison. General Dearborn's family was in close relations with his, and the Laws, who were now at Mount Vernon, were leaders of fashionable society. But his residence at Washington was saddened in the month of April of this year, by the loss of an infant daughter, a misfortune followed in 1805 and 1808 by two others almost precisely similar, which tended to throw a dark shadow over the Washington life and to make society distasteful. His close attention to business seems at this time to have affected his health, and the absence of his family still more affected his spirits. He worked persistently to get the business of his office into a condition that would enable him to rejoin his wife for a time, and almost the only glimpse of society his letters furnish is contained in the following extract, which has a certain interest as characteristic of his political feelings:

GALLATIN TO HIS WIFE.

WASHINGTON, 7th July, 1802.

... Monday all the city, ladies and gentlemen, dined in a tent near the navy yard; we were about 150 in company. I suppose every one enjoyed it as' his spirits permitted; to me it looked very sober and dull. Indeed, dinners of a political cast cannot, in the present state of parties, be very cheerful unless confined to one party. It is unfortunate, but it is true. I had another cause which damped my spirits. We were in an enclosure formed with sails stretched about six feet high, and some marines were placed as sentries to prevent intrusion; for the arrangements had been made by Burrows and Tingey. The very sight of a bayonet to preserve order amongst citizens rouses my indignation, and you may judge of my feelings when I tell you that one of the sentries actually stabbed a mechanic who abused him because he had been ordered away. The bayonet went six inches in his body and close to his heart. He is not dead, but still in great danger, and the marine in jail. Such are the effects of what is called discipline in times of peace. The distribution of our little army to distant garrisons where hardly any other inhabitant is to be found is the most eligible arrangement of that perhaps necessary evil that can be contrived. But I never want to see the face of one in our cities and intermixed with the people. The mammoth cheese was cut on Monday; it is said to be good; I found it detestable.

* * * * *

At length he succeeded in getting away, but was obliged to return in August, and his letters became wails of despair, in which there was always a little mingling of humor. The following is a specimen:

GALLATIN TO HIS WIFE.

WASHINGTON, August 17, 1802.

... As to myself I cannot complain, but yet am as low-spirited as before; it will never do for me to keep house apart from you and in this hateful place. I am told that even within five or six miles from this place, and off the waters, intermittent and bilious complaints are unknown.... I am good for nothing during your absence; the servants do what they please; everything goes as it pleases. I smoke and sleep; mind nothing,--neither chairs, bedstead, or house,--ten to one whether I will call on Mrs. Carroll till your return. All those concerns you must mind. I grow more indolent and unsociable every day. If I have not you, and the children, and the sisters in a very short time, I cannot tell what will become of me. I have not called on Mrs. Law, though she sent a message to know when you and Maria were expected. How is Maria? as prudish as ever? I wish she was in love. You do not perceive the connection, perhaps, but I do. Tell her, ugly as I am, I love her dearly, that is to say, as much as my apathy will permit.... I have been so gloomy this summer that I mean to frolic all next winter with the girls,--assemblies, dinners, card-parties, abroad and at home. You, my dear, will stay home to nurse the children and entertain political visitors....

24th August, 1802.

... Nothing but the hope of seeing you soon has kept in any degree my spirits from sinking. Whether in the plains or over the hills, whether in city or in retreat, I cannot live without you. It is trifling with that share of happiness which Providence permits us to enjoy to be forever again and again parted. I am now good for nothing but for you, and good for nothing without you; you will say that anyhow I am not good for much; that may be, but such as I am, you are mine, and you are my comfort, my joy, and the darling of my soul. Now do not go and show this to Maria; not that I am ashamed of it, for I glory in my love for you; but she will think my expressing myself that way very foolish, and I am afraid of her.

* * * * *

Early in October, 1802, they were again in Washington, and Mr. Gallatin resumed work with more philosophy. The rest of the Cabinet gradually assembled. When the time came for the Secretary of the Treasury to make his annual report to Congress, he was able to say, as the result of his first year's administration, that the revenue from import duties, instead of $9,500,000 as he had estimated, had produced $12,280,000, a sum which exceeded "by $1,200,000 the aggregate heretofore collected in any one year, on account of both the import and the internal duties repealed by an Act of last session." The report, however, was still cautious in its estimates for the future; in the face of possible losses in revenue, arising from peace in Europe, it adhered closely to last year's estimates, and in the face of navy deficits for 1801 and 1802 still maintained $1,700,000 as the total appropriation for army and navy combined. The receipts and expenditures were still to be $10,000,000, and last year's excess was to be held as a protection against a possible falling off in the revenue.

