Chapter XI: Appendix: (lists of Sources) 517 (11)

Soon after 1848 came in, the annexation cause began to put on a bold front. Naturally the younger element in the party and the country felt inclined to take it up. Crocodile tears were shed over the "poor foundling"--though a future heiress--placed by Divine Providence at our threshold. The danger that England or France might ravish it away from us came to the fore. Conquest was pronounced in the Senate a legitimate method of expansion. Orators in both Houses pointed more plainly toward an extension at the cost of Mexico. Declarations in the contrary sense indicated the force of the current. Senator Niles believed that substantially all of the Democrats among his colleagues would fall in with the plan. Enthusiastic citizens acclaimed it. Speculators fancied it would help their schemes in various ways. Capitalists believed that by stimulating enterprise it would enlarge and continue the demand for money. Manufacturers and high tariff men argued that it would increase the national expenses and therefore the duties. Army officers could see a wide field for them; and the opponents of slavery, led by the _National Era_, felt that Mexican plantations would draw away the negroes--now understood to be unprofitable--of Kentucky, Tennessee and Virginia. Public meetings became excited on the subject. The country is going mad for Mexico, inferred Buchanan; and Walker believed that only a systematic newspaper agitation was needed to ensure success.[32.17]

[THE QUESTION BEFORE POLK]

Polk moved in the same direction. In September, 1847, he concluded that, should the war continue, he might demand Tamaulipas and the line of thirty-one degrees, and reduce the compensation to fifteen millions; and before the end of January, 1848, he felt inclined to throw aside entirely the terms offered through Trist. Besides, he loathed the treaty on account of the man who made it and the man who gave assistance. After his recall, considering himself a private citizen, Trist reported with a free hand, criticising the President's recent Message as encouraging the Eventualists, and expressing his opinions on the business without much reserve. Naturally Polk the Mediocre, guided by Pillow the Cunning, totally misconceived the spirit of Trist and Scott. In his eyes they had contrived a wicked political "conspiracy" against Him, His administration, His party and His Pillow. Both had proved "utterly unworthy," and on January 25 the "arrogant, impudent" and "very base" Trist was ordered to leave headquarters. To accept, approve, endorse, recommend and support the work of such a scoundrel seemed impossible.[32.18]

But Polk had professed to be considerate and forbearing toward our erring sister, and to seek only redress, indemnity, security and peace. His terms had been officially stated; and while his Message of December, 1847, had suggested that a continuance of the war might be expected to modify them, no real fighting had occurred since then, and--although Polk had known for about six weeks that negotiations on virtually the old basis were afoot--no modification of them had been announced. That Message had expressly disclaimed all thought of making "a permanent conquest" of Mexico; and on the fourth of this very February Sevier, chairman of the committee on foreign relations, had stated in the Senate that Polk was anxious for peace, desired only indemnity, and wanted to preserve Mexican nationality.[32.19]

Trist had substantially embodied Polk's terms in the treaty, and had even anticipated his thought of reducing the compensation. Congress had voted men and money on the basis of Polk's professions and terms; and, should he now raise his demands, all his enemies would say their charges of greed, falsehood, injustice, o'ervaulting ambition and bloodthirsty wickedness had been proved. Hostilities might continue, the Whigs might carry the election, the war might end in disaster and ignominy, and all the gains now embodied in the treaty might be lost. Even should these perils be avoided, it seemed extremely doubtful whether Mexico would ever accept by treaty a more encroaching boundary, and quite possible that an endeavor to obtain it would open a long vista of expenses, guerilla warfare, foreign complications and Heaven only knew what. Extension toward the south was liable to kindle the fires of an anti-slavery agitation and perhaps disrupt the Union. The treaty and the victories that it consummated meant enough glory for any President. Finally, Polk, now moving about with dragging steps, dry, brown face, gray hair and sunken eyes, perhaps felt weary of battling both abroad and at home; and at the very least, should he endorse this paper and lay it before the Senate, his responsibility would cease.[32.19]

Buchanan and Walker opposed the treaty; but the former, as well as Polk himself, recognized that any personal misconduct of Trist, a mere agent of the Executive, had no proper bearing on the question. The rest of the Secretaries favored placing the document before the Senate. On February 22, after full debates in the Cabinet, Polk did this, recommending by implication the acceptance of it; and so a paper which had been simply a memorandum drawn up by a private American citizen and several Mexicans holding official positions, became a real treaty, merely awaiting confirmation.[32.20]

Among the Senators the treaty met with jeers and scowls. "Great Jehovah!" exclaimed Lieutenant W. T. Sherman on learning its terms; it is "just such a one as Mexico would have imposed on us had she been the conqueror"; and so thought a number of the Senators. It is a mere piece of waste paper, cried many; the impudent, perhaps traitorous, work of a discredited agent, whom the President had ordered out of Mexico; and it would be undignified, ridiculous, degrading, to accept such a thing. The war party opposed it. The annexationists opposed it. The no-territory men opposed it. The Little Unionists, who thought the country too big already, opposed it. Not a few hated to think of letting Polk elude them so easily.[32.21]

But suddenly the head of John Quincy Adams, as he sat in the House, dropped. He was borne to the Speaker's room. "This is the last of earth; I am content," murmured the venerable statesman. For two days he lingered, unconscious; and then he passed away. This tragic event had a deep effect. There fell a hush, as when snow descends upon the city pavement. The sessions of Congress were suspended. Senators were prevented from announcing their positions hastily. And when discussion began once more, it was resumed with a new feeling of seriousness, a new sense of responsibility.[32.21]

