Part 12 (1/2)

In 1838, on the foundation of the Bank of Commerce under the free banking law of the State of New York, the presidency of it was first tendered to Mr. Gallatin. The directors of this bank were among the most distinguished financiers of the city, and its object was to provide a conservative inst.i.tution with sufficient power and capital to act as a regulator upon the New York banks. Profit to the stockholders was secondary to the reserve power for general advantage.

In June, 1839, Mr. Gallatin resigned his post as president of the National Bank of New York. In 1841 he published a financial essay, which he ent.i.tled ”Suggestions on the Banks and Currency of the United States,” a paper full of information, but from the nature of the subject not to be compared in general interest with his earlier paper, which is as fresh to-day as when it was written. Mr. Gallatin condemned paper currency as an artificial stimulus, and the ultimate object of his essays was to annihilate what he termed the ”dangerous instrument.” He admitted its utility and convenience, when used with great sobriety, but he deprecated its tendency to degenerate into a depreciated and irredeemable currency. This tendency the present national banking law arrests, but the law rather invites than prohibits the stimulus of increased issues. The last word has not yet been said on national currency, which, though the basis of all commercial transactions, has necessarily no other relation to banks than that which it holds to any individual in the community.

Economic questions have interested the highest order of mind on the two continents. Sismondi published a paper on commercial wealth in 1803, and in 1810 a memoir on paper money, which he prepared to show how it might be suppressed in the Austrian dominions; Humboldt made a special study of the sources and quant.i.ty of the precious metals in the world, in which Mr. Gallatin aided him by investigation in America. Michel Chevalier was interested in the same subjects; surviving his two masters in the art and witnessing the marvelous effects of the additions made by America to the store of precious metals, he continued the study in the spirit of his predecessors, and favored the world with instructive papers. Mr. Gallatin's contributions to this science are remarkable for minute research and careful deductions.

In 1843 President Tyler tendered the Treasury portfolio to Mr. Gallatin.

The venerable financier looked upon the offer as an act of folly to which a serious answer seemed hardly necessary. Yet as silence might be misconstrued, he replied that he wanted no office, and to accept at his age that of secretary of the treasury would ”be an act of insanity.” He was then in his eighty-third year. The offer of the post was but an ill-considered caprice of Mr. Tyler.

FOOTNOTES:

[Footnote 10: Cents are omitted as confusing figures.]

[Footnote 11: The first Annual Report of the Secretary of the Treasury.

This was under the Supplementary Treasury Act.]

[Footnote 12: Excess of receipts, notwithstanding the purchase of Louisiana and payments on account of princ.i.p.al and interest of the debt.]

[Footnote 13: These were the banks of New York, Boston, Philadelphia, and Baltimore. Seven presidents formed the committee. John A. Stevens of New York was chairman, by request of the Secretary of the Treasury. The other members were named by him. The sum advanced to the government was one hundred and fifty millions of dollars in coin.]

[Footnote 14: At Portland, $120,000; Salem, $183,600; Boston, $75,300; Providence, $67,800; Richmond, $49,000; Norfolk, $103,000; Charleston, $354,000.]

[Footnote 15: Report of Secretary Dallas, September 20, 1816.]

[Footnote 16: Act of March 3, 1817.]

[Footnote 17: _Democratic Review_, xii. 641.]

[Footnote 18: Chairman of the Committee of Ways and Means.]

CHAPTER VII

IN THE CABINET

The general principles which Mr. Jefferson proposed to apply in his conduct of the government were not principles of organization but of administration. The establishments devised by Hamilton, in accordance with or in development of the provisions of the Const.i.tution, were organic. The new policy was essentially restrictive and economic. The military and naval establishments were to be kept at their lowest possible limit. The Treasury Department was to be conducted on strictly business principles. The debt was to be reduced and finally paid by a fixed annual appropriation. The revenue was to be raised by imposts on importation and tonnage, and by direct taxation, if necessary. The public land system was to be developed. A scheme of internal improvements by land and water highways was to be devised. All these purposes except the last had been declared by the opposition during the last part of Was.h.i.+ngton's second term and during Adams's presidency, and had been lucidly expounded by Madison, Gallatin, Giles, Nicholas, and others of the Republican leaders. On all these subjects Mr. Gallatin was in accord with his chief. Only upon the bank question were they at issue. Mr. Jefferson detested or feared the aristocracy of money, while Gallatin, with a clearer insight into commercial and financial questions, recognized that in a young country where capital was limited, and specie in still greater disproportion to the increasing demands of trade, a well-ordered, well-managed money inst.i.tution was an enormous advantage, if not an imperative necessity to the government and the people.

