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Subject Area: Economics
Subject Area: Political Theory

CRAWFORD TO GALLATIN. - Albert Gallatin, The Writings of Albert Gallatin, vol. 2 [1879]

Edition used:

The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.

Part of: The Writings of Albert Gallatin, 3 vols.

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CRAWFORD TO GALLATIN.

Washington, 24th July, 1819.

My dear Sir,—

The departure of Mr. Hyde de Neuville offers so favorable an opportunity of presenting my respects to you that to omit using it would be something like an act of disrespect to him.

He is, as you no doubt have been informed by Mr. Adams, quite a favorite with the Administration, and no less so with the citizens. He deserves the esteem of both.

He will be able to give you the secret history of the Spanish negotiation, which but for his good offices would probably have been postponed for years.

You have, no doubt, seen the report of the bank committee during the last session of Congress, and have learnt the result of the efforts of its chairman. A more unfair exposition of the transaction of the bank could not have been offered to the public.

When fairly represented they were highly censurable, and deserved the severest animadversion. Such a representation would probably have forwarded the views of the chairman more effectually than the one he thought proper to make. The old proverb, “Let envy alone and it will punish itself,” was never more perfectly verified than in this case. I have been strongly censured for not throwing myself between the bank and the investigation which was set on foot. The folly of the censure is manifest. The object of the inquiry was to ascertain what I had no legitimate means of knowing, and what in fact I did not know, except from the newspapers and common rumor. The bank never communicated to me their determination not to receive their own paper except where payable, its determination to discount upon their own stock at $125 for $100, or any other act which I had not a right to demand of it. It was, therefore, impossible for me to shield the bank against the examination, unless a declaration that it had discharged its duties to the Treasury would furnish that shield. The examination has, however, saved the bank, without, however, the consent of the majority of the committee. It is impossible that specie payments could have been continued to this time with Mr. Jones at its head. In saying this I am very far from insinuating anything against his integrity, industry, zeal, and, I may add, talents; for he has certainly a considerable degree of talent. I regretted extremely the necessity there was for his retiring from office, and reluctantly gave my advice for the election of his successor. His removal, however, was indispensable, not only as a propitiatory offering upon the altar of public opinion, but for the preservation of the bank itself. He had so completely enveloped himself in the policy of the Baltimoreans, so completely was he taken in their toils, that he obeyed no other impulse. It is now ascertained that the branch direction of Baltimore wished the suspension of specie payments, and were conducting the affairs of the office to effect that object. The president, cashier, and teller of the bank made use of the funds of the institution as if they were their own, taking what they wanted and dividing the rest out among their confederate friends. A scene of fraud and swindling has been exhibited there which would suit much better the Court of St. James or that of Vienna than a republican city of not more than half a century’s growth. The funds of the corporation have been dilapidated to an amount not much below $2,000,000. Under the administration of Mr. Jones this dilapidation would not only not have been discovered, but would have been carried to an extent which would have produced the most widespread ruin among the stockholders. It was partly discovered shortly after Mr. Cheves came into the presidency; and, after obtaining such security as the parties were able or willing to furnish, the cashier was removed. This act was a death-blow to the swindlers. They distinctly saw that concealment was no longer possible. Buchanan resigned the presidency, and endeavored to have the removal of the cashier denounced in a town-meeting. His friends who were friendly to the bank offered him $400,000, which he had the candor to admit was of no use to him. This unveiled his plan of denunciation and of bankruptcy, into which he had drawn a number of others. What he was about to do from necessity, and throw the odium of it upon the bank, they were going to do to express their indignation at the removal of a swindling officer. The town-meeting was abandoned, and the public indignation fell where it was deserved, upon the officers of the branch bank. It is proper to observe that General Smith is acquitted in Baltimore of all the disgraceful acts which have covered Buchanan and McCulloh with indelible disgrace.

The United States Bank is now entirely safe. Its affairs have been managed with skill, integrity, and great energy by Mr. Cheves. Until lately he has been absolute. About the middle of April it was in the utmost peril. It owed the Philadelphia banks more than the amount of specie in its vaults. Its means of replenishment were contracted and distant. Under these circumstances he gave me notice that the bank would not receive from the government, and credit as specie, its own notes except at the places where they were payable, and that it would not pay Treasury drafts except at places where the public money had accumulated, without reasonable time being first given to transfer the public money to the place required. From the time the examination was instituted by the House of Representatives, the board of directors fell into a state of inanity or lethargy, which prevented their transferring advantageously the public money which had accumulated at Charleston, Savannah, and New Orleans. The resolution of the bank, therefore, left me without funds at any point to the east of this place. The public funds were in the West and in the South, where there was but little demand for them, and from whence, especially the former, it was impossible to transfer them to any considerable extent. My reliance was, therefore, upon the collections in the Atlantic cities, to the eastward, and upon transfers which were practicable from the South. The first resource was greatly diminished by the receipt, at those places, of the notes of the Southern and Western offices, which were considered as so much revenue collected in those offices instead of the places where they were received. For such sums time to transfer was necessarily required, according to the regulation of the bank. Against this inconvenience there was no immediate remedy but to refuse to receive the notes of the bank and its offices except where they were payable. To this I was earnestly pressed by Mr. Cheves, who thought there was no doubt of the right of the Treasury to refuse them under such circumstances. I did not concur in this opinion; but if I had concurred I should not have acted upon it, as it was very manifest that the question was not so clear as to admit of no difference of opinion. A refusal to receive them would have been the signal for their tender from Passamaquoddy to the Sabine; the collection of the revenue would have been suspended until the decision of the Supreme Court could have been obtained. There was then a moral and political obligation to receive their notes without reference to the place where they were payable.