In his notes on the draft of Mr. Jefferson's annual message, Mr. Gallatin's criticisms this year seem to express the satisfaction he doubtless felt at the success they had met. Mr. Jefferson's weakest side was his want of a sense of humor and his consequent blind exposure to ridicule. Mr. Gallatin himself now and then ventured to indulge a little of his own sense of humor at the cost of his chief, as, for instance, when he criticised the first paragraph of this message as follows: "As to style, I am a bad judge; but I do not like in the first paragraph the idea of limiting the _quantum_ of thankfulness due to the Supreme Being, and there is also, it seems, too much said of the Indians in the enumerations of our blessings in the next sentence." But occasionally he flatly opposed Mr. Jefferson's favorite schemes, and it is curious to notice the results in some of these cases. This year, in regard to Mr. Jefferson's famous recommendation of dry-docks at Washington, Mr. Gallatin's note said: "I am _in toto_ against this recommendation, 1st, because, so long as the Mediterranean war lasts, we will not have any money to spare for the navy; and 2d, because, if dry-docks are necessary, so long as we have six navy-yards, it seems to me that a general recommendation would be sufficient, leaving the Legislature free either to designate the place or to trust the Executive with the selection." This was certainly travelling out of his own department into the bounds of another, and Mr. Jefferson adhered to his dry-docks in spite of Mr. Gallatin, who told him that the scheme would not command thirty votes in Congress; and this turned out to be the case.

[Sidenote: 1801-1813.]

But the Mediterranean war was Mr. Gallatin's great annoyance at present. His letters to Mr. Jefferson show how persistently he pressed his wish for peace. In one, dated August 16, 1802, he said: "I sincerely wish you could reconcile it to yourself to empower our negotiators to give, if necessary for peace [with Tunis, Tripoli, and Morocco], an annuity to Tripoli. I consider it no greater disgrace to pay them than Algiers. And, indeed, we share the dishonor of paying those barbarians with so many nations as powerful and interested as ourselves, that, in our present situation, I consider it a mere matter of calculation whether the purchase of peace is not cheaper than the expense of a war, which shall not even give us the free use of the Mediterranean trade.... Eight years hence we shall, I trust, be able to assume a different tone; but our exertions at present consume the seeds of our greatness and retard to an indefinite time the epoch of our strength."

But the Tripolitan war and the difficulties with Morocco were soon thrown into the shade by events of a much more serious kind, which threatened to break down Mr. Gallatin's arrangements in a summary way. In the course of the summer of 1802 it had become known that France, by a secret treaty, had acquired Louisiana from Spain, and had determined to take possession of that province. While our minister in Paris was reporting the progress of the movements which were to place a French army across the stream of the lower Mississippi, our government received information in October that the Spanish intendant at New Orleans had interdicted the right of deposit for merchantdise which had hitherto been enjoyed there by our citizens. Kentucky and Tennessee were exasperated at this step, and there was some danger that they might begin a war on their own account. The Administration at once took measures to guard against these perils, so far as was possible. A confidential message was sent to the Senate on January 11, containing the nomination of Mr. Monroe to act with Mr. Livingston, then minister in Paris, as special commissioners for the purchase of the eastern bank of the Mississippi. Another confidential message had been previously sent to the House, which debated upon it in secret session. What passed there is briefly mentioned by Mr. Gallatin in a note of the 3d December, 1805: "A public resolution ... was moved by Randolph and adopted by the House. A committee in the mean while brought in a confidential report to support and justify the President in the purchase he was going to attempt, and to this an appropriation law in general terms was added."

After a few months of anxiety and silent preparation, the Administration had the profound satisfaction to see this storm disappear as suddenly as it had risen. The renewal of war between England and France led the First Consul not to accept the American offer to purchase Louisiana from the Mississippi to Pensacola, but to propose the sale of all Louisiana, which then embraced the whole western bank of the Mississippi from its source to the Gulf of Mexico. This idea was naturally accepted with eagerness by the Administration, and even Mr. Gallatin seems to have felt for once no hesitation about increasing the national debt, a necessary consequence of the purchase.

[Sidenote: 1803.]

The session, however, did not pass away without producing an attack upon Mr. Gallatin's management of the Treasury. This attack was not a very serious one, nor is it one that either then or now could be made interesting. The Federal party, which had created the United States Bank, viewed with jealousy the course pursued by the Administration towards that institution. Mr. Jefferson's letters, in fact, show a deep and not very intelligent hostility to the bank. On the 7th October, 1802, he wrote to Mr. Gallatin that he should make a judicious distribution of his favors among all the banks, since the stock of the United States Bank was held largely by foreigners, and "were the Bank of the United States to swallow up the others and monopolize the whole banking business of the United States, which the demands we furnish them with tend shortly to favor, we might, on a misunderstanding with a foreign power, be immensely embarrassed by any disaffection in that bank." On the 12th July, 1803, he renewed this proposition from another stand-point: "I am decidedly in favor of making all the banks republican by sharing deposits among them in proportion to the dispositions they show. If the law now forbids it, we should not permit another session of Congress to pass without amending it. It is material to the safety of Republicanism to detach the mercantile interest from its enemies and incorporate them into the body of its friends. A merchant is naturally a Republican, and can be otherwise only from a vitiated state of things."[60] Mr. Gallatin gently put aside these demonstrations of Mr. Jefferson,[61] and administered his Department on business principles, with as little regard to political influence as possible. He looked on the bank as an instrument that could not be safely thrown away; without it his financial operations would be much more slow, more costly, more hazardous, and more troublesome than with it; indeed, he was quite aware that its fall would necessarily be followed by much financial confusion, and he had no mind to let such experiments in finance come between him and his great administrative objects. He was, therefore, by necessity a friend and protector of the bank.