[THE TREATY BEFORE THE SENATE]

If the President could put up with Trist and his work, surely the Senate could, one began to think; and in every way Polk's virtual endorsement gave the paper enough respectability. Politics played a leading rôle in almost every mind, but after a little it seemed like bad strategy to vote against the glory and the territory ensured by its terms. The committee on foreign relations, which decided to throw the treaty aside and send an "imposing" commission to do the work over, dropped the scheme when Polk told them bluntly this would be "worse than an idle ceremony." Benton, thoroughly angry at the administration because Frémont, his son-in-law, had been condemned for insubordination in California; Berrien, wedded to his "no-territory" idea; Corwin, anxious perhaps to have more Americans find hospitable graves in Mexico; Webster, who asserted that California and New Mexico were "not worth a dollar"; and certain other Senators, committed for this or that reason, were beyond argument; but all their hopes failed.[32.22]

The deep current set against them. "What better can we do?" became an unanswerable argument for the treaty. The people wanted peace. They desired no more bloodshed, no more costs. One could not be sure of obtaining another treaty from chaotic Mexico, or sure that any treaty differing from the present one could have as good a chance in the American Senate. To reject the work of Trist was understood more and more clearly to involve, perhaps, not only interminable fighting, but a train of moral, political, industrial, commercial and financial ills of which no one could see the end. Already enough generals had built up reputations, thought many of the politicians. It would be of priceless advantage, urged some of the finer men, to supplement our military triumphs with a great act of magnanimity. By March 7 ratification, which had been for a time extremely doubtful, appeared probable. Houston of Texas, a leading opponent, concluded to visit New Hampshire. And on the tenth by 38 against 14--a narrow margin, since a majority of two-thirds was requisite--the treaty won. A transfer of four votes from the affirmative to the negative would have defeated it.[32.22]

There were a few amendments. Article X, which might have revived extinct Mexican claims to lands in Texas now occupied by _bona fide_ settlers, went overboard at once. The provision of security for the Roman Catholic church in the acquired territory (Art. IX) fell out as unnecessary, as reflecting on the good faith of the United States, as suggesting government interference with religious affairs in this country, and as tending to confirm the Mexican pretence that we entertained hostile feelings toward that communion. The Senate refused to agree that California and New Mexico should be made into states "as soon as possible" (Art. IX), regarding that as a step to be taken with deliberation, and only when, in the judgment of Congress, all the prerequisites of statehood should exist. Instead of allowing Mexico to choose between payment by instalments and payment in securities convertible at once into cash (Art. XII) it was decided to offer only the former method, as a veiled hint that an infraction of the treaty would cause a suspension of the instalments. Another amendment permitted the Indians to have firearms, which, as they lived by the chase, had to be done. A further modification, intended to hasten the conclusion of peace, authorized the exchange of ratifications at Querétaro whenever Mexico should accept the amended treaty; and it was also provided by the Senate that evacuation could then begin. Finally a secret article, which permitted Mexico to consummate the ratification of the agreement at any time within eight months, instead of the four months of Article XXIII, was cancelled, because it seemed to encourage procrastination, and allow her time to escape from the treaty, while compelling us to bear great expenses. But none of these changes touched the essentials.[32.23]

[THE TREATY IN MEXICO]

It now became necessary to have some one explain the amended treaty to Mexico, bring about her acceptance of it, and, should it be confirmed, exchange the ratifications. This gave Polk a chance to prove himself a large man. Scott, though not without serious grounds of offence against Hitchcock, Harney and Quitman, had forgiven and honored them, because they deserved well of the country. Trist, the bringer of peace, the negotiator of its terms, high in the favor of the Mexican government, and able to exert much influence on the Mexican Congress, deserved the appointment. If the treaty represented a great national service and had merit enough to be accepted, its maker had merit enough to be recognized. But the President was only Polk the Mediocre after all. His plumage had been ruffled; and instead of giving Trist this high and lucrative post, he relegated the peacemaker to a dishonorable oblivion, and would not even pay him for the time actually spent in the negotiations. To think that a President of the United States could be so small![32.24]

Aside from this petty meanness and spite, however, Polk selected a man worthy, both personally and officially, of the position. This was Sevier, chairman of the Senate committee of foreign relations and leading champion of the treaty in that body. Then, as Sevier became suddenly though temporarily ill and no delay could be risked, Clifford, the attorney general, was appointed associate commissioner with equal powers; and eventually the two--both arriving at Mexico by the fifteenth of April--acted in concert.[32.24]

Mexico now became the scene of action again. February 6 the government announced what had been done about peace. Knowing how loud an outcry had been raised against even considering a treaty, one can imagine what occurred, now that a treaty had been made. The old objections were reiterated. Trist's lack of authority was dwelt upon. Secret, despotic, illegal, treasonable, shameful, ruinous, were a few of the everyday epithets that bombarded the government. It had no power to alienate Mexican territory. It should have waited for the American friends of peace to act. Even "the sepulchral comfort" of temporary subjugation was described as preferable to such a peace. "Approval of the treaty," exclaimed Rejón, "is the political death of the Republic." Another insurrection broke out at San Luis Potosí, and all the comandantes general were notified to expect revolts.[32.25]

