if at all (N. Y. _Express_, Dec. 14, 1846). Bids (to be in by Apr.
10) for $18,000,000 of it were invited on Feb. 9, 1847. The New York
and Boston banks appear to have agreed on a price, but some New York
capitalists offered more, and they in turn were outbid by Corcoran and
Riggs of Washington, who seem to have taken a very large part of it.
The bids above par totalled about $55,000,000, and the premiums offered
ran as high as 2 per cent. It has been called a mistake to pay 6 per
cent on long-term bonds, and this is proved by the premium they soon
commanded. But before the bonds were issued grave doubts regarding
their acceptability were entertained, and a saving in interest was
of relatively little importance. Many had expected that the whole
amount($23,000,000) would be issued in treasury notes and practically
increase the amount of the currency; but the amount issued at first was
largely taken for investments (N. Y. _Herald_ (weekly), Mar. 20, 1847).
Hence the currency in circulation was diminished. However, the specie
coming from abroad soon made up for this.
Bids for $5,000,000 of notes were invited on Feb. 26. The Rothschilds
(represented by A. Belmont) were soon understood to be interested, and
were in fact successful to a large extent in the bidding. Their bidding
encouraged American capitalists. Probably the notes could safely, and
therefore should, have been made convertible into 5 per cent, instead
of 6 per cent, bonds. The interest paid on them at redemption was 5-2/5
or 6 per cent (De Knight, Currency, 71).
June 1, 1817, Walker reported treasury notes as outstanding (minus
$789,700 of cancelled notes on hand): of issues prior to July 22,
1846, $303,817; of issues under the Act of July 22, $3,565,600; of
issues under the Act of Jan. 28, $8,100,000; net total, $11,179,717
(_Niles_, June 5, p. 224). About the middle of August, 1847, they sold
at 106-1/2, but within a week (probably because reports that Scott had
captured Mexico City were found to be false) they fell at New York to
103-1/2. The issuing of more notes was objected to on the ground that
it would virtually mean a government bank controlled by a party. It
was argued by some that notes for small amounts bearing interest at
a nominal rate should have been put out. These, it was said, would
have been purchased by persons of small means, who actually put their
savings into specie needed by the government. The question was raised
why Polk asked in December, 1846, for funds to cover the fiscal year
1847-8 (N. Y. _Express_, Dec. 14, 1846). Walker's report included
estimates for that period, but this fact does not seem to be an
adequate explanation. One suspects that Polk and Walker knew the money
would be needed, and thought this the easiest way to get it.
33.15. Richardson, Messages, iv, 516. Pakenham, no. 6, Jan. 28, 1847.
Sen. 2; 29, 2 (Walker, report, Dec. 9, 1846). Ho. 6; 30, 1 (_Id._,
report, Dec. 8, 1847). Ho. 7; 30, 2 (_Id._, report, Dec. 9, 1848). Sen.
105; 29, 2 (_Id._ to Dallas, Feb. 1, 1847). Sen. 392; 29, 1 (_Id._ to
Polk, June 15, 1846). Taussig, Tariff Hist., 115. Welles papers. Polk,
Diary, Jan. 2, 1847. _Niles_, Jan. 2, 1847, p. 288. Boston _Courier_,
Feb. 17, 1848. _Cong. Globe_, 30, 1, pp. 281, 298. N. Y. _Herald_
(weekly), Jan. 9, 1847. (Pessimists) =345=G. A. Worth to Van Buren, May
20, 1847.
In Dec., 1847, Polk had to admit that a deficiency of $15,729,114 on
June 30, 1848, was probable. The British minister reported that one
reason for proposing the tax on tea and coffee was a wish to defeat
anticipated attempts of the protectionists to repeal the tariff of
1846. It was suspected that Walker made the appeal to Congress in order
to display his influence or to relieve that body of responsibility for
modifying the tariff it had so recently voted. The motives of the House
were mixed. Some members doubtless objected to the plan on principle,
others because they wished to be consistent with their action in
accepting that tariff, others because the estimated return from such
a tax ($2,500,000 or $3,000,000 per year) did not seem enough to meet
the requirements, and others, perhaps, to rebuke what struck them like
dictation on Walker's part; but the main considerations appear to
be those mentioned in chap. xxxiv (_e.g._, p. 285.) The vote in the
House was taken Jan. 2, 1847. Walker persisted, but without effect.
