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Subject Area: Economics
Subject Area: Political Theory

GALLATIN TO MADISON. - 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 MADISON.

Treasury Department, April 17, 1813.

Sir,—

I have the honor to enclose the copy of a letter written this day to the Secretaries for the War and Navy Department, which gives a general view of our fiscal situation for this year, and regulates the sums which, in conformity therewith, may be monthly drawn during the residue of the year 1813, for the service of each of those Departments respectively.

I have the honor to be, with the highest respect, sir, your obedient servant.

[Enclosure.]

Treasury Department, April 17, 1813.

Sir,—

The loan being now filled, and the probable receipts of the Treasury for this year nearly ascertained, I have the honor to communicate the general result, and the amount on which you may rely for the service of your Department.

The Treasury was so far exhausted on the first day of this month that the small unexpended balance, dispersed in more than thirty banks, could not have afforded any further resources. This unpleasant situation was principally due to the large requisitions made by the War Department during the first quarter of this year, and it is indispensable to adopt some fixed rules which may prevent the occurrence of a similar crisis.

The revenue derived from customs, payable during the remainder of this year, is estimated at$9,000,000
that resulting from the sale of lands may be estimated at320,000
Revenue,$9,320,000
Of the sixteen million loan, there had been received and expended prior to the first of April a sum of $500,000, leaving an unexpended residue of15,500,000
The only remaining resource is that of the Treasury notes authorized by the Act of last session, which, though yet uncertain, will be taken at its full amount,5,000,000
Total of resources,$29,820,000

Of the several branches of expenditure, there are but two which by law are entitled to a priority, viz., the civil list, for the payment of which six hundred thousand dollars are annually reserved by virtue of the 1st Section of the Act of August 4, 1790; and the payments for the public debt, which, with the exception of the said sum of $600,000, have priority before all other payments, by virtue of the contracts with the creditors and of the several laws making an annual appropriation for that purpose, and pledging that appropriation for the specific objects therein mentioned, which may fall due in the course of each respective year.

The unexpended balance on that account at the end of last year, together with the annual appropriation for this year, after deducting the sum expended from the first of January to the 31st of March last, amounts to$10,500,000
Of this sum, 9,000,000 are necessary to ratify the demands actually due and still payable this year, and the residue of 1,500,000 must also be applied, according to law, to the purchase of stocks, unless these should, contrary to every appearance, rise to par. To which adding the above-mentioned sum of600,000
makes an aggregate of11,100,000
which deducted from the aggregate of resources,29,820,000
leaves the sum of$18,720,000
applicable to all the other expenses, civil, military, and naval, for the remainder of the year 1813.
The civil, miscellaneous, and diplomatic expenses may, in addition to the above-mentioned sum of $600,000, be estimated at about$900,000
which leaves for the War and Navy Departments17,820,000
$18,720,000

That sum of 17,820,000 may, I think, be divided between the two Departments, by allotting $13,220,000 to the War, and $4,500,000 to the Navy, Department. Should that distribution be objected to, the President must decide, and the alterations which he may direct will be obeyed; but the aggregate, being a matter of fact and not of discretion, cannot be altered unless Congress shall think fit at their ensuing session to provide further funds. By such funds I do not mean appropriations, which are only an authority to expend, but ways and means which shall, in the course of the present year, place an additional sum of money in the Treasury.

For the reasons already stated, it is necessary that the requisitions from each Department should be as regular and gradual as the receipts into the Treasury commonly are, and that those from the { War Navy } Department should not, therefore, for each of the nine last months of the year 1813, exceed one-ninth part of the above-mentioned sum of { $13,320,000, 4,500,000, } or the monthly average of { $1,480,000. 500,000. }

If a less sum should be sufficient for any one month, the undrawn difference may be added to the requisition for any of the ensuing months where it may be wanted. But, with that exception, no more than the said sum of { $1,480,000 500,000 } will be paid monthly by the Treasury on account of the { War Navy } Department, without a special order from the President. And in such case the surplus thus advanced will be invariably deducted from the payment for the ensuing month, in order that there may not be any risk of leaving the payments for the public debt unprovided for. These, as has already been stated, have the priority, and the public faith as well as the laws require that those payments should at all events be made, and that if there be any deficiency it should fall on the other expenses of government.

With respect to the places where money may be wanted, I believe that it will be in the power of the Treasury, on receiving timely notice, to supply the money in any of the Atlantic States where it may be wanted. But should the same rate of expenditure be continued to the westward, I apprehend that the { War Navy } Department will be compelled either to transport specie or to permit its agents to draw at a discount. And it is not improper to add that this transmission of specie, by draining the places from which we exclusively draw our resources, must have a tendency to curtail those resources. The last loan of $16,000,000 has been obtained in the following places, viz.:

States east of New York,$486,700
State of New York,5,720,000
Philadelphia,6,858,400
Baltimore and District of Columbia,2,393,300
State of Virginia,187,000
Charleston, S.C.,354,000
$16,000,000

And it seems both just and convenient that, so far as there may be discretion, and so far as it is practicable, the public moneys should be expended in the places where they are obtained.

This communication it would at all events have been my duty to make, though probably in an inofficial manner, as has been the case on former similar occasions. But it has been deemed particularly important not to leave with the gentleman who will act as Secretary of the Treasury any difficult question unsettled, and to convey at this time a clear understanding of our real fiscal situation for the present year.

I have the honor to be, with great respect, sir, your obedient servant.

The Secretary of { War. Navy.