The Federalists did not yet fully understand this fact, and they were disturbed at learning that Mr. Gallatin had sold, on account of the sinking fund, a certain number of bank shares in order to pay the Dutch debt. The shares were purchased by Alexander Baring under very favorable conditions, and the Federalists showed that they expected little from their motion by making it only on the last day of the session. At the same time Mr. Griswold, in an elaborate speech made on March 2, attacked the accounts of the sinking fund.[62] The only result of these combined attacks was to call out replies from the Administration speakers and a long letter from Mr. Gallatin himself on the operations of the sinking fund. This letter, replying to Mr. Griswold's attack, was written in response to a resolution of the House, and was completed in time to be presented, before the close of the session, on the night of the 3d March. It appears to have met all Mr. Griswold's criticisms. At all events, the attack seems to have made no impression, and in all probability the Federalists themselves intended only to punish Mr. Gallatin for the trouble he had so often in a similar manner inflicted upon them.

The adjournment of Congress closed the second year of Mr. Jefferson's Administration. With the exception of that Louisiana anxiety, which another month was to clear away, these two years had been marked by complete success. Never before had the country enjoyed so much peace, contentment, and prosperity. Mr. Gallatin himself had in these two years succeeded in making himself master of the situation; he was more powerful and more indispensable than ever; his financial policy was firmly established; his hold, both in Cabinet and in Congress, was undisputed; every day brought his projects nearer to realization, and every day relieved him from the absorbing labor which had made his first two years of office so burdensome.

Nevertheless there was cause enough for anxiety. The approaching storm in Europe, which was to shake Louisiana into the President's lap, brought with it dangers in regard to which the experience of Washington and John Adams would have been valuable to Mr. Jefferson had he only been willing to profit by it; but, over-confident in the virtue of his theories, he, as his correspondence shows, was firmly convinced that he could balance himself between the two mighty powers which had dealt so rudely with his predecessors, and it was a cardinal principle with the Republican party that our foreign relations were endangered only by the faults of Federalism, and were safe only in Republican hands. "I do not believe," wrote Mr. Jefferson on July 11, 1803, "we shall have as much to swallow from them as our predecessors had." "We think," he wrote on the next day, "that peaceable means may be devised of keeping nations in the path of justice towards us, by making justice their interest, and injuries to react on themselves." This was the very point to be proved, and on the result of this theoretical doctrine was to depend the fate of Mr. Jefferson's Administration and of Mr. Gallatin's financial hopes.

Besides this grave danger, which was destined steadily to take more and more serious proportions, there were smaller political difficulties, which in their nature must increase in importance with every embarrassment that the future had in store. The party schism led by Vice-President Burr was now beginning to rage with fury and to do infinite mischief in New York. In Pennsylvania matters were still worse, at least for Mr. Gallatin, whose political interests lay in that State. The very completeness of the Republican triumph in Pennsylvania was fatal to the party. The extremists, led by Duane and his friend Michael Leib, began a schism of their own, the more dangerous because they avoided the mistake of Burr and declared no war on Mr. Jefferson. Indeed, they followed the very opposite policy, and, sheltering themselves under the cover of their pure Republicanism with Mr. Jefferson for their peculiar patron, they declared war upon Mr. Jefferson's Cabinet. On the 10th May, 1803, Joseph H. Nicholson warned Mr. Gallatin of what was to happen: "I have enclosed the President a letter from Captain Jones to me, which you can see if you please. He says that Duane and his coadjutors meditate an attack upon Mr. Madison and yourself for setting your faces against the office-hunters." Mr. Jefferson on this occasion did not treat Duane as he had treated Burr; he attempted to intervene and soothe the susceptibilities of his over-zealous partisans. He consulted Mr. Gallatin on the subject, and sent him the draft of a letter to Duane. Mr. Gallatin, on the 13th August, 1803, returned the draft and attempted to dissuade the President from sending the proposed letter: "Either a schism will take place, in which case the leaders of those men would divide from us, or time and the good sense of the people will of themselves cure the evil. I have reason to believe that the last will happen, and that the number of malcontents is not very considerable and will diminish.... It is highly probable that Duane, who may be misled by vanity and by his associates, but whose sincere Republicanism I cannot permit myself to doubt, will adhere to us when his best friends shall have taken a decided part.... If a letter shall be written, I think that, if possible, it should be much shorter than your draft, and have perhaps less the appearance of apology. The irresistible argument to men disposed to listen to argument appears to me to be the perfect approbation given by the Republicans to all the leading measures of government, and the inference that men who are disposed under those circumstances to asperse Administration seem to avow that the hard struggle of so many years was not for the purpose of securing our republican institutions and of giving a proper direction to the operations of government, but for the sake of a few paltry offices,--offices not of a political and discretionary nature, but mere inferior administrative offices of profit."

