CONGRESS assembled Dec. 6, 1813, at a time of general perplexity.
The victories of Perry and Harrison, September 10 and October 5, had
recovered Detroit and even conquered a part of West Canada, but their
successes were already dimmed by the failures of Wilkinson and Hampton
before Montreal, and the retreat of both generals November 13 within
United States territory. In the Creek country the Georgians had failed
to advance from the east, and Jackson was stopped at Fort Strother
by want of supplies and men. At sea the navy was doing little, while
the British blockade from New London southward was becoming more and
more ruinous to the Southern and Middle States, and through them to
the government. Abroad the situation was not yet desperate. The latest
news from Europe left Napoleon at Dresden, victorious for the moment,
before the great battles of October. From the American commissioners
at St. Petersburg no news had arrived, but England’s refusal to accept
mediation was unofficially known. With this material the President was
obliged to content himself in framing his Annual Message.
The Message sent to Congress December 7 began by expressing regret that
the British government had disappointed the reasonable anticipation
of discussing and, if possible, adjusting the rights and pretensions
in dispute. From France nothing had been received on the subjects of
negotiation. Madison congratulated Congress on the success of the navy
upon the ocean and the Lakes, and the victory won by Harrison and R. M.
Johnson in Canada. He mentioned briefly the failure of the armies on
the St. Lawrence, and at greater length the success of Jackson on
the Coosa; and he entered in detail into the retaliatory measures
taken on either side in regard to naturalized soldiers. The finances
were treated with more show of confidence than was warranted by the
prospects of the Treasury; and the Message closed by a succession of
paragraphs which seemed written in a spirit of panegyric upon war:--
“The war has proved moreover that our free government like other
free governments, though slow in its early movements, acquires in
its progress a force proportioned to its freedom; and that the
Union of these States, the guardian of the freedom and safety of
all and of each, is strengthened by every occasion that puts it to
the test. In fine, the war with its vicissitudes is illustrating
the capacity and the destiny of the United States to be a great, a
flourishing, and a powerful nation.”
The rule that feeble and incompetent governments acquire strength by
exercise, and especially in war, had been as well understood in 1798 as
it was in 1813, and had been the chief cause of Republican antipathy
to war; but had Madison publicly expressed the same sentiment in 1798
as in 1813, he would have found himself in a better position to enforce
the rights for which he was struggling when the extreme discontent of
nearly one third of the States contradicted his congratulations on “the
daily testimony of increasing harmony throughout the Union.” Whatever
the ultimate result of the war might be, it had certainly not thus far
strengthened the Union. On the contrary, public opinion seemed to be
rapidly taking the shape that usually preceded a rupture of friendly
relations between political societies. Elections in the Middle States
showed that the war, if not actually popular, had obliged the people
there to support the government for fear of worse evils. New Jersey by
a small majority returned to its allegiance, and the city of New York
elected a Republican to represent it in Congress; but the steady drift
of opinion in the Middle States toward the war was simultaneous with an
equally steady drift in the Eastern States against it.
The evidences of chronic discontent in the Eastern States were
notorious. Less than a month before Madison wrote his Annual Message,
Governor Chittenden of Vermont, by proclamation November 10, recalled
the State militia from national service:[465]
“He cannot conscientiously discharge the trust reposed in him by
the voice of his fellow-citizens, and by the Constitution of
this and the United States, without an unequivocal declaration
that in his opinion the military strength and resources of
this State must be reserved for its own defence and protection
exclusively, excepting in cases provided for by the Constitution
of the United States, and then under orders derived only from the
commander-in-chief.”
The intercourse between the Eastern States and the enemy was notorious.
The Federalist press of Massachusetts, encouraged by Russian and
English success in Europe, discussed the idea of withdrawing the State
from all share in the war, and making a separate arrangement with
England. The President’s first act, after sending to Congress his
Annual Message, was to send a special Message incidentally calling
attention to the want of harmony that paralyzed the energy of the
government.
The special and secret Message of December 9 asked Congress once more
to impose an embargo. Considering the notorious antipathy of the
Eastern States to the system of embargo, the new experiment was so
hazardous as to require proof of its necessity. That it was directed
against the commerce of the New England States was evident, for the
blockade answered the purposes of embargo elsewhere. The Message
seemed to propose that all commerce should cease because any commerce
must favor the enemy; in effect, it urged that New England should
be forbidden to sell or buy so long as the rest of the country was
prevented from doing so.