Peace was necessary to the success of this general policy of internal progress, but peace was not to be had for the asking. It was not till half a century later that the power of the western continent as a food-producing country was fully felt by Europe, and peace with the United States became almost a condition of existence to millions in the old world, while this country became independent, in fact as in name, to the fullest meaning of the word. Peace was not menaced during Jefferson's first administration, for the Federalists had left no legacy of diplomatic discord to embarra.s.s their successors. The divisions of opinion were on home affairs. The Republican party was the first opposition which had reached power since the formation of the government. The Federalists had not hesitated to confine the patronage of the executive to men of their own way of thinking. The Republicans had attacked that principle. There were men even in the ranks of Jefferson's administration who scouted the idea that the President of the United States could become ”the President of a party.” But practice and principle are not always in accord, even in administrations of sentimental purity, and the pressure for office was as great in 1800 as it has ever since been on the arrival of a new party to power. Beyond all other departments of government, the Treasury depends for its proper service upon business capacity and a knowledge of the principles of accounting and office routine. Mr. Gallatin was well aware of the difficulties his predecessors had encountered in finding and retaining competent examining and auditing clerks. As there was no reason to suppose that all this talent was to be found in the ranks of the Republican party, and his common sense pointed out the folly of limiting the market of supply, he early (July 25, 1801) prepared a circular to collectors, in which he informed them ”that the door of office was no longer to be shut against any man because of his political opinions, but that integrity and capacity suitable to the station were to be the only qualifications required; and further, the President, considering freedom of opinion or freedom of suffrage at public elections imprescriptible rights of citizens, would regard any exercise of official influence to sustain or control the same rights in others as injurious to the public administration and practically destructive of the fundamental principles of a republican Const.i.tution.” But Mr. Jefferson and Mr. Madison opposed this simple declaration of a principle which has since been the base of every attempt at reform in the civil service. Mr. Jefferson answered that after one half of the subordinates were exchanged, talents and worth might alone be inquired into in the case of new vacancies.

This was a miserable shuffling policy which defeated itself. For a Federalist to retain office when such a discrimination was applied was of itself a degradation. Mr. Jefferson here threw away and forever lost the power to establish the true system, and fixed the curse of patronage upon American administration. The true principle may be stated in the form of an axiom. Administrations should rely for continuation upon measures, not on patronage. Gallatin yielded with reluctance to the spirit of persecution which he did not hesitate to say disgraced the Republican cause, and sank them to a level with their predecessors.

Notwithstanding his aversion, he was compelled to follow the policy of the cabinet. Its first result was to divide the Republican party, and to alienate Burr, whose recommendation of Matthew L. Davis for the naval office at New York was disregarded. Had the new administration declined to make removals except for cause, such a dispute would have been avoided. As it was, the friends of Burr considered the refusal as a declaration of war. Appointments became immediately a part of the machinery of Republican administration, as it had been part of that of their predecessors, and each was carefully weighed and considered in its reference to party quite as much as to public service.

Already looking forward to the next presidential election, Gallatin was anxious for an agreement upon Jefferson's successor, and even before the meeting of the first Congress of his term he advised the President on this point, and he also proposed the division of every State into election districts by a general const.i.tutional provision.

Jefferson submitted the draft of his annual messages to the head of each department, and invited their comments. Gallatin was minute in his observations, and it is interesting to note the peculiar precision and caution of his character in the nice criticisms of language and style, sometimes declaratory, sometimes non-committal, but always and obviously reasonable, and often presenting a brief argument for the change proposed. In these days of woman's rights it is curious to read ”Th. J.

to Mr. Gallatin. The appointment of a woman to office is an innovation for which the public is not prepared, nor am I.”

Gallatin suggested a weekly general conference of the President and the secretaries at what is now styled a cabinet meeting, and private conferences of the President with each of the secretaries once or twice a week on certain days and at fixed hours. The business to come before the House was also to be considered, and the policy to be pursued determined upon. Unfortunately in this case again Jeffersonian theory did not accord with Jeffersonian practice. Even erratic Randolph complained of the want of system at these cabinet meetings, where each was at liberty to do and say as he chose; a severe trial, this, to Gallatin. In 1845 Mr. Gallatin wrote to Edward Coles that it was ”quite unusual to submit to the cabinet the manner in which the land or naval forces authorized by Congress, and for which appropriations had been made, should be employed,” and added that on no occasion, in or out of cabinet, was he ever consulted on those subjects prior to the year 1812.