Benton's idea was adopted in 1854. See "Public Lands, Bill to reduce
and graduate the price of," in Senate index of _Cong. Globe_, 29 Cong.,
1 and 2 sess.; 30 Cong., 1 sess., etc.
33.16. Ho. 6; 30, 1 (Walker, report, Dec. 8, 1847). Ho. 7; 30, 2
(_Id._, report, Dec. 9, 1848). =13=Pakenham, no. 147, Dec. 29, 1846.
Stockton, circular, Aug. 15, 1846. Ho. 60; 30, 1, pp. 905 (Marcy); 930,
1085 (Scott); 931 (Worth). London _Times_, June 8, 1846. Richardson,
Messages, iv, 548-9, 570, 672. Vattel, book 3, chap. 9, sect. 161.
Balt. _American_, Feb. 17, 1847. Wash. _Union_, Apr. 12, 1847. N.
Y. _Herald_ (weekly), May 1, 1847. Sen. 1; 30, 1, pp. 552, 558, 561
(Polk); 553 (Walker). _Niles_, Apr. 24, 1847, p. 113. Ho. 1; 30, 2, p.
1075 (Shubrick). =47=Shubrick, Apr. 15, 1848. =76=Lavallette, proclam.,
Oct. 26, 1847. Sen. 24; 30, 1 (Polk, Message). Ho. 20; 30, 2 (Polk,
Message). Polk, Diary, Mar. 10, 1847.
We do not positively know that Walker originated the idea of the tariff
in Mexican ports, nor that it had any relation to the tea and coffee
tax; but one would naturally assume as much, and so the Washington
_Union_ stated (_Niles_, Apr. 24, 1847, p. 113). At first, however,
Walker did not perceive that the tariff would have to rest upon the
President's military authority. Contributions took the place of the
pillage formerly practised in war. An advantage of the plan, perhaps
not contemplated at first, was that it would greatly discourage
smuggling, and therefore, since imports would mostly have to pass the
inspection of American officers, contraband could much more fully
be excluded. This tariff was fiercely attacked in Congress, but the
position of the Executive was impregnable. Complaint was also made that
Americans as well as neutrals had to pay it; but had they not done so,
they would have been able to defy competition, foreign nations would
have complained, the Mexicans would have benefited by the low prices of
merchandise, and the United States would have obtained no revenue.
The American policy prior to March 31, 1847, is shown by Walker's
circular of June 30, 1846 (Ho. 60; 30, 1, p. 158) and by Marcy's
=63=instructions to the commanding officer at Tampico, Dec. 15, 1846.
The latter said: Only United States vessels may enter, and those only
when carrying articles produced in the United States or imports upon
which United States duties have been paid, and on all such goods no
duties will be charged. "But in a spirit of accommodation" clearances
to Tampico of cargoes of foreign products, etc., in American vessels
will be granted (duties having been paid) without being unloaded in
the United States. Vessels admitted at Tampico may take out return
cargoes of the property of Americans or neutrals without paying export
duties; and specie belonging to neutrals may be freely exported. Indeed
this export of specie should be encouraged, since it prevents Mexico
from seizing the means of waging war. Pakenham complained that this
policy would give American goods (which would not have to pay a duty) a
monopoly of the Mexican market; but it seemed impossible at this time
to run the risk of the military injury liable to result from admitting
neutral vessels generally. He seems to have felt inclined to protest,
but he did not find that the ministers of France, Spain and Germany
intended to do so (=13=no. 147). Previous to Dec. 15, 1846, American
goods had been extensively smuggled into Mexico across the Rio Grande,
and of course that process continued.
33.17. Ho. 60; 30, 1, pp. 975, 1014 (Marcy); 1083 (Shubrick). Sen. 1;
30, 1, pp. 552-76, 583, 585 (Marcy); 585 (circular); 586 (Walker);
951 (Mason). Ho. 1; 30, 2, pp. 1073, 1086 (Shubrick). Sen. 14; 30, 1,
pp. 9 (Marcy); 10 (Walker). London _Times_, June 8, 1846; June 15,
1847. Polk, Diary, June 11; Nov. 6, 1847. Richardson, Messages, iv,
531-2, 548. =52=Chargé Martin, no. 31, May 15, 1847. =13=Consul Glass,
July 12, 1848. Ho. 6; 30, 1 (Walker, report, Dec. 8, 1847). Ho. 7;
30, 2 (_Id._, report, Dec. 9, 1848). _Constitutionnel_, May 15, 1847.
