Albert Gallatin
principle of American finance. Mr. Gallatin was uniformly supported in
it by Congress and public opinion. It was faithfully adhered to by his
distinguished successors, Dallas and Crawford, and the impulse thus
given continued through later administrations, until, in 1837, twenty
years after the peace, the entire debt had been extinguished. All this
without any other variation from Mr. Gallatin's original plan than an
increase of the annual appropriation, to the sinking fund for its
reimbursement, from eight to ten millions.[16]
The only charge which has ever been made against Gallatin's
administration was, that he reduced the debt at the expense of the
defenses and security of the country; but, to quote the words of one of
his biographers:[17] "Mr. Gallatin had the sagacity to know that it [the
redemption of the debt] would make but little difference in the degree
of preparation of national defense and means of contest, for which it is
impossible ever to obtain a considerable appropriation before the near
approach of the danger that may render them necessary. He knew that the
money thus well and wisely devoted to the payment of the debt was only
rescued from a thousand purposes of extravagance and mal-application to
which all our legislative bodies are so prone whenever they have control
of surplus funds." In our own day the irresistible temptations of a full
treasury need no labored demonstration. Friend and foe drop political
differences over the abundant fleshpot. The very thought of catering to
such appetites disgusted Gallatin. To Jefferson he frankly said, in
1809, that while he did not pretend to step out of his own sphere and to
control the internal management of other departments, yet he could not
"consent to act the part of a mere financier, to become a contriver of
taxes, a dealer of loans, a seeker of resources for the purpose of
supporting useless baubles, of increasing the number of idle and
dissipated members of the community, of fattening contractors, pursers,
and agents, and of introducing in all its ramifications that system of
patronage, corruption, and rottenness which you justly execrate."
RECEIPTS AND EXPENDITURES DURING MADISON'S ADMINISTRATION, FROM
ELLIOTT'S SYNOPTICAL EXHIBITS.
RECEIPTS.
------------+----------------+---------------+----------------+
Four Years | Customs. | Internal | Direct Taxes. |
Ending | | Revenue. | |
Dec. 31. | | | |
------------+----------------+---------------+----------------+
1812 | $38,151,330.15 | $18,674.03 | $28,491.87 |
1816 | 62,813,212.43 | 11,470,507.24 | 8,639,611.38 |
|----------------+---------------+----------------+
Madison | 100,964,542.58 | 11,489,181.27 | 8,668,103.25 |
------------+----------------+---------------+----------------+
----------------+----------------+-------------------+----------------+
Postage. | Public Lands. | Loans and | Dividends |
| | Treasury Notes. | Sales of |
| | | Bank Stock. |
----------------+----------------+-------------------+----------------+
$85,077.40 | $2,889,466.46 | $15,606,201.30 | - |
364,787.84 | 4,977,570.54 | 94,321,103.73 | - |
----------------+----------------+-------------------+----------------+
449,865.24 | 7,867,037.00 | 109,927,305.03 | - |
----------------+----------------+-------------------+----------------+
----------------+----------------
Miscellaneous. | Total.
|
|
----------------+----------------
$209,309.34 | $56,988,550.55
630,248.16 | 183,217,041.32
----------------+----------------
839,557.50 | 240,205,591.87
----------------+----------------
EXPENDITURES.
-----------+-----------------+---------------+----------------+
Four Years | Civil List. | Foreign | Miscellaneous. |
Ending | | Intercourse. | |
Dec. 31. | | | |
-----------+-----------------+---------------+----------------+
1812 | $2,887,197.98 | $860,281.28 | $1,619,849.12 |
1816 | 3,768,342.61 | 1,042,633.42 | 5,015,100.92 |
|-----------------+---------------+----------------+
Madison | 6,655,540.59 | 1,902,914.70 | 6,634,950.04 |
-----------+-----------------+---------------+----------------+
----------------+----------------+-------------------+----------------+
Military Dept. | Pensions. | Indian Dept. | Naval Dept. |
| | | |
| | | |
----------------+----------------+-------------------+----------------+
$19,480,722.54 | $338,023.68 | $944,848.84 | $10,006,934.54 |
70,809,210.90 | 435,614.48 | 1,140,015.30 | 26,326,169.25 |
----------------+----------------+-------------------+----------------+
90,289,933.44 | 773,638.16 | 2,084,864.14 | 36,333,103.79 |
----------------+----------------+-------------------+----------------+
----------------+----------------
Public Debt. | Total.
|
|
----------------+----------------
$26,920,285.12 | $63,058,143.10
56,508,652.66 | 165,045,739.54
----------------+----------------
83,428,937.78 | 228,103,882.64
----------------+----------------
* * * * *
_Revenue_
_L'Etat c'est moi_ was the autocratic maxim of Louis Quatorze. An
adherence to it cost the Bourbons their throne. Burke was more
philosophical when he said, "The revenue of the State is the State." Its
imposition, its collection, and its application involve all the
principles and all the powers of government, constitutional or
extraordinary. It is the sole foundation of public credit, the sole
support of the body politic, its life-blood in peace, its nerve in war.