“The tendency of our commercial and navigation laws in their
present state to favor the enemy,” said Madison,[466] “and thereby
prolong the war, is more and more developed by experience. Supplies
of the most essential kinds find their way not only to British
ports and British armies at a distance, but the armies in our
neighborhood with which our own are contending derive from our
ports and outlets a subsistence attainable with difficulty if at
all from other sources. Even the fleets and troops infesting our
coasts and waters are by like supplies accommodated and encouraged
in their predatory and incursive warfare. Abuses having a like
tendency take place in our import trade. British fabrics and
products find their way into our ports under the name and from the
ports of other countries, and often in British vessels disguised
as neutrals by false colors and papers.... To shorten as much as
possible the duration of the war, it is indispensable that the
enemy should feel all the pressure that can be given to it.”
Although Madison pointed to the notorious supply of food for the
British forces in Canada as one of the motives for imposing an embargo,
no one supposed that motive to be decisive. Other laws already forbade
and punished such communication with the enemy; and experience proved
that a general embargo would be no more effective than any special
prohibition. The idea that England could be distressed by an embargo
seemed still less likely to influence Government. Congress knew that
Russia, Prussia, Denmark, Sweden and Norway, Spain, and South America
were already open to English commerce, and that a few days must decide
whether Napoleon could much longer prevent Great Britain from trading
with France. The possibility of distressing England by closing Boston
and Salem, New Bedford and Newport to neutral ships was not to be
seriously treated.
Whatever was the true motive of the President’s recommendation,
Congress instantly approved it. The next day, December 10, the House
went into secret session, and after two days of debate passed an
Embargo Act by a vote of eighty-five to fifty-seven, which quickly
passed the Senate by a vote of twenty to fourteen, and received the
President’s approval December 17, being the first legislation adopted
at the second session of the Thirteenth Congress.[467] The Act was at
once enforced with so much severity that within a month Congress was
obliged to consider and quickly adopted another Act[468] relieving
from its operation the people of Nantucket, who were in a state of
starvation, all communication with the main land having been forbidden
by the law; but nothing proved that the illicit communication with
Canada ceased.
This beginning of legislation at a time when the crisis of the war
could be plainly seen approaching suggested much besides want of
harmony. The embargo strengthened the antipathy of New England to
the war,--a result sufficiently unfortunate; but it also led to a
number of other consequences that were doubtless foreseen by the
Administration, since they were prophesied by the Federalists. The Act
was approved December 17. Hardly had it gone into operation when the
British schooner “Bramble” arrived at Annapolis, December 30, bringing
a letter from Castlereagh to Monroe offering to negotiate directly,
though declining mediation. Important as this news was, it did not
compare with that in the newspapers brought by the “Bramble.” These
contained official reports from Germany of great battles fought at
Leipzig October 16, 18, and 19, in which the allies had overwhelmed
Napoleon in defeat so disastrous that any hope of his continuing to
make head against them in Germany was at an end. Except France, the
whole continent of Europe already was open to British commerce, or soon
must admit it. From that moment the New England Federalists no longer
doubted their own power. Their tone rose; their opposition to the war
became more threatening; their schemes ceased to be negative, and began
to include plans for positive interference; and the embargo added
strength to their hatred of Madison and the Union.
Madison was seldom quick in changing his views, but the battle of
Leipzig was an event so portentous that optimism could not face it.
Other depressing news poured in. Fort George was evacuated; Fort
Niagara was disgracefully lost; Lewiston, Black Rock, and Buffalo were
burned, and the region about Niagara was laid waste; blue lights were
seen at New London. Every prospect was dark, but the battle of Leipzig
was fatal to the last glimmer of hope that England could be brought to
reason, or that New England could be kept quiet. A change of policy
could not safely be delayed.
