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Subject Area: Economics
Subject Area: Political Theory

GALLATIN TO GALES & SEATON. - 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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GALLATIN TO GALES & SEATON.

New York, 5th February, 1835.

Gentlemen,—

I have seen and thank you for two very friendly articles in the National Intelligencer on the subject of the redemption of the public debt. Your allusions, however, to Mr. Lowndes’s law, and to a report of mine of the year 1802, make me apprehensive that you attach more importance to matters of form than they deserve. I presume my report to be a letter to the Committee of Ways and Means; and, if my recollections are correct, that the object of this and of Mr. Lowndes’s bill was the same,—mine to simplify (which was all that at that time could be done) and his to repeal altogether the mystifying and useless machinery with which Mr. Hamilton had, in imitation of Mr. Pitt’s sinking fund, encumbered the very simple subject of paying the debt. But neither that which I then proposed in that respect, and which was sanctioned by Congress, nor Mr. Lowndes’s act, if I have not mistaken one law for another, had any other effect but that just mentioned; and neither of those measures have accelerated by a single day the final redemption of the public debt.

This could be effected by no other means than by an existing and constant surplus of income over the current expenses, and by a constant and tenacious application of that surplus to the payment of the principal. It is what was done from 1801 to 1812, and from 1816 to 1834. I have been much used to “sic vos non vobis,” but had not supposed that my agency in promoting and carrying into effect those measures to which near eighteen years of my life were almost exclusively devoted (1795-1812) could ever be a matter of doubt.

The fundamental substantial measure which I proposed, and was adopted by Congress, was a permanent annual appropriation of $7,300,000 a year, for the principal and interest of the debt, to continue until the whole of the principal was paid off. This proposition is not contained in my report of 1802, but in my first annual report to Congress of 1801. No other alteration has, to my knowledge, been made to the plan of redemption accordingly adopted at that time by Congress, but an increase of the sum thus annually appropriated, viz., from 7,300,000 to 8,000,000 in the year 1804, in consequence of the additional debt incurred by the purchase of Louisiana, and from eight to ten millions of dollars in the year 1816, in consequence of the great additional debt incurred during the last war. The surplus of revenue beyond the expenditure, including in this the above-mentioned annual appropriation of 7,300,000 to 10,000,000 of dollars, was also always appropriated to the same object, from Mr. Hamilton’s time to that of the final extinction of the debt. From 1791 to 1801 there had been no such surplus, and, on the contrary, the debt had been increased, notwithstanding his sinking fund. During the war, the income being far below the expenditure, the debt was necessarily increased, notwithstanding the annual appropriation. The redemption took place without any other alteration, to my knowledge, in the plan of 1801 but the increase above stated during the two periods 1801-1812 and 1816-1834.

As I was not in the United States when Mr. Lowndes’s bill was passed, it may be that some law was enacted which has escaped my notice and which did something more than to get rid of a useless apparatus and to simplify the accounts rendered to Congress. I think it improbable; but I will thank you to give me the date and title of the Act passed at his suggestion which has been alluded to, and also, if possible, a copy of the report on which it was founded. Be good enough to give me also the date and title of my report of 1802 to which you have alluded. When I have this information I will furnish you, as soon as possible, with a correct statement or view of the whole subject. I had rather that you would in the mean while abstain from publishing that report of mine of the year 1802 to which you have alluded.