The embarrassments, however, which these measures produced have nearly disappeared, and if it was possible to use the Western funds in the support of the army, our fiscal operations would be simple and easy. How far this can be effected depends upon the War Department, which has manifested a strong disposition to aid me in this regard; but owing to the insubordination of the officers and the perverseness of the contractors, but little progress has been made towards the accomplishment of this indispensable object. Unless this can be done, a deficit, not in the receipts, but in effective revenue, will probably occur during the present, and certainly during the succeeding, year. It is, I think, probable that the expenditures of the next year will have to be reduced, or new impositions exacted of the people. The internal duties were abolished upon the supposition that the annual expenditure, which was then less than $22,000,000, would not be increased. The Congress which abolished them increased the expenditure permanently to about $25,000,000, which increase exceeded the amount at which the internal duties had been estimated. The Revolutionary Pension Bill of itself makes up nearly the difference between these two sums. I think it is probable that the reduction required by the state of the finances will be made in the War Department. This can be effected either by a reduction of the army or by postponing a year or two a large portion of the estimate for fortifications. It is probable that the former mode of equalizing the expenditure and revenue will be adopted. The events of the Seminole war, and other events connected with the army, have produced a strong disposition to reduce, if not annihilate it. This disposition is understood to be predominant in the Senate of the United States. The vote in the other House upon the Seminole war is not to be ascribed to any indisposition to this object. The President threw the whole of his weight against the proceeding, and the Clintonians in the House, who came to Congress most decidedly hostile to the military procedure of the general, suddenly faced about and were his most zealous and clamorous defenders. The rest of New York were in his favor because the President was against the inquiry. When it is recollected that the men who voted for the resolutions are of the number of those who have defended the army against the efforts which have been heretofore made to reduce it, I think its reduction is almost certain, even without the inducement which a deficit in the revenue cannot fail to present. The navy appropriation, I think, will hardly be reduced. You have probably understood that General Jackson has been making war upon me in a manner not less savage perhaps than he made upon the savages themselves. His alleged cause of hostility is that I was hostile to him in the deliberation which his Seminole war produced. Now, in that deliberation I avoided giving any opinion which could personally affect the general. I confined my opinions and reasons entirely to the preservation of peace with Spain, and connected with it the preservation of the Constitution. There was in fact no difference of opinion in the Cabinet, except on the part of the Secretary of State, who, upon every question connected with the Floridas, has been excessively heterodoxical.

The course pursued by me upon that occasion is distinctly understood by the general; but his hostility has not subsided: at least I have received no evidence of it. The ogling and love-making which commenced last winter between him and De Witt Clinton has been kept up through the summer. It will in all human probability eventuate in toasts and puffs on both sides. It is a connection which has originated in unprincipled ambition on the one side and the most vindictive resentments on the other. It is impossible that the public interest can be promoted by so unhallowed a connection.

Old Pennsylvania Democracy seems to be going the way of all the earth. The late secretary of the Commonwealth seems to have been completely successful in producing another schism in the party. Binns and many others are now making war not only upon him but upon the governor. Strong manifestations have been given of a disposition to bring forward S. Snyder in opposition to him; whilst many, especially about Philadelphia, direct their views to the American minister at Paris as the only means of putting an end to the dissensions which now prevail in the Republican party in that State. I am afraid the defection of Binns, and others who are disgusted with the conduct of Mr. Sergeant, will give to Federalism, aided by the old-school party, a decided preponderance. In the West everything is unsettled. Notwithstanding the ostensible popularity of the Administration, the materials of a most formidable opposition may be easily discovered. Fortunately, no occurrence has yet favored their concentration, or tended to give them form or fix a rallying-point. For the peace of the nation I hope that none will be presented.

Present my respects to Mrs. Gallatin and the other members of your family, and accept the assurance of the sincere regard with which I have the honor to be your most obedient servant.