The "purse and the sword" are respectively the resource and defense of
government and peoples, and they are interdependent powers. With the
discovery of the sources of revenue, and the establishment of its
currents, Mr. Gallatin, in the first eight years of his administration
of the Treasury, had nothing to do. He had only to maintain those
systems which Hamilton had devised, and which, wisely adapted to the
growth of the country, proved amply adequate to the ordinary
expenditures of the government and to the gradual extinguishment of the
debt. The entire revenue included three distinct branches: imposts on
importations and tonnage, internal revenue, sales of public lands. The
duties on imports of foreign merchandise were alone sufficient to meet
the current expenses of the various departments of administration on a
peace establishment, and, increasing with the growth of the country,
would prove ample in future. The gross amount of imports in the four
years of Adams's administration, 1796-1800, was about three hundred and
fourteen millions of dollars, and the customs yielded about thirty
millions.
Mr. Gallatin's first annual report, submitted to the House of
Representatives in December, 1801, exhibited his financial scheme. He
recapitulated the various sources of permanent revenue. They were those
of Hamilton's original tariff.
The revenues for the year ended September 30, 1801, were the basis of
the estimates for future years. These were
Duties on imports and tonnage $10,126,213.92
Internal revenue 854,000.00
Land sales 400,000.00
--------------
$11,380,213.92
But the close of the war in Europe sensibly diminished the enormous
carrying trade which fell to the United States as neutrals, and, as a
consequence, the revenue from that source; large quantities of goods
were brought into the United States and reexported to foreign ports
under a system of debenture. The revenue on what Mr. Gallatin calls
"this accidental commerce" was $1,200,000. He therefore _estimated the
permanent revenues at_
Customs duties $9,500,000
Land sales 400,000
Postage 50,000
Internal revenue 650,000
-----------
$10,600,000
Or, without the internal revenue, say ten millions of permanent revenue,
as a basis for _the permanent expenditures_.
To bring the expenditures within this sum, however, a reduction in the
army and navy establishments was necessary. This Gallatin soon found to
be too radical a measure for success, either in the cabinet or Congress,
however well it may have accorded with Jefferson's utopian views. In the
budget of 1802 the internal revenue, $650,000, was, therefore, a
necessary item. The expenditures proposed were
Annual appropriation for interest and
principal of debt $7,100,000
Civil list $780,000
Foreign intercourse 200,000
Military and Indian Dept 1,420,000
Naval 1,100,000
-----------
$3,500,000 3,500,000
-----------
$10,600,000
In this budget the estimate for the military establishment was an
increase over that of Wolcott for 1801, which was $1,120,000. But the
Republicans in the House were not content with this arrangement. The
internal revenues were utterly distasteful to them. They had been laid
against their protest and collected under military menace. They were of
those Federal measures of which they would have none. John Randolph,
chairman of the Committee of Ways and Means, reported, March 2, 1802,
against the entire system of internal duties, in the old words of the
Pennsylvania radicals, as vexatious, oppressive, and peculiarly
obnoxious; as of the nature of an excise which is hostile to the genius
of a free people, and finally because of their tendency to multiply
offices and increase the patronage of the executive. The repeal was
imperative upon the Republican party. On April 6, 1802, the act was
repealed and the surplus of the budget stripped from it, without Mr.
Gallatin's consent, certainly, but also without protest from him.
The prosperity of the country continued. The impost duties for the
fiscal year ending September 30, 1802, rose to $12,280,000, the sales of
the public lands to $326,000, and the postage to $50,500, a total of
$12,656,500, and left in the Treasury, September 30, 1802, the sum of
$4,539,675. This large increase in the Treasury did not in the least
change Mr. Gallatin's general plan, and his budget for 1803 was based on
his original scale of a permanent revenue of $10,000,000, to correspond
with which the estimates of the preceding year were reduced. The fiscal
year closed September 30, 1803, with a balance in the Treasury of
$5,860,000. This situation of the finances was fortunate in view of
secret negotiations which the President and Congress were initiating for
the purchase of Louisiana from France.
The secretaries of war and of the navy had promised to reduce their
expenditures to a figure approximate to Mr. Gallatin's estimates; but
the breaking out of hostilities with Tripoli prevented the proposed
economy, and Mr. Gallatin was called upon to provide for an increased
expenditure with one certain source of revenue definitively closed. He