The peace men, however, stood firm. Honor has been saved, they insisted. The United States has recognized Mexico as an independent nation. There has been no suing for terms at Washington. Territory has been regained, not sold. To speak properly, indeed, this is a "treaty of restitution"; fifteen millions are to be paid for injuries done us; the territory acquired by the United States costs her more dearly than Louisiana; and full rights have been secured for all Mexicans adopted by another government. Whatever harshness can be found in the conditions is due to the circumstances, not the government. War has no respect for justice. Besides, in case of need a nation, like an individual, may find amputation expedient, and be the stronger for it. Above all, the administration has merely done its duty in treating according to its best judgment. It has determined nothing, settled nothing. The facts of the case will be laid before Congress, and the representatives of the people shall decide.[32.25]

Here, then, came the real crisis: would Congress ratify the treaty? At Washington, in spite of some encouraging reports, the impression gained ground that it would not. The amendments appeared to cause little excitement, but they were not the real issues. Opponents of peace had the speeches of American statesmen printed, and hawked them about the streets. Prudent Mexicans demanded an end of the uncertainty, disorder and chaos that was paralyzing the country; but so had they always demanded it. The government exhibited little activity, while the Puros and the friends of Santa Anna did not sleep. The especially important elections in the occupied territory did not end until April 23, and by that date one could see that something else was to be feared even more than opposition. As on every other occasion demanding a patriotic stand, most of the decent men felt afraid to assume responsibility. Another difficulty was that money for their travelling expenses had customarily been advanced to the members by the government, and now it had no money for the purpose. Finally, however, said an American who did not precisely understand the affair, merchants at the capital subscribed a large sum to hunt up the Congress and feed it long enough to ratify the treaty; severer measures also were taken to ensure attendance; and early in May a quorum of shaking legislators convened.[32.26]

In opening Congress Peña stated the grand question ably. Honor, union, independence and the hope of national prosperity and felicity have been saved, he pointed out; the United States made the proposals, and Mexico has obtained all the advantages possible under the circumstances; we have given up some territory, but the foremost nations of the world have done the same at one time or another; every one sees that we should have adjusted our difficulties in 1845, but it is now possible once more to settle them, and the opportunity to do so should not again be lost. The ministers of war and finance presented statements proving the impossibility of continuing the war successfully, and the peace commissioners justified the terms of the treaty. The prospect of recovering the Mexican customhouses and receiving the American millions looked highly attractive. No less telling, doubtless, were the preparations of the United States to resume hostilities with fresh energy, and to tax Mexico rigorously. The most efficient American army that had yet been seen in the country awaited Butler's orders, and large reinforcements had been voted by Congress. No responsible men in their senses could resist such arguments. The treaty, as amended by the American Senate, was promptly ratified, and by June 9 Washington had the news. With all speed it ran from city to city, from town to town, from vale to vale; and everywhere it was greeted with quiet but heartfelt rejoicings.[32.27]

By an arrangement already made, Sevier and Clifford, after learning what had been done by the Mexican Congress, proceeded to the seat of government. It was a tiresome journey of about 145 miles; but at last, from the summit of a high ridge, they saw domes and spires two miles or so distant, glittering on a low eminence in a fine valley, which was enclosed by parallel ranges of mountains. The town was Querétaro; and on May the twenty-sixth, in the President's rather plain reception room, dignified with crimson curtains and with chairs of state, Clifford presented their credentials.[32.28]

[THE TREATY RATIFIED BY MEXICO]

Peña, tall and benign though sadly worn, Rosa, the minister of relations, rather short and swarthy but with large, thoughtful eyes lighting up his countenance, and Anaya, the minister of war, tall and gaunt, with high cheek bones and a face of Indian stolidity, received them with all due courtesy. "Sister republics, may the two countries ever maintain the most friendly relations," was the American greeting; and Peña replied, "As the head of this nation, I desire nothing more ardently than that our treaty may prove the immutable basis of that constant harmony and good understanding which should prevail sincerely between the two republics." Conversations and formalities ensued, and on May 30 an exchange of the ratifications concluded this momentous business.[32.28]

In the execution of the treaty a few misunderstandings arose, but none of serious importance; and the minister of relations attested the good faith of the United States.[32.29] Orders for the evacuation of Mexican territory were promptly given to our commanders in the various fields of operation, and were promptly obeyed.[32.30] Even before the last formalities occurred, in fact, Butler called in his outposts, and as the sun rose on the twelfth of June it shone upon the arms of his rejoicing troops, drawn up--facing the palace--in the grand plaza of the capital. Housetops, balconies and the near streets were full, but perfect order and stillness prevailed except for the sharp commands of our officers. Thirty guns saluted the American banner on the palace, and then it was lowered. The Mexican flag took its place on the staff and received the same honors. An American band struck up gaily. The unconquered ranks wheeled, marched and left the city. Herrera, the new President, returned to the chair from which Paredes had ejected him, and the proud capital rejoiced to be free once more. But it rejoiced soberly. "I question," said U. S. Grant, "whether the great majority of the Mexican people did not regret our departure as much as they had regretted our coming."[32.31]