=13=Mora to Palmerston, May 19, 1847. _Nat. Intelligencer_, Apr. 24,
1847. =48=Mason to Perry, Apr. 3; June 16, 1847.
In some cases the Mexican tariff was reduced very much more than
one half, and many articles of daily use, that had previously been
prohibited, became available. No tonnage dues were assessed on vessels
(chartered by the United States) laden exclusively with supplies for
our army or navy (=60=Marcy to Scott, May 10, 1847), and United States
officers, soldiers and sailors were exempted from the operation of the
order to pay duties (Richardson, Messages, iv, 548). At Matamoros,
Tampico and Vera Cruz the military governors acted as collectors. At
places held by the navy, naval officers did so. On the Pacific coast it
proved necessary to modify the tariff. June 11, 1847, the regulations
were somewhat modified (Polk, Diary, June 11), and additional changes
were made in Nov., 1847 (Polk, Diary, Nov. 6; Sen. 14; 30, 1, p. 11).
July 31, 1847, the duty on books was made 20 per cent _ad valorem_
(Sen. 1; 30, 1, p. 585).
Chargé Martin reported from Paris that the French newspapers, alarmed
by the protest of the Mexican consul at Havre, called on their
government to demand guaranties from ours. Martin justly took the
position that our admitting French commerce to Mexican ports was a pure
favor, to be enjoyed at the risk of those caring to take advantage
of it, but expressed the opinion freely that in the treaty of peace
we should protect the interests invited by our policy, as in fact we
pledged ourselves to do and did (Walker, report, Dec. 8, 1847 in Ho. 6;
30, 1, 619; chap. xxxii, p. 468).
33.18. N. Y. _Herald_ (weekly), May 1, Dec. 4, 1847. Ho. 60; 30, 1, p.
1037 (Marcy). Ho. 1; 30, 2, p. 1148 (Shubrick). =13=Consul Giffard, no.
37, Oct. 20, 1847. Richardson, Messages, iv, 548. =13=Consul Glass,
Dec. 1, 1847; July 12, 1848. =75=Hacienda to Relaciones, Dec. 3, 1847.
=75=Gov. Tamaulipas to Relaciones, Dec. 10, 23, 1847. =75=Gates, order,
Nov. 27, 1847. =76=Hacienda to Guerra, Dec. 3, 29, 1847. =13=Crampton,
no. 30, Aug. 13, 1847. =76=---- to Amador, Feb. 2, 1848.
The governor of Tamaulipas wrote frankly to the central government that
prohibition would merely promote robbery and smuggling while injuring
good Mexicans. He therefore did nothing except to collect a duty. Yet
Gates, commanding at Tampico, had to send escorts with traders, and
could not fully protect them.
33.19. N. Y. _Express_, Dec. 1, 1846. Sumner, Amer. Currency, 167.
_Economist_, Apr. 24, 1847. Gallatin, War Expenses, 3, 10. _Bankers'
Mag._, i, 513-6, 609-12, 673-4; ii, 201, 706-7. N. Y. _Herald_
(weekly), Dec. 19, 1846; Feb. 6; Apr. 17, 24; July 24, 31; Nov. 20;
Dec. 11, 1847. _Niles_, Feb. 13, 1847, p. 384; Feb. 27, p. 416; Sept.
11, p. 18; Sept. 25, p. 60; Oct. 2, p. 80; Oct. 9, p. 82; Oct. 23,
p. 128; Nov. 6, p. 145. =52=Bancroft, no. 46, Dec. 4, 1847. Welles
papers. =198=Gallatin to Everett, Dec. 16, 1847. Ho. 6; 30, 1 (Walker,
report, Dec. 8, 1847). Ho. 7; 30, 2 (_Id._, report, Dec. 9, 1848).
=181=Buchanan to Donelson, Jan. 29, 1847.