Castlereagh’s offer was instantly accepted. January 5 Monroe replied,
with some complaint at the refusal of mediation, that the President
acceded to the offer of negotiating at Gothenburg. The next day Madison
sent the correspondence to Congress, with a warning not to relax
“vigorous preparations for carrying on the war.” A week afterward,
January 14, he nominated J. Q. Adams, J. A. Bayard, Henry Clay, and
Jonathan Russell as commissioners to negotiate directly with Great
Britain, and the Senate confirmed the nominations, January 18, with
little opposition except to Jonathan Russell’s further nomination as
Minister to Sweden, which was confirmed by the narrow vote of sixteen
to fourteen. Three weeks later, February 8, Albert Gallatin was added
to the commission, George W. Campbell being nominated to the Treasury.
The prompt acceptance of Castlereagh’s offer, the addition of Henry
Clay to the negotiators, and the removal of Gallatin from the Treasury
showed that diplomacy had resumed more than its old importance. The
hope of peace might serve to quiet New England for a time, but mere
hope with so little to nourish it could not long pacify any one, if
the embargo was to remain in force. Several signs indicated there
also a change of policy. Besides the embargo, and in support of its
restrictions, Madison had recommended the passage of bills prohibiting
collusive captures, ransoming vessels captured by the enemy, and
interference by the courts, as well as the introduction of British
woollens, cottons, and spirits. The bill prohibiting woollens and other
articles was reported to the Senate December 30, the day when the
“Bramble” reached Annapolis. The Senate waited nearly a month, till
January 27, and then passed the bill, January 31, by a vote of sixteen
to twelve. The House referred it to the Committee on Foreign Relations
February 3, where it remained. On the other hand, the bill prohibiting
ransoms was introduced in the House December 30, and passed January 26
by a vote of eighty to fifty-seven. The Senate referred it January 28
to the Committee on Foreign Relations, which never reported it. The
fate of these measures foreshadowed the destiny of the embargo.
Yet the President clung to his favorite measure with a degree
of obstinacy that resembled desperation. Congress showed by its
indifference to the two supplementary bills that it had abandoned the
President’s system as early as January, but the embargo continued
throughout the winter, and the month of March passed without its
removal. The news from Europe at the close of that month left no doubt
that Napoleon could offer little effectual resistance even in France
to the allies, whose armies were known to have crossed the Rhine,
while Wellington advanced on Bordeaux. Holland was restored to her
ancient independence, and Napoleon was understood to have accepted in
principle, for a proposed Congress at Mannheim, the old boundaries of
France as a basis of negotiation. In theory, the overthrow of Napoleon
should have not essentially affected the embargo or the Non-importation
Acts, which were expected to press upon England independently of
Napoleon’s Continental system; but in practice the embargo having
produced no apparent effect on Europe during the war, could not be
expected to produce an effect after England had succeeded in conquering
France, and had abandoned her blockades as France had abandoned her
decrees. For that reason avowedly Madison at last yielded, and sent
a Message to Congress March 31, recommending that the system of
commercial restriction should cease:--
“Taking into view the mutual interests which the United States and
the foreign nations in amity with her have in a liberal commercial
intercourse, and the extensive changes favorable thereto which
have recently taken place; taking into view also the important
advantages which may otherwise result from adapting the state of
our commercial laws to the circumstances now existing,”--
Taking into view only these influences, Madison seemed to ignore the
supposed chief motive of the embargo in stopping supplies for Canada,
and to admit that embargo was an adjunct of Napoleon’s Continental
system; but in truth Madison’s motives, both political and financial,
were deeper and more decisive than any he alleged. His retreat was
absolute. He recommended that Congress should throw open the ports, and
should abandon all restriction on commerce beyond a guaranty of war
duties for two years after peace as a measure of protection to American
manufactures. The failure of the restrictive system was not disguised.
The House received the Message with a mixed sense of relief and
consternation, and referred it to Calhoun’s committee, which reported
April 4 a bill for repealing the Embargo and Non-importation Acts,
together with the reasons which led the committee to unite with the
Executive in abandoning the restrictive system.