The plan of evacuation was to let the troops wait near Jalapa until transports could be provided and their baggage go aboard, and then march to the unhealthy coast and sail away as quickly as possible. For some time General Smith had now been making preparations at Vera Cruz with his characteristic efficiency; and soon the army, the sick, the wounded and the many who attended to their needs, took ship rapidly for New Orleans. By the twelfth of July more than 25,000 embarked, and on the last day of the month all the fortifications of Vera Cruz and frowning Ulúa, the symbol of Mexican pride, were given up. Stirred by feelings deep and strong, the departing soldiers looked round them with a farewell gaze--at the low white walls, at the exotic vegetation that had now come to be familiar, and at the gleaming, snowy peak of Orizaba, towering above its belt of dark evergreens. They had trodden the soil of that wonderful country with the stern, proud foot of the conqueror, but they now left it full of sympathy and good wishes; and one of the number put his feelings into terse and soldierlike rhymes:

"The stranger parting from the shore,
Thy glories to behold no more,
Bids thee farewell with swelling heart
As his swift bark leaps o'er the sea,
And, as the truant tear-drops start,
Prays God that thou mayst yet be free."[32.32]

XXXIII

THE FINANCES OF THE WAR

1846-1848

Mexico, as we have learned, entered upon the contest with neither money nor revenues nor credit. From nothing, nothing comes; and many supposed she was too poor to fight. But she did fight--or at least men fought in her name--and one cannot help asking how they contrived to do so. In full the question cannot be answered, but some of the facts lie within our view, and these are not only valuable in themselves but highly suggestive.[33.1]

Aside from loans, the income of the government in 1844 was figured roughly as follows: import duties, seven million dollars; duties on commerce in the interior, four and a quarter millions; profits from the monopolies of the mints, tobacco, stamped paper, playing cards, national lottery, post-office, etc., two and a quarter millions; miscellaneous taxes and revenues, three millions; total, sixteen and a half millions net. But the American blockade cut off nearly fifty per cent of this income at one stroke; and not only our progressive occupation of territory, but the dislike of the people for national taxes, their growing dissatisfaction with Santa Anna's régime, and their increasing destitution caused a rapid shrinkage of the residue.[33.2]

It was proposed to contrive a general plan of taxation for the emergency; but probably the interests principally threatened put a stop to it, and at all events it mysteriously disappeared. The government was given ample authority, but could do nothing. A war tax was laid on house-rents, for example; but it could not be collected everywhere, and probably its net proceeds amounted to little. In November, 1846, it was decided to issue drafts for two millions, to be accepted by the clergy and then purchased by designated citizens; but the scheme, though actually decreed, proved a failure, and the famous laws of January 11 and February 4, 1847, were no more successful. June 17, 1847, a special tax of one million was assessed upon the entire population; but only a small fraction of this appears to have been paid. In November, 1847, the government offered to deduct one half of the pending national taxes levied before May 1, 1846, if citizens would pay them by February 1, 1848; and this indicates clearly how the people had been acting. A few of the states, besides maintaining National Guards, erecting fortifications and manufacturing cannon, remitted some cash to the central government; but when we find the richest of them all, Mexico, boasting that she had sent the insignificant sum of about $160,000, we have reason to place a rather slight value upon this kind of assistance. Moreover, accepted drafts on that state, payable in one, two and three months, could not be sold--even at a discount.[33.3]

The clergy gave nominally a million and a half, but they appear to have taken up indirectly, at a discount of forty per cent, the drafts of which this donation consisted. Citizens provided a large part of the new ordnance, but aside from this we hear of few substantial gifts. Just after the battle of Molino del Rey, in order to obtain bread for the army, the government requested the bakers of the capital to meet, but only a part of them came. A "positive supreme order" then brought them together, and they promised contributions; yet the promises were not kept.[33.4]

Every possible effort was made to borrow. Once the treasury offered a national loan of two and a half millions, but it fell flat in the states that might have paid the most. Just before the battle of Cerro Gordo there was a door-to-door canvass at Mexico; but only small sums can have been picked up. About three months later the government imposed a forced loan, of which more than $280,000 were assigned to the capital; but the Mexicans had learned to evade such extortions, and it proved hard to collect the allotted amounts. In July, 1847, the British consul general, Mackintosh, loaned $600,000 in exchange for the ratification of an arrangement negotiated with the British bondholders. In four loans the clergy furnished some three millions, all told. The President raised money, it was reported, on public and private securities, sold bonds freely at very low rates, and borrowed in effect by giving contracts on terms favorable enough to make the transactions worth while as gambling propositions. The principal mint, for example, was turned over to the British consul general for a period of ten years in February, 1847, in exchange for some $200,000 in cash and a promise to pay one per cent on the amount coined; and on similar principles arms and other necessaries were sometimes obtained.[33.4]

All of these financial operations were at least ostensibly lawful, but Santa Anna did not pause here. Wherever money could be found, he seems to have taken it, holding that the exigency outweighed all rights and all pledges. Funds belonging to the tobacco revenue were illegally seized, for instance; and a large sum due the Academy of Fine Arts fell into this voracious maw. Not only cash but everything needed for the army went the same way. At Jalapa early in April, 1847, for example, all the owners of horses received orders to bring them in. Grain, forage, lead, lumber, arms, ammunition, tools, cattle, mules and laborers were taken by force; and sometimes military officers exhibited the burglar's predilection for a midnight hour. Here was a kind of finance that saved the expenses of accounting, and without it even the low cost of the Mexican soldier would not explain Santa Anna's holding out so long.[33.5]

[THE AMERICAN FINANCIAL OUTLOOK]