In the difficulty which arose with the Barbary powers Mr. Gallatin earnestly urged the payment of an annuity to Tripoli, if necessary for peace. He considered it a mere matter of calculation whether the purchase of peace was not cheaper than the expense of a war. This policy was to be continued for eight years, at the end of which he hoped that a different tone might be a.s.sumed. In a note on the message of 1802, Gallatin expressed the hope to Jefferson that his administration would ”afford but few materials for historians.” He would never sacrifice permanent prosperity to temporary glitter.

Mr. Gallatin's counsel was sought, and his opinion deferred to, on subjects which did not fall directly within the scope of administration.

Even on questions of fundamental const.i.tutional law his judgment was not inferior to that of Madison himself. In one notable instance he differed from Mr. Lincoln, the attorney-general, whom he held in high esteem as a good lawyer, a fine scholar, ”a man of great discretion and sound judgment.” This was in 1803, when the acquisition of East Louisiana and West Florida was a cabinet question. Mr. Lincoln considered that there was a difference between a power to acquire territory for the United States and the power to extend by treaty the territory of the United States, and held that the first was unconst.i.tutional. Mr. Gallatin held that the United States as a nation have an inherent right to acquire territory, and that, when acquisition is by treaty, the same const.i.tuted authorities in whom the treaty power is vested have a const.i.tutional right to sanction the acquisition, and that when the territory has been acquired Congress has the power either of admitting into the Union as a new State or of annexing to a State, with the consent of that State, or of making regulations for the government of the territory. Mr. Jefferson concurred in this opinion, while at the same time he thought it safer not to permit the enlargement of the Union except by amendment of the Const.i.tution. Mr. Gallatin's view was practically applied in the cases named, and later in the annexation of Texas, although he disapproved of the latter as contrary to good faith and the law of nations. He advised Jefferson, also, not to lay the treaty by which Louisiana was acquired before the House until after its ratification by the Senate, taking the ground that until then it was not a treaty, and urging that great care should be taken to do nothing which might be represented as containing any idea of encroachment on the rights of the Senate. He personally interested himself in the arrangements for taking possession of New Orleans, and, considering the expense as trifling compared with the object, urged the dispatch of an imposing force of not less than fifteen thousand men, which would add to the opinion entertained abroad of our power, resources, and energy; five thousand of these to be active troops; ten thousand an enrolled reserve. The acquisition of Louisiana was the grand popular feature of the foreign policy of the first term of Jefferson's administration. The internal management left much to be desired.

While his general views were exalted, and his principles would stand the nicest examination in their application, Mr. Jefferson was not fortunate in his choice of methods or men. It is not enough for an administration to be pure; it should be above suspicion. This his was not. Time has not washed out the stain of his intimacy with William Duane, the editor of the infamous ”Aurora.” Citizen Duane, as he styled himself in the first days of the administration, quarreled with Gallatin because he would not apply the official guillotine, and thereafter pursued him with uncompromising hostility. Of favoritism in appointments Mr. Gallatin could not be accused. During his twelve years in the Treasury he procured places for but two friends; one was given an obscure clerks.h.i.+p in the department; the other, John Badollet, was made register in the land office at Vincennes, against whom Gallatin said in the application for appointment which he reluctantly made, there was but one objection, ”that of being his personal and college friend.”

The dispositions for the sale of lands in the western territory, the extinguishment of t.i.tles, and the surveys fell under Mr. Gallatin's general supervision, and were the objects of his particular care. So also was the establishment of the authority of the United States in the Louisiana territory. In the course of these arrangements he was brought into contact with Mr. Pierre Choteau of St. Louis, who controlled the Indian trade of a vast territory. The foundation of an intimate acquaintance was then laid. The influence of this remarkable man over the Western Indians and the extent of his trading operations with them was great, and has never since been equaled. About this period Mr. John Jacob Astor informed the government that he had an opportunity, of which he intended to take advantage, to purchase one half of the interest of the Canadian Fur Company, which, notwithstanding the treaty of 1794, engrossed the trade by way of Michilimackinac with our own Indians.