During the year ending June 30, 1848, almost thirty-seven and a half
millions in breadstuffs were exported (Walker, report, Dec. 9, 1848
in Ho. 7; 30, 2). As early as March, 1847, the _Bankers' Magazine_
estimated the increase in the value of our "present" exports of grain
and cotton as $12-15,000,000. The customs receipts for the year ending
June 30, 1847, were $23,747,865; for the following year $31,757,071. Of
course the rising tide of prosperity, besides increasing the customs
receipts and bringing specie, enhanced the credit of the government
generally, and assisted the country in other ways to support the burden
of the war. The crops of 1847 were fine in Europe; the importations
were found there to have been excessive; and prices fell sharply.
British business proved to be far less solid than it had been supposed
to be. Bancroft, our minister, reported "a whirlwind of bankruptcies
overspreading the land" (no. 46, Dec. 4, 1847). Orders for American
goods were cancelled. Owing to a want of confidence the practice of
consigning goods to English houses, with bills drawn on the consignees
for a considerable part of their value, was to a large extent
abandoned. Every vessel from England brought large parcels of American
bonds to be sold for what they would fetch. Early in November the rate
of exchange went up and specie began to be exported from this country,
though much remained in the interior. Numerous failures occurred in the
United States. All called in their resources. But here the trouble did
not prove to be long or very serious; and while another year of war
might have caused embarrassment, the country, despite the revolution in
France, soon found itself comfortable.
33.20 Ho. 6; 30, 1 (Walker, report, Dec. 8, 1847). Ho. 7; 30, 2 (_Id._,
report, Dec. 9, 1848). U. S. Stat. at Large, ix, 217. =13=Crampton,
no. 40, Apr. 2, 1848. N. Y. _Herald_ (weekly), Jan. 29, 1848. Bayley,
National Loans, 73. De Knight, Currency, 73. For the debates in
Congress consult the _Cong. Globe_. Boston _Courier_, Feb. 23, 1848.
=345=Niles to V. Buren, Dec. 16, 1847. Polk, Diary, Feb. 1, 1848.
The debate in the House began Feb. 8 and ended Feb. 17. In the course
of the discussion it came out that the treasury really had about
$7,000,000 more than had been supposed, but that $4,000,000 were
desired by the war department to make good certain deficiencies. The
amount of the loan was therefore reduced from $18,500,000 to "not more
than" $16,000,000 (Bayley, Nat. Loans, 73). The power to borrow under
this Act was to continue one year. The bonds were to bear not more than
6 per cent interest, be sold at not less than par, and be reimbursable
at any time after July 1, 1868. Before July 1, 1868, the secretary
could purchase the bonds at the market price (but not below par).
Coupons could be attached to the certificates, and such certificates
be transferable by mere delivery. The secretary of the treasury was
required to advertise for bids--these to be received 20-60 days from
the date of the earliest advertisement at Washington. In order to give
the loan the aid of assured peace, Walker arranged the advertising
so as to defer the time of opening the bids until June 17, 1848. The
premium obtained was $487,169. Though assisted with this loan, the
treasury ended the fiscal year with a balance of only $153,535.]
33.21. Ho. 60; 30, 1, pp. 354 (Taylor); 994 (Scott); 1005 (Mason); 341,
1007, 1037 (Marcy). =256=J. Parrott to Marcy, Dec. 20, 1847, private.
=256=Marcy to Scott, Nov. 17, 1847. Sen. 14; 30, 1, pp. 5 (Marcy), 6
(Scott). _Cong. Globe_, 30, 1, app., 423-4. Polk, Diary, Sept. 19,
1846; Aug. 31; Oct. 4, 5, 1847. =63=Mason to Scott, Sept. 1, 1847.
Richardson, Messages, iv, 546-8. =13=Crampton, no. 58, Nov. 28, 1847.
Sen. 52; 30, 1, pp. 124 (Scott); 145 (Marcy). Scott, Mems., ii, 552-3.
_Diario_, May 23, 1847. _Republicano_, June 9, 1847. Ho. 6; 30, 1
(Walker, report, Dec. 8, 1847).
For the olive branches (_i.e._ offers to treat) see pp. 122-4. A
particular difficulty in attempting to live on the country would have
been the general sparseness of the population, especially since the
Americans had to keep together. For this reason, though some of the
enemy expected us to rouse the nation by undertaking to enforce such
a policy, the wiser Mexicans did not look for it. On the ground that
places would be occupied alternately by the contending armies, the
British chargé at Washington deplored the order to exact contributions;
but the course of the war preserved the Mexicans from this misfortune
in a way he did not anticipate.
