THE long, exciting, and splendid panorama of revolution and war, which
for twenty-five years absorbed the world’s attention and dwarfed all
other interests, vanished more quickly in America than in Europe,
and left fewer elements of disturbance. The transformation scene of
a pantomime was hardly more sudden or complete than the change that
came over the United States at the announcement of peace. In a single
day, almost in a single instant, the public turned from interests and
passions that had supplied its thought for a generation, and took up a
class of ideas that had been unknown or but vaguely defined before.
At Washington the effect of the news was so extraordinary as to shake
faith in the seriousness of party politics. Although the peace affected
in no way party doctrine or social distinctions, a new epoch for the
Union began from the evening of February 13, when the messenger from
Ghent arrived with the treaty. No one stopped to ask why a government,
which was discredited and falling to pieces at one moment, should
appear as a successful and even a glorious national representative a
moment afterward. Politicians dismissed the war from their thoughts,
as they dismissed the treaty, with the single phrase: “Not an inch
ceded or lost!”[102] The commissioners from Massachusetts and
Connecticut who appeared at Washington with the recommendations of the
Hartford Convention, returned home as quietly as possible, pursued by
the gibes of the press. The war was no more popular then than it had
been before, as the subsequent elections proved; but the danger was
passed, and passion instantly subsided.
Only by slow degrees the country learned to appreciate the
extraordinary feat which had been performed, not so much by the
people as by a relatively small number of individuals. Had a village
rustic, with one hand tied behind his back, challenged the champion of
the prize-ring, and in three or four rounds obliged him to draw the
stakes, the result would have been little more surprising than the
result of the American campaign of 1814. The most intelligent and best
educated part of society both in the United States and in Great Britain
could not believe it, and the true causes of British defeat remained
a subject of conjecture and angry dispute. The enemies of the war
admitted only that peace had saved Madison; but this single concession,
which included many far-reaching consequences, was granted instantly,
and from that moment the national government triumphed over all its
immediate dangers.
While the Senate unanimously ratified the treaty February 16, the House
set to work with much more alacrity than was its habit to dispose of
the business before it. Haste was necessary. Barely fourteen days
remained before the Thirteenth Congress should expire, and in that
interval some system of peace legislation must be adopted. The struggle
over the proposed Bank charter was still raging, for the Senate had
passed another bill of incorporation February 11, over which the House
was occupied the whole day of February 13 in a sharp and close contest.
The first effect of the peace was to stop this struggle. By a majority
of one vote, seventy-four to seventy-three, February 17, the House laid
the subject aside.
Three days afterward, February 20, the President sent to Congress
a Message transmitting the treaty with its ratifications, and
congratulating the country on the close of a war “waged with the
success which is the natural result of the wisdom of the legislative
councils, of the patriotism of the people, of the public spirit of
the militia, and of the valor of the military and naval forces of the
country.” After recommending to Congress the interests of the soldiers
and sailors, the Message passed to the reduction of expenditures, which
required immediate attention:
“There are, however,” continued Madison, “important
considerations which forbid a sudden and general revocation of
the measures that have been produced by the war. Experience
has taught us that neither the pacific dispositions of the
American people, nor the pacific character of their political
institutions, can altogether exempt them from that strife which
appears, beyond the ordinary lot of nations, to be incident to
the actual period of the world; and the same faithful monitor
demonstrates that a certain degree of preparation for war is not
only indispensable to avert disasters in the onset, but affords
also the best security for the continuance of peace.”
The avowal that experience had shown the error of the principle
adopted by the nation in 1801 was not confined to President Madison.
Monroe spoke even more plainly. In a letter to the military committee,
February 24, Monroe urged that an army of twenty thousand men should be
retained on the peace establishment. Each soldier of the rank-and-file
was supposed to cost in peace about two hundred dollars a year, and
Monroe’s proposal involved an annual expense of more than five million
dollars.