Calhoun had always opposed the commercial policy of Jefferson and
Madison. For him the sudden Executive change was a conspicuous triumph;
but he showed remarkable caution in dealing with the House. Instead of
attempting to coerce the majority, according to his habit, by the force
of abstract principles, he adopted Madison’s reasoning and softened his
own tone, seeming disposed to coax his Southern and Western friends
from making a display of useless ill-temper. “Men cannot go straight
forward,” he said, “but must regard the obstacles which impede their
course. Inconsistency consists in a change of conduct when there is no
change of circumstances which justify it.” The changes in the world’s
circumstances required a return to free trade; but the manufactures
would not be left unprotected,--on the contrary, “he hoped at all times
and under every policy they would be protected with due care.”[469]
As an example of political inconsistency, as Calhoun defined it, his
pledge to protect American manufactures deserved to be remembered;
but hardly had Calhoun’s words died on the echoes of the House when
another distinguished statesman offered a prospective example even
more striking of what Calhoun excused. Daniel Webster rose, and in
the measured and sonorous tones which impressed above all the idea of
steadfastness in character, he pronounced a funeral oration over the
restrictive system:--
“It was originally offered to the people of this country as a kind
of political faith; it was to be believed, not examined; ... it was
to be our political salvation, nobody knew exactly how; and any
departure from it would lead to political ruin, nobody could tell
exactly why.”
Its opponents had uniformly contended that it was auxiliary to
Napoleon’s Continental system, in co-operation with Napoleon’s
government; and its abandonment with the fall of Napoleon showed the
truth. While thus exulting in the overthrow of the first “American
system,” Webster qualified his triumph by adding that he was,
“generally speaking,” not the enemy of manufactures; he disliked only
the rearing them in hot-beds:--
“I am not in haste to see Sheffields and Birminghams in America....
I am not anxious to accelerate the approach of the period when
the great mass of American labor shall not find its employment in
the field; when the young men of the country shall be obliged to
shut their eyes upon external Nature,--upon the heavens and the
earth,--and immerse themselves in close and unwholesome workshops;
when they shall be obliged to shut their ears to the bleatings of
their own flocks upon their own hills, and to the voice of the lark
that cheers them at the plough, that they may open them in dust and
smoke and steam, to the perpetual whirl of spools and spindles and
the grating of rasps and saws.”
Potter of Rhode Island, where the new manufactures centred, spoke hotly
against the change. Much Federalist capital had been drawn into the
manufacturing business as well as into speculation in all articles of
necessity which the blockade and the embargo made scarce. At heart
the Federalists were not unanimous in wishing for a repeal of the
restrictive system, and Potter represented a considerable class whose
interests were involved in maintaining high prices. He admitted that
the average duties would still give American manufactures an advantage
of thirty-six per cent, without including freight and marine risks, but
he insisted that the bill was intended to encourage importations of
British goods “that we do not want and can do very well without, in
order to raise a revenue from the people in an indirect way.”
Probably Potter’s explanation of the change in system was correct.
The necessities of the Treasury were doubtless a decisive cause of
Madison’s step; but these necessities were foreseen by the Federalists
when Madison recommended the embargo, and the neglect to give them due
weight exposed the Administration to grave reproach. “A government
which cannot administer the affairs of a nation,” said Webster,
“without producing so frequent and such violent alterations in the
ordinary occupations and pursuits of private life, has in my opinion
little claim to the regard of the community.”
The Republicans made no attempt to defend themselves from such
criticisms. Among the small number who refused to follow Calhoun was
Macon, who sat in his seat during the debate writing to his friend
Judge Nicholson.
“Those who voted the embargo so very lately,” he said,[470] “and
those or him who recommended it must, I think, feel a little sore
under Webster’s rubs.... I have not for a long time seen the Feds
look in so good humor. They have all a smile on their countenances,
and look at each other as if they were the men which had brought
this great and good work about.... The Republicans have not the
most pleasing countenances. Those who support the bill do not look
gay or very much delighted with their majority, and those who
expect to be in the minority have a melancholy gloom over their
faces.”
That the system of commercial restrictions had failed was admitted, but
the failure carried no conviction of error to its friends. Physical
force had also apparently failed. The Southern Republicans had no
choice but to adopt strong measures, giving to the government powers
which in their opinion they had no constitutional right to confer; but
they remained unshaken in their opinions.