33.22. Ho. 60; 30, 1, pp. 1048, 1062, 1081, 1085 (Scott), 1050, 1063,
1066 (gen. orders). J. Parrott to Marcy (note 33.21). =256=_Id._ to
_Id._, Dec. 28, 1847, private. =60=Butler to Marcy, Mar. 7, 1848.
=69=Wool to Marcy, Jan. 24, 1848. Sen. 14; 30, 1, pp. 11, 13. =63=Marcy
to Gates, Mar. 7, 1848; to Davenport, May 2, 1848. =65=Scott, gen.
orders 358, 376, 395 (1847); 15, 31 (1848). Scott, Mems., ii, 553, 582.
Grant, Mems., i, 170-1. =61=McDowell to Hunter, Feb. 20; Mar. 5, 1848.
Rodríguez, Breve Reseña, 1849, 5. =69=Scott to commander at Jalapa,
Jan. 6, 1848. =61=McDowell to Monclova ayunt., Mar. 5, 1848. =80=Actg.
treas., Méx. state, Feb. 29, 1848. =60=Taylor to Marcy, Nov. 20,
1847. =60=Butler to Marcy, Mar. 2, 7, 1848. =92=Mex. ayunt., session
of Sept. 16, 1847. =92=Quitman, proclam., Sept. 22. =92=Veramendi to
ayunt., Sept. 24. =65=Wool, orders 157, Dec., 1847. _Delta_, Dec. 19,
1847 ("Mustang"). =61=Memoir on Mex. finances. Sen. 19; 30, 1, pp.
2-4 (Scott). Moreno, Cantón, 380. =69=Wool to Taylor, Mar. 7, 1847.
=61=McDowell to Webb, Apr. 15, 1848. =358=Williams to father, Dec. 27,
1847.
Besides the $150,000, Scott collected some $70,000 (about $12,000
captured at Cerro Gordo, nearly $50,000 for captured tobacco, and
smaller amounts for licenses, etc.). Polk was accused of inconsistency
for holding that Mexico could pay us no indemnity except in territory
and yet expecting to draw large revenues from that country (_Amer.
Review_, Jan., 1848, p. *2). The reply is threefold: 1, in the latter
case he assumed that Mexico was to be deprived by military force of the
revenues normally used by a nation; 2, even if a Mexican government
might have had the physical power to raise a cash indemnity for us, it
could not actually have obtained the money from the people for that
purpose, as our own armies were expected to do by force; and, 3, Polk's
expectations were not realized. Polk was also charged with encroaching
upon the prerogatives of the House both in taxing the Mexicans and
in spending the proceeds. Webster and Calhoun concurred in this view
(_Cong. Globe_, 30, 1, 495-6). But if Gen. Taylor had a right--as all
admitted--to impress a Mexican donkey into the service of his army,
Polk had a right to do all that he did in this regard. The authority
of the commander-in-chief in the enemy's country, waging war according
to the Constitution, was quite broad enough to cover it. See _Cong.
Globe_, 30, 1, app., 423-4.
The estimated possible revenues were as follows: import duties,
$12,000,000; duties on goods passing to the interior, $2,400,000;
direct taxes on real estate, professions, trades, etc., $3,000,000;
duties on the production of gold and silver, $600,000; melting
and assay dues, $50,000; export duties on coined gold and silver,
$1,000,000; revenue from the monopolies, $3,525,000 (=61=Memoir).
Transit dues on animals and goods, including the duties at city gates
(_alcabalas_), were to be discontinued. For a short time in 1847 Perry
allowed logwood to be exported under a 10 per cent duty. It seemed
impracticable to seize the mines, for the miners would probably have
fled on the approach of American troops.