As far as concerned Madison and Monroe the repudiation of old
Republican principles seemed complete; but the people had moved less
rapidly than their leaders. Had Congress, while debating the subject
February 25, known that Napoleon was then quitting Elba to seize once
more the control of France, and to rouse another European convulsion
with all its possible perils to neutrals, the President’s views might
have been adopted without serious dispute; but in the absence of
evident danger, an army of twenty thousand men seemed unnecessary. The
finances warranted no such extravagance. Dallas wrote to Eppes, the
chairman of the Ways and Means Committee, a letter[103] dated February
20, sketching a temporary financial scheme for the coming year. He
proposed to fund at seven per cent the outstanding Treasury notes,
amounting to $18,637,000; and even after thus sweeping the field clear
of pressing claims, he still required the extravagant war-taxes in
order to meet expenses, and depended on a further issue of Treasury
notes, or a loan, to support the peace establishments of the army and
navy. The state of the currency was desperate, and the revenue for the
year 1815 was estimated at $18,200,000 in the notes of State banks,--a
sum little in excess of the estimated civil necessities.
The military committee of the House showed no sympathy with the new
principles urged upon Congress by the Executive. Troup of Georgia
reported a bill, February 22, fixing the peace establishment at
ten thousand men, with two major-generals and four brigadiers. In
submitting this proposal, Troup urged the House, February 25, to
accept the reduction to ten thousand as the lowest possible standard,
requiring only the expense of two and a half millions; but no sooner
did he take his seat than Desha of Kentucky moved to substitute “six”
for “ten,” and a vigorous debate followed, ending in the adoption of
Desha’s amendment in committee by a majority of nineteen votes. The
war leaders were greatly annoyed by this new triumph of the peace
party. As a matter of principle, the vote on Desha’s amendment
affirmed Jefferson’s pacific system and condemned the Federalist
heresies of Madison and Monroe. The war leaders could not acquiesce in
such a decision, and rallying for another effort, February 27, they
remonstrated hotly. Forsyth of Georgia was particularly emphatic in
defining the issue:[104]--
“He had hoped that the spirit of calculation falsely styled
economy, whose contracted view was fixed upon present expense,
and was incapable of enlarging it to permanent and eventual
advantage, had been laid forever by the powerful exorcisms of
reason and experience. It would seem however that it had been
only lulled by the presence of a more powerful demon. Since the
potent spell of necessity had been broken, the troubled spirit
of petty calculation was again awakened to vex the counsels and
destroy the best hopes of the country.”
For three years the friends of strong government, under the pressure
of war, had been able to drive Congress more or less in their own
direction; but at the announcement of peace their power was greatly
lessened, and their unwilling associates were no longer disposed to
follow their lead or to tolerate their assumptions of superiority.
Desha retaliated in the tone of 1798:--
“Do they suppose that the House do not understand the subject;
or do they suppose that by this great flow of eloquence they
can make the substantial part of the House change the opinions
in so short a time? When I speak of the substantial part of the
House, I mean those who think much and speak but little; who
make common-sense their guide, and not theoretical or visionary
projects.... Some gentlemen advocate ten thousand and others
twenty thousand of a standing army. The policy is easy to be
seen through. The advocates of a perpetual system of taxation
discover that if they cannot retain a considerable standing
army, they will have no good plea for riveting the present taxes
on the people.”
In the process of national growth, public opinion had advanced since
1801 several stages in its development; but the speeches of Forsyth,
Calhoun, and Lowndes on one side, like that of Desha on the other,
left still in doubt the amount of change. While Forsyth admitted that
he had under-estimated the strength of the economical spirit, Desha
certainly over-estimated the force of the men “who think much and
speak but little.” With Federalist assistance, Desha’s friends passed
the bill for an army of six thousand men by a vote of seventy-five
to sixty-five; but the Senate, by a more decided vote of eighteen to
ten, substituted “fifteen” for “six.” With this amendment the bill
was returned to the House March 2, which by an almost unanimous vote
refused to concur. The bill was sent to a conference committee, which
reported the original plan of ten thousand men; and in the last hours
of the session, March 3, the House yielded. By a vote of seventy to
thirty-eight the peace establishment was fixed at ten thousand men.