“I confess to you,” wrote Macon, “that the parties seem by their
acts to be approaching each other, and I fear that tough times is
a strong argument with many of us to stretch the Constitution; and
the difference between expediency and constitutionality becomes
every day less. Notwithstanding this, I do not despair of the
republic, because my dependence has always been on the people; and
their influence was felt in laying the embargo, and probably that
of the Executive in repealing it.”
No one understood or represented so well as Macon the instincts and
ideas of the Southern people at that time, and he never represented
them more truly than in the matter of the embargo. Virginia and the
Carolinas were with him at heart. Macon’s hopes for the republic
depended on his confidence in the people; and that confidence in its
turn depended on his belief that the people were still true to a dogma
which the Government had abandoned as impracticable. The belief was
well founded, as the course of events proved. The House, April 7, by
a vote of one hundred and fifteen to thirty-seven, passed the bill
repealing the Embargo and Non-importation Acts; the Senate also passed
it, April 12, by a vote of twenty-six to four; the President, April
14, approved it; and from that day the restrictive system, which had
been the cardinal point of Jefferson’s and Madison’s statesmanship,
seemed to vanish from the public mind and the party politics of the
country. Yet so deeply riveted was the idea of its efficacy among the
Southern people, that at the next great crisis of their history they
staked their lives and fortunes on the same belief of their necessity
to Europe which had led them into the experiment of coercing Napoleon
and Canning by commercial deprivations; and their second experiment had
results still more striking than those which attended their first.
The explanation of this curious popular trait certainly lay in the
nature of Southern society; but the experience was common to the whole
Union. When the restrictive system was abandoned of necessity in
April, 1814, it had brought the country to the verge of dissolution.
The Government could neither make war nor peace; the public seemed
indifferent or hostile; and the same traits which characterized the
restrictive system continued to paralyze the efforts of Congress to
adopt more energetic methods.
“I will yet hope we may have no more war,” wrote Mrs. Madison to
Mrs. Gallatin Jan. 7, 1814.[471] “If we do, alas! alas! we are not
making ready as we ought to do. Congress trifle away the most
precious of their days,--days that ought to be devoted to the
defence of their divided country.”
Mrs. Madison doubtless echoed the language she heard used at the White
House; yet the leaders of Congress were neither triflers nor idlers,
and they did all that public opinion permitted. Within a week after
Mrs. Madison’s complaint, the military committee of the House reported
a bill for encouraging enlistments. Viewed as a means of embodying the
whole military strength of the republic to resist the whole military
strength of Great Britain, about to be released from service in Europe,
Troup’s bill[472] was not an efficient measure; but it terrified
Congress.
During the campaign of 1813, as the story has shown, the Government
never succeeded in placing more than ten or eleven thousand effective
rank-and-file in the field in a single body. About as many more were
in garrison, and the sick-list was always large. Armstrong reported to
the Ways and Means Committee that the aggregate strength of the army
in February, 1813, was 18,945; in June, 27,609; in December, 34,325;
and Jan. 17, 1814, it was 33,822.[473] Discouraging as this report was,
it concealed the worst part of the situation. In truth, the abstract
furnished by the adjutant-general’s office gave the number of regular
troops in service for January, 1814, not as 33,822, but as 23,614;
and to the return a note was appended, explaining that “although the
numerical force in January, 1814, was 23,614, the actual strength of
the army at that time was less than half that number, arising from the
expiration of the term of service of the troops raised in 1809 and
enlisted for five years, and of the twelve and eighteen-months men
enlisted in 1812–1813.”[474] The establishment consisted of 58,254 men
authorized by law; but the legal establishment was not half filled.
The European news showed that England would soon be able to reinforce
her army in Canada and take the offensive. Instead of sixty thousand
men, Armstrong needed twice that number for a moderately safe defence,
since every part of the sea-coast stood at the enemy’s mercy, and no
adequate defence was possible which did not include an offensive return
somewhere on the Canadian frontier. Needing more than one hundred
thousand,--authorized by law to enlist sixty thousand,--he could
depend on less than thirty thousand men. Yet so far from attempting to
increase the establishment, Armstrong hoped only to fill the ranks.