Scott resolved not to take the ordinary state and city revenues,
because he felt that such a course would be "to make war on
civilization"; since every civilized community requires the means of
paying for administration, without which it would fall into anarchy
(Ho. 60; 30, 1, p. 1049). His broad taxation orders were based upon
an announced intention of spreading over the country. He proposed to
send out expeditions soon. One actually proceeded, as we have seen, to
Toluca, another to Cuernavaca, and another to the important mining town
of Pachuca (Ho. 60; 30, 1, pp. 1048, 1061-2). The occupation of Córdoba
and Orizaba was partly in pursuance of the same policy (=61=Scott to
Twiggs, Dec. 26, 1847). He proposed in particular to send 7000 men to
San Luis Potosí in order to open the communication between Tampico and
the mining city of Zacatecas. But his lack of troops and the peace
negotiations prevented this.
In order to force the products of the mines into circulation for the
benefit of both Americans and Mexicans, Scott forbade the exportation
of gold and silver bullion, and on gold and silver coin exported he
imposed a duty of 5 per cent (=65=gen. orders 362). Walker's and Polk's
views on these points had been different from Scott's, and Scott's
action was taken subject to revision at Washington, where he presented
his reasons. At the end of April, 1848, Walker's instructions were put
into force by General Butler.
Scott instructed his officers to execute his orders in a conciliatory
manner, if possible, but apply force should that be necessary. Should
there be no other way, the commanding officer was to collect the
assessment in money or some equivalent from the wealthier inhabitants.
In the northeast Wool carried out the financial purposes of the
government to the best of his ability, beginning at Saltillo as early
as May, 1847, with a revenue system, the occupation of buildings,
and the seizure of cattle, mules, etc. He punished refractory towns
and places violating pledges of neutrality with special taxes. Mar.
2, 1848, he reported that all were paying their taxes. The owners of
houses taken for the use of the army were indemnified through a tax
on all the real estate of the vicinity. In northwestern Mexico only
coast towns were in our hands. California and New Mexico, which the
United States government intended to retain, were of course viewed in
a different light. Naturally all possible attempts were made by the
Mexicans to protect their property against us. Subsistence, forage,
etc., continued to be paid for, since the interests of the army
prescribed that policy still. Our officers were not permitted to have
any interest (_e.g._ claim for special services) in cases of seizure,
etc.
33.23. Richardson, Messages, iv, 591, 651, 678. Sen. 52; 30, 1, pp.
107-9. =69=Hughes to Scott, Jan. 5, 1848. =63=Marcy to Twiggs, Mar. 7,
1848. Ho. 60; 30, 1, p. 1062 (Scott). Sen. 1; 30, 1, p. 588. Ho. 47;
30, 2, pp. 2 (Marcy), 109 (Mason). Ho. 1; 30, 2, p. 1131 (Shubrick).
=47=Shubrick, Apr. 15, 1848. =69=Wool to Marcy, Jan. 24, 1848. Sen. 14;
30, 1, p. 11 (Scott).
Import, export and tonnage duties produced in all only $3,434,665;
contributions from other sources, $553,055; captured money and
property, $163,573; assessments on states and the City of Mexico,
$225,649; and state and municipal revenues, together with some
other sources of income, $163,055. From these amounts the costs of
collection, drawbacks on goods disposed of to men in the service, and
the expenses of the state and municipal governments had to be deducted.
It was to make up for surrendering the monopolies that Scott quadrupled
the state assessments originally contemplated. $769,650 derived from
the military contributions were applied on the first instalment due to
Mexico. All of the $3,000,000 appropriated by the Act of March 3, 1847,
was paid to her shortly after she ratified the treaty of peace (Sen.
52; 30, 1, pp. 107-9; Richardson, Messages, iv, 588).
33.24. Sen. 1; 30, 1, p. 589. =13=Pakenham, no. 74, June 13, 1846. Ho.
Rep. 503; 31, 1. Ho. 60; 30, 1, p. 1004 (Marcy). Sen. 52; 30, 1, p.
125 (Scott). Scott, Mems., ii, 583. Polk, Diary, Aug. 18-20, 24-5, 28;
Nov. 13, 1847. Wash. _Union_, Dec. 9, 1847. N. Y. _Herald_ (weekly),
May 23; June 20; Oct. 31; Nov. 7, 1846; Aug. 21; Oct. 16; Nov. 6, 1847.
Ho. Report 503; 31, 1. _Picayune_, Sept. 14, 1847. =256=J. Parrott to
Marcy, Dec. 20, 27, 1847, private. =139=W. B. to D. Campbell, Aug. 9,
1846.