The movement of public opinion was more evident in regard to the navy.
Instead of repeating the experiments of 1801, Congress maintained
the whole war establishment, and appropriated four million dollars
chiefly for the support of frigates and ships-of-the-line. The vessels
on the Lakes were dismantled and laid up; the gunboats, by an Act
approved February 27, were ordered to be sold; but the sum of two
hundred thousand dollars was appropriated for the annual purchase
of ship-timber during the next three years, and the whole navy
thenceforward consisted of cruisers, which were to be kept as far as
possible in active service. As the first task of the new ships, an Act,
approved March 3, authorized hostilities against the Dey of Algiers,
who had indulged in the plunder of American commerce.
These hasty arrangements for the two services, coupled with an equally
hasty financial makeshift, completed the career of the Thirteenth
Congress, which expired March 4, as little admired or regretted as
the least popular of its predecessors. Not upon Congress but upon the
Executive Departments fell the burden of peace as of war, and on the
Executive the new situation brought many embarrassments.
The first and most delicate task of the Government was the reduction
of the army. No one could greatly blame Monroe for shrinking from the
invidious duty of dismissing two thirds of the small force which had
sustained so well and with so little support the character of the
country; but the haste which he showed in leaving the War Department
suggested also how keenly he must have suffered under its burdens.
His name was sent to the Senate, February 27, as Secretary of State;
no Secretary of War was nominated, but Dallas, with the courage that
marked his character, undertook to manage the War Department as well as
the Treasury until the necessary arrangements for the new army should
be made.
April 8 Dallas wrote to six generals,--Brown, Jackson, Scott, Gaines,
Macomb, and Ripley,--requesting their attendance at Washington to
report a plan for the new army. Jackson and Gaines were unable
to attend. The rest of the board reported a scheme dividing the
country into two military districts, north and south; and into
nine departments, five in the northern, four in the southern
division,--allotting to each the troops needed for its service. May
17 the new arrangements were announced. Brown was ordered to command
the northern district, with Ripley and Macomb as brigadiers. Jackson
took the southern district, with Scott and Gaines as brigadiers. Eight
regiments of infantry, one of riflemen, and one of light artillery were
retained, together with the corps of artillery and engineers. As far as
possible, all the officers whose names became famous for a generation
received rank and reward.
No such operation was necessary for the navy, where no reduction was
required. In the civil service, Madison enjoyed the satisfaction of
rewarding the friends who had stood by him in his trials. February
27 he sent to the Senate, with the nomination of Monroe as Secretary
of State, the name of J. Q. Adams as Minister to England. At the same
time Bayard was appointed to St. Petersburg, and Gallatin to Paris. The
nomination of Bayard proved to be an empty compliment, for he arrived,
August 1, in the Delaware River, in the last stages of illness, and was
carried ashore the next day only to die.
These appointments were well received and readily confirmed by the
Senate; but Madison carried favoritism too far for the Senate’s
approval when, March 1, he nominated Major-General Dearborn to be
Secretary of War. Dearborn had few or no enemies, but the distinction
thus shown him roused such strong remonstrance that Madison hastened to
recall the nomination, and substituted Crawford in Dearborn’s place.
The Senate had already rejected Dearborn, but consented to erase the
record from their journal,[105] and Crawford became Secretary of War.
Thus the government in all its branches glided into the new conditions,
hampered only by the confusion of the currency, which could not be
overcome. The people were even more quick than the government to adapt
themselves to peace. In New Orleans alone a few weeks of alarm were
caused by extraordinary acts of arbitrary power on the part of General
Jackson during the interval before the peace became officially known;
but public order was not seriously disturbed, and the civil authority
was restored March 13. Elsewhere the country scarcely stopped to notice
the cost or the consequences of the war.