Mr. Jefferson seems to have followed this advice and to have suppressed the proposed letter.[63] Duane continued his attacks on the moderate wing of the Republican party, and Mr. Gallatin's hopes that he would find no following were soon disappointed. A complete separation took place between him and Governor McKean. Perhaps the existence of this schism had something to do with the offer, which Mr. Dallas was now commissioned to make, of putting Governor McKean in nomination for the Vice-Presidency in the general election of 1804. The offer was declined, and George Clinton was substituted in his place, but Governor McKean's letter of declination is so characteristic as to be worth publication.

THOMAS McKEAN TO ALEXANDER J. DALLAS.

LANCASTER, 16th October, 1803.

DEAR SIR,--Your friendly letter of the 14th has been read with pleasure. I am much obliged to the kind sentiments of my friends in thinking me a suitable character to be proposed as a candidate for the dignified station of Vice-President of the United States, but must absolutely decline that honor. The office of Governor of Pennsylvania satisfies my ambition, and it has been conferred in such a manner, at two elections, that the people are endeared to me; indeed, it appears to me that I am engaged to continue in this distinguished character the constitutional term, if it shall be the desire of my fellow-citizens. I am now descending in the vale of years, and am satisfied with my share of honors; that of President of the United States in Congress assembled in the year 1781 (a proud year for Americans) equalled any merit or pretensions of mine, and cannot now be increased by the office of Vice-President. But, all personal considerations waived, what would be the probable result of my acceptance of the proposed post? Little, very little benefit to the people of America, but at least a doubtful situation to my fellow-citizens of Pennsylvania. What would be the fate of my friends, of those I have placed in office, and of the liberty of the State at this most critical period, were I to resign the office? Who is there to control the wanton passions of men in general respectable, suddenly raised to power and frisking in the pasture of true liberty, yet not sufficiently secured by proper barriers? But I must say no more on this head, even to a friend; it savors so much of vanity. In brief, who will be my successor, possessing the same advantages from nativity in the State, education, experience, and from long public services in the most influential stations and employments; who can or will take the same liberty in vetoes of legislative acts, or otherwise, as I have done? I confess I am at a loss to name him, and yet, when I must resign by death or otherwise, I trust the world will go on as well as it has done, if not better, though I never had existed.

Be so good as to pay my most respectful compliments to the President, to Messrs. Madison, Gallatin, Dearborn, Granger, etc., and compliments to all mine and your friends. Farewell and prosper. Adieu.

* * * * *

Mr. Jefferson's party required very delicate handling. Embracing, as it did, materials of the most discordant kind, schism was its normal condition. Between the purity of Madison and Gallatin and the selfishness and prejudice of the local politicians, Mr. Jefferson was obliged to make what compromise he could; but while with quiet determination he drove Burr out of the party, he tolerated Duane and Leib with extraordinary patience. There were very strong reasons which justified or excused his treatment of Burr; particularly the position of heir-apparent, which the Vice-President occupied, made it necessary either to recognize or reject his claims, and Mr. Jefferson did not hesitate to reject them. Whether his treatment of Duane was to be equally defensible became more and more a subject of vital consequence to Mr. Gallatin.

So long as Virginia remained steady the Administration had little to fear, and as yet there was no sign of schism in the Virginia ranks. Of all the Virginia members John Randolph was the most prominent, and his support was firm. Mr. Gallatin and he were on the most intimate terms, and since Gallatin's letters to him are lost, some of his letters to Gallatin may be worth inserting, to show their relations together:

JOHN RANDOLPH TO GALLATIN.

BIZARRE, 9th April (27th year), 1803.

DEAR SIR,--When your letter arrived I was from home, and, ours being a weekly post, my reply is necessarily delayed longer than I could wish.

Mr. Griswold's first objections to the report of the commissioners of the sinking fund are (if in existence, which I very much doubt) among other loose papers which I left in Georgetown. The paragraph which you enclose differs from most which have appeared of late in a certain description of prints, in this, that it contains _some truth_. But, as it is resorted to only to serve as the vehicle of much falsehood, it is proper that a correct statement should go forth to the public of this singular transaction.