The United States, happily, stood far above this level, but not so far that probably mere good luck did not save us from grave trouble; and it was easy to foresee many dangers--all the worse because they naturally made capital timid--when the hostilities began. The total receipts of the treasury for the fiscal year ending with June 30, 1845, were nearly thirty millions and the ordinary expenditures $22,935,828. It was estimated that during the next year the receipts would fall about three millions, and Walker--allowing the munificent amounts of something more than two and a half millions for the army and something less than five for the navy--expected to reduce the total disbursements a little, anticipating for the period ending with June, 1847, a further saving of more than four millions. The receipts for July-September, 1845, proved to be more than two millions below those of the corresponding months of 1844, and the customs income for the fiscal year 1845-46 was $815,445 less than for the preceding twelve-month. In a word, shrinking revenues and curtailed outlays were the prospect.[33.6]

In this condition of things, not only had the unpredictable costs and embarrassments of war to be faced, but those of war in a distant land. Money was to be sent out of the country, never to return, and the bills for supplies to be increased by the burdens of marine transportation, insurance and losses; while risks from privateers and European complication could be seen. Before such an outlook business men shrank from large enterprises. People with money felt disposed to keep it.[33.7]

Where, then, were funds to come from? The currency had been inflated by the paper issues of many banks. Stocks were selling far below the prices of twelve months before. Even the business men who did not endorse the tariff of 1842 had adjusted their affairs to it, and now everybody understood that a new scale of duties, based upon free-trade ideas, lay on the treasury anvil. Calls for the government funds held and used by state depositories and for the specie of all the banks were feared. The banks cannot support a loan, and even in peace our capitalists have never done so, remarked the financial editor of the New York _Herald_, probably the best newspaper authority.[33.7]

The government must look abroad, concluded the editor, and in Europe no light could be seen. By 1842 our state debts, mostly held there, had amounted to nearly $200,000,000. Mississippi, Michigan, Arkansas and Florida sank in the mire of repudiation. Pennsylvania, Maryland, Indiana, Illinois and Louisiana became delinquent. The bonds of South Carolina fell below par. Missouri passed a stay law. Sidney Smith, when he met a Pennsylvanian at dinner, felt like dividing the man's raiment among the British guests, most of whom, if not all, had probably suffered by the "dishonor" of the state. Indeed, the bondholders were disposed to throw off half of the interest rate, if our national treasury would assume the debts; but a proposition to do this failed in Congress.[33.8]

As early as 1841 even our six per cent national bonds would not sell in Europe, though money commanded less than half as large a return there. "Who will lend on American securities?" asked the London _Spectator_ the very month we began war upon Mexico. Our credit then grew worse instead of better. The war bill precipitated a panic in Wall Street, and soon business in the west and south was described as prostrate. Bad as such a financial outlook was in itself, too, it involved a consequent ill. Evidently the administration would have to pinch; and, as Madame de Sévigné once remarked, "There is nothing so expensive as want of money."[33.8]

The Democrats, however, were committed against the protective tariff of 1842, now in force, and Polk as a party man felt that something must be done about it. Walker no doubt shared this opinion; and, having gained immense prestige in the south by his brilliant advocacy of the annexation of Texas, he very likely hoped that by now carrying into effect the fiscal ideas prevalent in that section, he might supplant Calhoun. Probably, too, he sincerely believed in these ideas. To him the existing scale of duties appeared to be the cause of the shrinking revenues; and he stated boldly that war, which had been recognized for some time as a possibility, "would create an increased necessity for reducing our present high duties in order to obtain sufficient revenue to meet increased expenditures."[33.9]

[NEW FISCAL LAWS]

Soon after hostilities began, therefore, a tariff bill came before Congress. It was bitterly and stubbornly fought. In the Senate its defeat appeared sure; but Crittenden and Clayton, believing it could only prove a discreditable failure, had a Whig support it in order to gain party advantage at the expense of the nation, and by this unworthy trick and the casting vote of the presiding officer it passed. In company with it went a warehouse bill and the restoration of the sub-treasury system, which divorced the government from the banks, and required the treasury to accept and pay out only specie. About the first of August, 1846, this entire system became law. "Our administration seems enamoured of ruin, and woos calamity for itself," exclaimed the Whig _North American_; our credit is threatened by the sub-treasury plan; our industries are deprived of protection; "while an expensive war is eating out our vitals, our revenue is to be diminished"; and a direct tax will have to be laid.[33.9]

The new tariff became effective on the first of December, 1846. As of course importers waited for it, a lean period preceded that event, and the heavy receipts that followed it, providing Walker with an apt retort, did not prevent the total for the year ending with June, 1847, from coming short of his estimate by more than four millions. Without waiting to acquire this unwelcome fact, however, the government found itself compelled in June, 1846, to revise at a sharp angle upward its predictions of the expenditures. Over and above their calculations of the previous December the war and navy departments now called for $23,952,904, which Polk informed Congress was "the largest amount which any state of the service" would require up to July 1, 1847. The secretary of the treasury had expected to find on July 1, 1847, a surplus (virtually that estimated for the previous year minus half a million) of at least $4,332,441, and had confidently hoped for a substantial gain in revenue; but he admitted that it was now requisite, since a working capital of four millions for the treasury and the mints had to be kept on hand, to provide $12,586,406 of additional income.[33.10]

The proper method of handling our war finances was, in the first place, to increase the existing taxes--not only to obtain funds promptly, but as a firm support for the nation's credit and a basis for those temporary loans which are a wise expedient at the beginning of a war; and Walker expected the proposed tariff to answer this purpose. But the question how to raise these twelve and a half millions remained. Excise and direct taxes, the administration believed, would not be prompt enough, and would not seem to the public warranted by the circumstances. It was therefore recommended to Congress that both treasury notes and a loan should be resorted to; and on July 22, 1846, without much debate, the issue of ten millions in such obligations, to be sold at not less than par, was authorized.[33.11]

Treasury notes could not really serve the government's purpose well, for they were soon to be paid, the expense of handling them fell upon the treasury, and, as they were receivable for duties, they were sure to pour into the customhouses instead of real money whenever they should be cheaper than specie. The treasury, bound by law to pay out only the latter, would then have to buy coin at the market price--presumably, as Gallatin said, with depreciated notes. These would then fall still more, and so the process appeared certain to continue.