In truth the cost was moderate. Measured by loss of life in battle, it
was less than that reported in many single battles fought by Napoleon.
An army which never exceeded thirty thousand effectives, or placed more
than four thousand regular rank-and-file in a single action, could not
sacrifice many lives. According to the received estimates the number
of men killed in battle on land did not much exceed fifteen hundred,
including militia, while the total of killed and wounded little
exceeded five thousand.[106] Sickness was more fatal than wounds, but
a population of eight millions felt camp-diseases hardly more than its
periodical malarial fevers.
The precise financial cost of the war, measured only by increase of
debt, was equally moderate. During three years,--from February, 1812,
until February, 1815,--the government sold six per cent bonds at
various rates of discount, to the amount of fifty million dollars, and
this sum was the limit of its loans, except for a few bank discounts
of Treasury notes not exceeding a million in all. By forcing Treasury
notes on its creditors the Treasury obtained the use of twenty
millions more. After the peace it issued bonds and new Treasury notes,
which raised the aggregate amount of war debt, as far as could be
ascertained, to about eighty million five hundred thousand dollars,
which was the war-addition to the old nominal capital of debt, and
increased the total indebtedness to one hundred and twenty-seven
millions at the close of the year 1815.[107]
The debt had exceeded eighty millions twenty years before, and in the
interval the country had greatly increased its resources. The war
debt was a trifling load, and would not have been felt except for the
confusion of the currency and the unnecessary taxation imposed at the
last moments of the war. That the currency and the war taxes were
severe trials was not to be denied, but of other trials the people had
little to complain.
Considering the dangers to which the United States were exposed, they
escaped with surprising impunity. The shores of Chesapeake Bay and
of Georgia were plundered; but the British government paid for the
slaves carried away, and no town of importance except Washington was
occupied by an enemy. Contrary to the usual experience of war, the
richest parts of the country suffered least. Only the Niagara frontier
was systematically ravaged. When the blockade of the coast was raised,
every seaboard city was able instantly to resume its commercial habits
without having greatly suffered from the interruption. The harvests
of two seasons were ready for immediate export, and the markets of
Europe were waiting to receive them. Every man found occupation, and
capital instantly returned to its old channels. From the moment of
peace the exports of domestic produce began to exceed five million
dollars a month, while four millions was the highest average for any
previous twelvemonth, and the average for the seven years of embargo
and blockade since 1807 fell much short of two and a half millions. The
returns of commerce and navigation showed that during the seven months
from March 1 to October 1, 1815, domestic produce valued at forty-six
million dollars was exported, and American shipping to the amount of
eight hundred and fifty-four thousand tons was employed in the business
of export.[108]
The ease and rapidity of this revolution not only caused the war to
be quickly forgotten, but also silenced political passions. For the
first time in their history as a nation, the people of the United
States ceased to disturb themselves about politics or patronage. Every
political principle was still open to dispute, and was disputed; but
prosperity put an end to faction. No evidence could be given to prove
that the number or weight of persons who held the opinions commonly
known as Federalist, diminished either then or afterward. Massachusetts
showed no regret for the attitude she had taken. At the April election,
six weeks after the proclamation of peace, although Samuel Dexter was
the Republican candidate, the State still gave to Governor Strong
a majority of about seven thousand in a total vote of ninety-five
thousand. The Federalists reasonably regarded this vote as an express
approval of the Hartford Convention and its proposed measures, and
asked what would have been their majority had peace not intervened
to save the Government from odium. They believed not only that their
popular support would have been greater, but that it would also have
shown a temper beyond control; yet the Federalist majority in April was
no longer hostile to the Government.
The other elections bore the same general character. Even in New
York the popular reaction seemed rather against the war than in its
favor. New York city in April returned Federalist members to the State
legislature, causing a tie in the Assembly, each party controlling
sixty-three votes.[109] In Virginia the peace produced no change
so decided as to warrant a belief that the war had become popular.
