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Subject Area: Economics
Subject Area: Political Theory

GALLATIN TO JEFFERSON. - Albert Gallatin, The Writings of Albert Gallatin, vol. 1 [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 JEFFERSON.

Washington, 14th March, 1801.

Sir,—

The weather having detained me here to-day, I have employed it in making some rough sketches relative to our financial situation, which I have the honor to enclose.

Independent of the uncertainty arising from the fluctuation in the amount of duties on imports, which vary so much as to have been two millions of dollars more in 1800 than the preceding year, I had neither time nor documents sufficient to give them even the degree of correctness of which estimates of that kind are susceptible.

No. 1 is an estimate of the probable receipts and expenditures for the year 1801, by which it would appear that we may have a surplus of above two millions of dollars applicable to the redemption of the debt. I am afraid that the revenue on imports is rated too high, although I have reduced it half a million less than last year, and it is not improbable that I may have supposed the savings for this year greater than will be found practicable. I find also a mistake of near one hundred thousand dollars in the marines, which arises from a part of the expenses of that corps being blended with the general navy appropriation.

But it is doubtful with me whether you have not a power, in laying up the frigates, to discharge a number of those marines, grounded on the 2d Section of the “Act for the establishing and organizing a marine corps.”—Sec. 4th, vol. NA, page 200, lines 3d and 4th.

The simplest way of applying the surplus, whatever it may be, is, after making necessary remittances to Holland for the purpose of discharging this and part of next year’s instalments, to pay a part of the debt due to the bank, which, by reducing the amount due to them, will enable them to assist us hereafter by temporary loans in equalizing the heavy instalments of the Dutch debt.

No. 2 is intended to show how far it will be necessary to reduce the naval and military establishments, in order to render a repeal of all the internal duties practicable, at the same time that we should apply one million yearly to the payment of the Dutch debt. That sum at least is necessary in order to discharge the whole within the period for which it was originally borrowed. The payment of the British debts is perhaps the most untoward circumstance, as the result on that subject is not under our own control. And if we shall be obliged actually to pay them, we must necessarily either redeem less debt or continue the internal duties.

It is proposed in that sketch to continue those duties for the year 1802, because it seems necessary that Congress should have authorized a reduction of expense, and the expense should have actually been diminished, before taxes can be lessened; and because the risk seems too great to part altogether with that resource before we have had the trial of another year.

No. 3 shows the present rate of expense for the army, and the intended plan of Mr. Stoddard for the future expense of the navy. Although I have taken the liberty of suggesting in what manner the reduction might take place, it was merely in order to illustrate my meaning. The most eligible mode of making the reduction, and of applying and distributing amongst the several objects appertaining to those establishments the sums which shall ultimately be applicable to that purpose, must be the result of a strict investigation by the gentlemen who understand the subject. All I wish to impress is the necessity of a great reduction there, if it be intended to repeal the internal duties. Savings in every department may be practicable, and must be attempted whenever practicable; but we can save but thousands in the other, and we may save hundreds of thousands in those two establishments. And that they are practicable to the extent proposed appears from this fact. In the year 1797 the military and Indian departments, including fortifications, &c., cost only one million and sixty-two thousand dollars, and the naval establishment three hundred and eighty-two thousand, in all one million four hundred and forty-four thousand dollars. The average of both for the years 1796 and 1797 was about one million and a half. The lowest expense for the civil list, miscellaneous and contingent, foreign intercourse, &c., was 1796, during which it amounted to nine hundred and sixty-eight thousand dollars. I have rated all those objects in No. 2 at only nine hundred thousand; which sum, unless the sessions of the Legislature shall be shorter, the Judiciary Act repealed, and the diplomatic and Barbary expenses curtailed, will not be sufficient.

I find that I have neglected another item of expense, viz., the repayment of the two hundred thousand dollars loan guaranteed to Maryland for this city, and which will become due in four equal instalments, if I recollect right, within two years. And it is also to be feared that the city will draw from Congress additional sums.

Excuse, I pray, the very great hurry with which these observations have been written, and believe me to be, with great and personal respect,

Your most obedient and humble servant.

P.S.—The subject of the purchase of the navy-yards seems to require attention. Is that at New York completed? and if the appropriation does not cover the purchases, is there no remedy against the agents? The appropriation of fifty thousand dollars for docks had not, on the 30th September last, been touched, and expired on the 31st December. The appropriation of two hundred thousand dollars was for timber, or lands on which timber was growing, and the President was, by the same law, authorized to cause proper measures to be taken to have the same preserved.

But the appropriation extended to the purchase of timber, and not to the expense attending those measures. Under color of that appropriation it appears that at least one hundred and eighty-six thousand eight hundred dollars have been applied to navy-yards, and the balance to frames for two additional 74’s. Mr. Stoddard in his report misquotes the words of the law, and calls it an appropriation for preparing proper places for securing the timber. I enclose the report.