[BONDS ISSUED]

But notes were the most convenient and readiest, if not the only way of quickly anticipating revenue; they were particularly suited to the nature of the government's expenditures; they provided an easy method of transmitting the large sums that would be needed in the south on the war account; and financial critics at New York approved of them. Not all were of that opinion, however. About the middle of September the appearance of notes for half a million was announced by one journal under the heading, "Extensive Paper Money Manufactory"; but the government persisted, and by the ninth of December, 1846, nearly four millions of them were out. This with the balance--more than nine millions--handed over by the previous fiscal year, made up for the lean customs receipts of this period.[33.12]

Meanwhile attention was given to the more substantial resource of a loan. At the end of September the secretary of the treasury disappeared mysteriously from his accustomed haunts, and to Polk's acute distress of mind wandered for more than two weeks in the perilous jungle of Wall Street. His experiences there were in fact rather hard. The capitalists looked with favor on the project of a loan and had plenty of money, but--believing the government would require a large amount, and therefore that a loan made now would be likely to depreciate, as well as actuated by their characteristic spirit of thrift--they stood out for six per cent. The New York and Boston banks, it was thought at the White House, were in league against the administration. Besides, the public had little information about the way money was being spent, and felt apprehensive of extravagance and a huge debt. Many believed the war had cost half a million each day. Not a few distrusted Walker. He had engineered Mississippi into bankruptcy, and had become insolvent personally. In the Senate his reputation had been that of a needy adventurer, intensely ambitious, clever in debate and intrigue, but not of solid ability, and especially not a financier. At present nobody denied his real talents or his extreme devotion to work, but he was charged with inaccuracy and with sophistical reasoning.[33.13]

Apparently five and two fifths per cent was all he felt ready to offer, and special reasons could be given for halting there, since it was feared that issuing a six per cent loan at par would injure the United States sixes, now held at 106, and also the credit of the government. But finally, with the approval of the President and the Cabinet, he advertised, October 30, for bids on a five million loan for ten years at six per cent. November 12 the tenders were opened. For a small fraction of the amount a slight premium was offered, and for the rest par. No doubt the rate, in comparison with European standards, had to be regarded as high, but on the other hand this was our first specie loan, and was said to be the only war loan ever taken without a discount.[33.13]

Plainly, however, more needed to be done. It was already extraordinarily difficult to pay the comparatively small expenses of the war, wrote the British minister at this time. Congress had not fully provided for even the minimum needs recognized by the sanguine, if not sophistical, Walker; and early in December, 1846, his annual report intimated that on July 1, 1848, with a due allowance for the working capital of the treasury, there would be a deficit of twenty-three millions. Apparently a loan was requisite, and he advised making the term twenty years. Then, with no little anxiety, the administration waited. At the end of December Bancroft wrote privately, "If we can raise the ways and means," we can surmount the other difficulties. On the eleventh of January, 1847, a bill virtually embodying Walker's recommendations was thrown into the House, and a long, acrimonious debate ensued. The treasury "languishes," announced the organ of the government; needed volunteers could not be called out; but the legislators had irrepressible things to say. At length, however, on January 28 the bill providing $23,000,000 became a law. Though it primarily contemplated treasury notes, it permitted the Executive liberty of action; and a large amount of six per cent bonds were sold.[33.14]

But Polk was by no means out of trouble now. Walker's estimate made no mention of great outstanding purchases, for which the contractors had not yet sent in their accounts. Not only the customs duties but the sales of public lands were coming far short of his expectations. No allowance appeared to be made for the effect of bounty land scrip that was likely to reduce them still more. The Vera Cruz expedition and a possible march to the enemy's capital were in view. Indeed, the real war had only begun. Besides, the temper of Congress had already threatened trouble and made it. Not only to ensure additional revenue in general, but in particular--it would seem--to strengthen the credit of the government by showing how the interest on its obligations would be taken care of, the Secretary brought up again the suggestion of his annual report, that a duty of twenty-five per cent should be placed on tea and coffee, which--although the free list had been restricted in the tariff of 1846--had been left untaxed. In fact it had been intimated by him at New York, even if not actually promised, that such a step would be taken; and a few days before Christmas, 1846, he notified the committee on ways and means that probably without this assistance a satisfactory loan could not be made. Yet Congress rejected the proposition by a great majority.[33.15]

A plan of Benton's also--to grade the public lands on the basis of their attractiveness, and reduce prices accordingly--which would have increased the income of the government, failed to pass, though endorsed by Polk, Walker and the general land commissioner. Pessimists were happy. With Polk, the war, the weather, the sub-treasuries "and perhaps the Devil" to struggle against, wrote a correspondent of Martin Van Buren, soon not an ingot would be "left standing," and there was "no calculating, no prophesying" what would become of the nation.[33.15]