In April John Randolph defeated Eppes and recovered control of his
district. The State which had chosen sixteen Republicans and seven
opposition congressmen in 1813, elected in 1815 seventeen Republicans
and six opposition members. The stability of parties was the more
remarkable in New York and Virginia, because those States were first to
feel the effects of renewed prosperity.
After the excitement of peace was past, as the summer drew toward a
close, economical interests dwarfed the old political distinctions and
gave a new character to parties. A flood of wealth poured into the
Union at a steady rate of six or seven million dollars a month, and
the distribution of so large a sum could not fail to show interesting
results. The returns soon proved that the larger portion belonged to
the Southern States. Cotton, at a valuation of twenty cents a pound,
brought seventeen and a half millions to the planters; tobacco brought
eight and a quarter millions; rice produced nearly two million eight
hundred thousand dollars. Of fifty millions received from abroad in
payment for domestic produce within seven or eight months after the
peace, the slave States probably took nearly two thirds, though the
white population of the States south of the Potomac was less than half
the white population of the Union. The stimulus thus given to the slave
system was violent, and was most plainly shown in the cotton States,
where at least twenty million dollars were distributed in the year 1815
among a white population hardly exceeding half a million in all, while
the larger portion fell to the share of a few slave-owners.[110]
Had the Northern States shared equally in the effects of this stimulus,
the situation would have remained relatively as before; but the
prosperity of the North was only moderate. The chief export of the
Northern States was wheat and Indian corn. Even of these staples,
Maryland and Virginia furnished a share; yet the total value of the
wheat and corn exported from the Union was but eight million three
hundred and fifty thousand dollars, while that of tobacco alone was
eight and a quarter millions. While flour sold at nine or ten dollars
a barrel, and Napoleon’s armies were vying with the Russians and
Austrians in creating an artificial demand, the Middle States made
a fair profit from their crops, although much less than was made by
the tobacco and cotton planters; but New England produced little for
export, and there the peace brought only ruin.
Ordinarily shipping was the source of New England’s profits. For
twenty-five years the wars in Europe had given to New England shipping
advantages which ceased with the return of peace. At first the change
of condition was not felt, for every ship was promptly employed; but
the reappearance of foreign vessels in American harbors showed that
competition must soon begin, and that the old rates of profit were at
an end.
Had this been all, Massachusetts could have borne it; but the shipping
on the whole suffered least among New England interests. The new
manufactures, in which large amounts of capital had been invested,
were ruined by the peace. If the United States poured domestic produce
valued at fifty million dollars into the markets of Great Britain,
Great Britain and her dependencies poured in return not less than forty
million dollars’ worth of imports into the United States, and inundated
the Union with manufactured goods which were sold at any sacrifice to
relieve the British markets. Although the imported manufactures paid
duties of twenty-five per cent or more, they were sold at rates that
made American competition impossible.
The cotton manufacturers of Rhode Island, in a memorial to Congress,
dated October 20, 1815, declared that their one hundred and forty
manufactories, operating one hundred and thirty thousand spindles,
could no longer be worked with profit, and were threatened with speedy
destruction.[111] New England could foresee with some degree of
certainty the ultimate loss of the great amount of capital invested in
these undertakings; but whether such fears for the future were just or
not, the loss of present profits was not a matter of speculation, but
of instant and evident notoriety. Before the close of the year 1815
little profit was left to the new industries. The cotton manufacture,
chiefly a New England interest, was supposed to employ a capital of
forty million dollars, and to expend about fifteen millions a year
in wages.[112] The woollen manufacture, largely in Connecticut, was
believed to employ a capital of twelve million dollars.[113] Most of
the large factories for these staples were altogether stopped.
From every quarter the peace brought distress upon New England. During
the war most of the richer prizes had been sent to New England ports,
and the sale of their cargoes brought money and buyers into the
country; but this monopoly ceased at the same moment with the monopoly
of manufactures. The lumber trade was almost the last surviving
interest of considerable value, but in November Parliament imposed
duties on American lumber which nearly destroyed the New England trade.
The fisheries alone seemed to remain as a permanent resource.
The effect of these changes from prosperity to adversity was shown in
the usual forms. Emigration became active. Thousands of native New
Englanders transferred themselves to the valley of the Mohawk and
Western New York. All the cities of the coast had suffered a check from
the war; but while New York and Philadelphia began to recover their
lost ground, Boston was slow to feel the impulse. The financial reason
could be partly seen in the bank returns of Massachusetts. In January,
1814, the Massachusetts banks held about $7,300,000 in specie.[114]
In January and February, 1815, when peace was declared, the same
banks probably held still more specie, as the causes which led to the
influx were not removed. In June, about three months later, they held
only $3,464,000 in specie, and the drain steadily continued, until
in June, 1816, the specie in their vaults was reduced to $1,260,000,
while their discounts were not increased and their circulation was
diminished.[115]
The state of the currency and the policy pursued by the Treasury added
to the burden carried by New England. There alone the banks maintained
specie payments. In the autumn of 1815, while the notes of the Boston
banks were equivalent to gold, Treasury notes were at eleven per cent
discount in Boston; New York bank-notes were at eleven and a half per
cent discount; Philadelphia at sixteen; Baltimore at seventeen and
eighteen; and United States six-percent bonds sold at eighty-six. In
New England the Government exacted payments either in Treasury notes or
in the notes of local banks equivalent to specie. Elsewhere it accepted
the notes of local banks at a rate of depreciation much greater than
that of Treasury notes. This injustice in exacting taxes was doubled by
an equivalent injustice in paying debts. In New England the Treasury
compelled creditors to take payment in whatever medium it had at hand,
or to go unpaid. Elsewhere the Treasury paid its debts in the currency
it received for its taxes.
Dallas admitted the wrong, but made no serious attempt to correct it.
So complicated was the currency that the Treasury was obliged to keep
four accounts with each of its ninety-four banks of deposit,--(1) in
the currency of the bank itself; (2) in special deposits of other bank
currency; (3) in special deposits of Treasury notes bearing interest;
(4) in small Treasury notes not bearing interest. In New England,
and also in the cities of New York and Philadelphia, for some months
after the peace the taxes were paid in Treasury notes. So little local
currency was collected at these chief centres of business that the
Treasury did not attempt to discharge its warrants there in currency.
As the Treasury notes gradually appreciated in value above the local
bank-notes of the Middle States, tax-payers ceased to make payments
in them, and paid in their local bank-notes. Little by little the
accumulation of local currency in the Treasury deposits at Philadelphia
and New York increased, until the Treasury was able to draw on them in
payment of its warrants; but even at those points this degree of credit
was not attained in 1815, and in New England the Treasury still made
no payments except in Treasury notes, or the notes of distant banks at
a discount still greater than that of Treasury notes. This exceptional
severity toward New England was admitted by Dallas, and excused only
for the reason that if he were just to New England he must be severe to
the rest of the country. Every holder of a Treasury warrant would have
demanded payment at the place where the local medium was of the highest
value, which was Boston; and as the Treasury could not pay specie at
Boston without exacting specie elsewhere, Dallas paid no attention to
Constitutional scruples or legal objections, but arbitrarily excluded
Boston from the number of points where warrants were paid in local
currency.[116]
The people of Boston criticised, with much severity and with apparent
justice, Dallas’s management of the finances, which seemed to require
some explanation not furnished in his reports. By an Act approved March
3, Congress authorized a loan of $18,452,800 to absorb the outstanding
Treasury notes. At that time, under the momentary reaction of peace
excitement, Treasury notes were supposed to be worth about ninety-four
cents in the dollar, and Dallas expected to convert them nearly dollar
for dollar into six-per-cent bonds. His proposals were issued March 10,
inviting bids for twelve millions, and requiring only “that the terms
of the proposals should bear some relation to the actual fair price of
stock in the market of Philadelphia or New York.” When the bids were
received, Dallas rejected them all, because in his opinion they were
below the market rates. “In point of fact,” he afterward said, “no
direct offer was made to subscribe at a higher rate than eighty-nine
per cent, while some of the offers were made at a rate even lower
than seventy-five per cent.” Although the old six-per-cents were then
selling at eighty-nine, eighty-eight, and eighty-seven in Boston and
New York, Dallas held that “the real condition of the public credit”
required him to insist upon ninety-five as the value of the new stock.