[A TARIFF FOR MEXICAN PORTS]

Apparently to offset the failure of the tea and coffee tax, Walker's active brain produced another scheme, designed not only to bring in revenue and reassure the capitalists, but also to please the shipping men of the United States and neutral countries. This was to open the Mexican ports controlled by us, and permit merchandise to enter there under a moderate scale of duties. During March, 1847, assisted by Senator Benton and the attorney general, Polk satisfied himself that under his powers as commander-in-chief he could impose and collect the duties as military contributions, for by the right of conquest he could either exclude commerce or admit it on his own terms, and contributions were legitimate under the laws of war. Said Vattel, "A nation [at war] on every opportunity lays its hands on the enemy's goods, appropriates them to itself, and thereby, besides weakening the adversary, strengthens itself, and at least in part, procures an indemnification, an equivalent, either for the very cause of the war, or for the expences and losses resulting from it"; and a low scale of duties was an extremely mild application of this principle.[33.16]

Moreover, it was quite as legitimate under our Constitution also, though not expressly mentioned, as to blockade or bombard Vera Cruz, respecting which the organic law was equally silent. Indeed, to have left the ports wide open or allowed the high Mexican tariff to remain in force would, in addition to being harmful to us, have required as great an exercise of authority. Finally, Scott and some of our naval commanders, moved by the evident proprieties of the situation, fixed duties and used the proceeds at their discretion, and it was manifestly better to arrange the business in a uniform, well-considered manner.[33.16]

It might have been expected that substantially either our own or the Mexican tariff would be applied, but neither would have answered. Mexican imports were very different from ours; specific, not _ad valorem_, duties had been customary there; and competent appraisers could not be found. On the other hand the unreasonable Mexican duties, besides preventing commerce to a large extent, encouraged fraud and smuggling. In March, 1847, therefore, a special tariff was prepared by Walker, lowering the Mexican duties on imports more than one half, and substituting for all port dues and charges a uniform tax of one dollar per ton; and on March 31 Polk ordered the system to be put in force. Mexico retorted that goods paying the American duties--especially goods prohibited by her laws--would be confiscated, and this attitude caused some uneasiness in France; but it seemed fairly evident that the United States would protect neutrals accepting our policy, and not only the foreign merchants in Mexico but the neutral governments felt highly pleased with our course.[33.17]

The authorities at Washington, however, did not rejoice as much. The real difficulty lay, not in landing merchandise at the ports, but in placing it before Mexican customers, and comparatively few of the latter could be reached. Persevering efforts were made to solve the problem on both coasts. Sometimes, for reasons not fully understood, the Mexican government issued licenses for the passage of goods to the interior, and for a consideration local authorities in the northeast did the same; but even these documents were not always valid against officials and military men whose "patriotism" had not been "sweetened." European merchants could see this difficulty. Up to October 20, 1847, only one small cargo from that direction entered the harbor of Vera Cruz, and Walker admitted privately that a very small part of the few imports was disposed of for consumption beyond the coast. In a word, this vaunted plan gave no substantial help on the problem of supporting the war.[33.18]

[GOOD FORTUNE HELPS US]

But by this time the good luck which has been supposed to keep an eye on the United States of America had intervened. In 1846 came the great Irish famine. British provision laws were suspended. Faced with starvation people cared little what they paid, if they could obtain food. Our agricultural products, which had fallen heavily in market value since October 1, 1845, rose with astonishing buoyancy. Western grain that had scarcely been worth transporting--frequently not worth it--became precious. A ship could earn thirty per cent of her cost in one round trip, yet hardly enough vessels could be found. So abrupt was the turn that a financial editor who had predicted on December 17, 1846, a speedy return to the distress of 1837, declared on January 30, 1847, "We are on the high road to an unprecedented prosperity." The abolition of the British corn laws ensured our farmers not only temporary relief but a permanent market. Cotton, too, and even cotton goods were in active demand abroad; and a famine in Germany gave us additional support.[33.19]

Every vessel from the other side brought more of the specie that had been expected to disappear from circulation here. Between the first of January and the middle of July, 1847, approximately twenty-four millions came in, besides about five millions in the pockets of immigrants. Everybody who did anything or had anything shared in the general increase of wealth. Hoarding went out of fashion. All were spenders. In particular, a craze for dress demanded great quantities of European fabrics. The warehousing plan also stimulated importation. For the quarter ending with September, 1847, the customs duties amounted to more than eleven millions--almost half the total of the preceding year--and for the week ending with October 1 they were nearly double those of the corresponding week in 1846. In a word, gold rained upon us; the languishing treasury revived; and the credit of the government revived with it. Later, in the autumn of 1847, to be sure, the financial downpour abated, but it had already done its work. The ship of state rode now beyond the bar.[33.19]