After failing to obtain ninety-five or even ninety as the price of his
bonds, Dallas resorted to expedients best described in his own words.
As he could not fund the Treasury notes at the rate he wished, he
abandoned the attempt, and used the loan only to supply the local wants
of the Treasury:--
“The objects of the loan being to absorb a portion of the
Treasury-note debt, and to acquire a sufficiency of local
currency for local purposes, the price of the stock at the
Treasury was of course independent of the daily up-and-down
prices of the various stock markets in the Union, and could
only be affected by the progress toward the attainment of
those objects. Thus while the wants of the Treasury were
insufficiently supplied, offers to subscribe were freely
accepted, and the parties were sometimes authorized and invited
to increase the amount of their offers; but where the local
funds had so accumulated as to approach the probable amount of
the local demands, the price of the stock was raised at the
Treasury, and when the accumulation was deemed adequate to the
whole amount of the local demands the loan was closed.”[117]
Governments which insisted upon borrowing at rates higher than the
money market allowed, could do so only by helping to debase the
currency. Dallas’s course offered encouragement to the suspended
banks alone. The schedule of his loans proved that he paid a premium
to insolvency. Of all places where he most needed “a sufficiency
of local currency for local purposes,” Boston stood first; but he
borrowed in Boston less than one hundred thousand dollars, and this
only in Treasury notes. Next to Boston stood New York; but in New York
Dallas borrowed only $658,000, also in Treasury notes. In Philadelphia
he obtained more than three millions, and took $1,845,000 in the
depreciated local currency. In Baltimore he took nearly two millions
in local currency; and in the bank paper of the District of Columbia,
which was the most depreciated of all, he accepted $2,282,000 in local
currency.[118] Thus the loan which he had asked Congress to authorize
for the purpose of absorbing the excess of Treasury notes, brought into
the Treasury only about three millions in these securities, while it
relieved the banks of Philadelphia, Baltimore, and Washington of six
millions of their depreciated paper, worth about eighty cents in the
dollar, and provided nothing to redeem the government’s overdue bills
at Boston and New York.
Had Dallas pursued a different course and funded all the overdue
Treasury notes at the market rate, he might not have relieved New
England, but he would have placed the government in a position to deal
effectually with the suspended banks elsewhere. The immediate result
of his refusal to redeem the dishonored Treasury notes was to depress
their market value, and to discredit the government. Treasury notes
fell to eighty-eight and eighty-seven, while the six-per-cents fell as
low as eighty-one. In Washington, Baltimore, and Philadelphia Dallas
obtained enough local currency to meet local obligations, and doubtless
saved to the government a small percentage by thus trafficking in its
own discredit; but in gaining this advantage he offered encouragement
to the over-issues of the suspended banks, and he helped to embarrass
the solvent banks in the chief commercial centres as well as those in
New England.[119]
At the close of the year 1815 the general effect of the peace was
already well defined. The Southern States were in the full enjoyment of
extraordinary prosperity. The Middle States were also prosperous and
actively engaged in opening new sources of wealth. Only the Eastern
States suffered under depression; but there it was so severe as to
warrant a doubt whether New England could recover from the shock.
The new epoch of American history began by the sudden decline of
Massachusetts to the lowest point of relative prosperity and influence
she had ever known, and by an equally sudden stimulus to the South and
West. So discredited was Massachusetts that she scarcely ventured to
complain, for every complaint uttered by her press was answered by the
ironical advice that she should call another Hartford Convention.