Yet Polk still had to cope with difficulties. Early in December, 1847, when Congress assembled, he found it necessary to present large estimates and to admit that a deficit of nearly sixteen millions was to be expected by July 1, 1848; and there seemed to be little hope that Congress would provide additional revenue. Borrowing was inevitable, and Walker's report of December 8 proposed a loan of $18,500,000. Nothing was done, however. The banks of New York and Boston endeavored to force upon the government a fiscal policy more acceptable to them, and a strong element in Congress, of which more will be heard in the next chapter, not only entertained a similar desire, but seemed willing to impair the credit of the administration. At length, on the nineteenth of January, 1848, a bill was introduced, and after a further delay another long debate opened. "How is the loan bill getting on, Sir?" inquired a newspaper correspondent of a Representative of the People after it had been on the tapis for about a month. "Oh, they are spouting away, spouting away, Sir," was the careless reply. But on the last day of March a six per cent loan of $16,000,000 was authorized on substantially the same basis as the previous loans. The treaty of peace had been signed on February 2, and the new bonds brought a premium rising in some instances to $4.05 on a hundred.[33.20]

[THE MEXICANS TAXED]

In the same report (December, 1847) Walker announced, though evidently a little chastened in spirit, that relief would soon come from Mexico. What he chiefly counted upon at this time, however, was not customs duties. As early as the nineteenth of September, 1846, Polk, justly offended by the enemy's disdainful treatment of our olive branch, decided that instead of endeavoring longer to conciliate the Mexicans by paying liberally for supplies, we should bring them to terms by levying contributions or taking needed articles without compensation, and this course was promptly recommended to General Taylor; but he replied, as we have seen, that such a policy was impracticable. Shortly after the capture of Vera Cruz General Scott received instructions of the same tenor, and he made a similar reply. Early in the autumn of 1847, however, as Mexico had again rejected the olive branch, this change of system was pressed upon Scott with fresh urgency, and before long explicit orders to make all the revenues and resources of Mexico available, as far as they could be, followed.[33.21]

Scott, however, knowing the laws of war and the wishes of his government, began operations without waiting for these later instructions. Almost immediately after entering the capital he laid upon it an assessment of $150,000, and set on foot an examination into the general question of drawing revenues from the country, which eventually showed that nearly twenty-three millions a year could theoretically be collected, should we take possession of the whole territory. November 25, he directed that no rent should be paid for houses and quarters except so far as contracts existed. About three weeks later, notice was given that in the districts held by the Americans all the taxes and dues previously paid to the Mexican government would be required of the authorities for the support of our army; and at the end of December an assessment equal to four times the direct taxes paid in 1843 was laid upon the states. Scott's action was of course taken by Wool, now commanding in the northeast, as a pattern.[33.22]

But again Walker's hopes were disappointed. The most important of the monopolies, tobacco, had to be given up because the American product could not be excluded, and for administrative reasons the other monopolies also were surrendered. Owing to the dangers of waste, corruption, extortion and resentment, the business of collecting taxes had to be entrusted to the state authorities, and they possessed wonderful dexterity in the arts of evasion. State assessments were actually made on México and Vera Cruz only. The owners of occupied buildings were in many cases friends, and could not well be deprived of their rents. Contracts or agreements that stood in the way had to be respected. Gold and silver were clandestinely exported. Smuggling across the northern border could not be stopped. Brigands exacted their toll. The time required for investigation and planning, and in certain instances for correspondence with our government, militated against prompt action. We strongly desired to settle with Mexico and evacuate the country, and hence--especially after the peace negotiations began--it would not have been wise to run the risk of exasperating the nation for the sake of a few dollars. In short the net proceeds, including $106,928 turned in by naval officers, were only $3,935,676.[33.23]

Some of this money went directly to supply needs of the army and navy, but by far the greater part of those needs had to be met in other ways. During the first nine months of 1847, it was figured that the United States exported more than $12,000,000 in specie to Mexico. Many drafts on the principal American cities were sold there, and those on the quartermasters at New Orleans, Philadelphia, Washington and New York amounted to nearly $8,000,000 before December, 1847. Payments were also made in the United States on the certificates of officers acting in the field; and about the first of August, 1847, Belmont, the New York agent of the Rothschilds, arranged with our administration to place funds in the hands of any paymaster or quartermaster named by Scott. In general the large financial operations made necessary by the transfers of money were skilfully, honestly and safely conducted. Some $24,000,000 were distributed by the pay department through its thirty-five officers, for instance, and nothing was lost by accident, robbery, theft or capture.[33.24]

[THE COST OF THE WAR]

The total money cost of the war on the American side has been given at very low and at very high amounts, and none of the estimates inspires much confidence. The excess expenditures of the army and navy appear to have been $63,605,621; of which $49,000,000 were raised by selling bonds and treasury notes, and were substantially added to the national debt. But these figures by no means answer the question. To the apparent cost we must add twelve millions paid later to Mexico, the American claims of which we relieved her, the war expenses of the treasury department, bounty lands, pensions, valid claims for damages, and other liabilities of many kinds gradually discharged after peace returned; and from the total must be subtracted the bonds and treasury notes then available for issue and the actual worth of ships, ordnance and other materials required for the war and left over. Evidently it is not feasible to reach a satisfactory conclusion, but as a very bold guess one may suggest a hundred millions.[33.25]

Even were that a close estimate, however, it would mean little. On the one hand lives, physical and mental sufferings, personal losses of every description, much national obloquy and a thousand minor factors would need to be considered, and on the other our gain in territory, in recognized power, in military and naval efficiency, in national self-consciousness and in particulars not so obvious. One thing, however, is clear. The war cost far less money than its opponents had expected. Webster solemnly predicted in December, 1846, that should it end the following spring, our debt would be a hundred millions, but on the first of July, 1848, the debt was less than sixty-six millions.[33.26]

XXXIV

THE WAR IN AMERICAN POLITICS

1846-1848