Troup’s bill aimed at that object, purporting to be “A Bill making
further provision for filling of the ranks of the regular army.” No
system of draft was suggested. Troup’s committee proposed to treble the
bounty rather than raise the pay,--a system which might be economical
in a long war; but if the war should last only one year, the soldier
must gain four fifths of his bounty without return. Troup first
suggested one hundred dollars as bounty, which Congress raised to one
hundred and twenty-four dollars, together with three hundred and twenty
acres of land as already fixed. The pay of privates remained at ten
dollars. Twenty-four dollars of the bounty was to be paid only on the
soldier’s discharge. Recruiting-agents were to receive eight dollars
for each recruit.
Such a provision for filling the ranks could not be called excessive.
Even if the whole bounty were added to the pay, and the soldier were to
serve but twelve months, he would receive only twenty dollars a month
and his land-certificate. If he served his whole term of five years,
he received little more than twelve dollars a month. The inducement
was not great in such a community as the United States. The chance
that such a measure would fill the ranks was small; yet the measure
seemed extravagant to a party that had formerly pledged itself against
mercenary armies.
If the bill showed the timidity of the Republicans, it called out
worse qualities in the Federalists. The speeches of the opposition
were for the most part general in their criticisms and denunciations,
and deserved little attention; but that of Daniel Webster was doubly
interesting, because Webster was not only the ablest but among the
most cautious of his party. His speech[475] suggested much of the
famous eloquence of his later oratory, but dwelt on ideas to which his
later life was opposed, and followed lines of argument surprising in
a statesman of his great intellectual powers. His chief theme was the
duty of government to wage only a defensive war, except on the ocean.
“Give up your futile projects of invasion. Extinguish the fires that
blaze on your inland frontiers.” He wished the government to use its
forces only to repel invasion.
“The enemy, as we have seen, can make no permanent stand in any
populous part of the country. Its citizens will drive back his
forces to the line; but at that line where defence ceases and
invasion begins, they stop. They do not pass it because they do not
choose to pass it. Offering no serious obstacle to their actual
power, it rises like a Chinese wall against their sentiments and
their feelings.”
This advice, which echoed a Federalist idea reasonable or excusable
in 1812, was out of place in January, 1814. The battles of Leipzig
and Vittoria had settled the question of offensive and defensive in
Canada. The offensive had passed into British hands, and a successful
defence was all that the United States could hope. The interests of New
England as well as of New York and of the whole Union required that
the defensive campaign should, if possible, be fought on Canadian soil
rather than at Plattsburg, Washington, or New Orleans; and even the
most extreme Federalist could scarcely be believed blind to an idea so
obvious.
Moderate as the bill was, fifty-eight members voted against it, while
ninety-seven voted in its favor. In the Senate the bill passed without
a division, and received, January 27, the President’s approval.
Meanwhile the Senate passed bills for converting the twelve-months
regiments into regiments enlisted for the war, as well as for raising
three rifle regiments for the same term, and any number of volunteers
that in the President’s opinion the public service required, offering
to all recruits for these corps the same inducements as to the regular
regiments. These bills produced another and a longer debate, but were
passed without serious opposition. No further addition was made to the
regular army, and no other effort to obtain recruits.
Thus organized, the army consisted of forty-six regiments of infantry
enlisted for five years,--four rifle regiments; an artillery corps and
a regiment of light artillery; a regiment of dragoons; the engineer
corps, the rangers, and sea-fencibles,--an aggregate of 62,773 men
authorized by law, an increase of only five thousand men over that of
the previous year.
The appropriations for the military establishment amounted to nearly
twenty-five million dollars, the Federalists alone voting against them.
The naval appropriations amounted to seven millions, and were voted
without opposition. The Secretary of the Navy discouraged the building
of more cruisers, owing to want of timber and seamen; but Congress
showed more than ordinary sagacity by appropriating half a million
dollars for the construction of floating batteries with steam-power.
Such provision for the coming campaign offered little evidence of
increasing energy to make head against the vastly increased military
and naval power of England; but the financial outlook was much worse
than the military, and Congress dared not face it. The acting Secretary
of the Treasury, William Jones, sent his annual report to the House
January 8, and so far as his balance-sheet went, no difficulties were
apparent. He had disbursed thirty million dollars during the past
fiscal year, and needed nearly forty millions for the current year.
These sums were not excessive when compared with the wealth of the
country or its exertions at other periods of national danger. Half a
century afterward the people of the Southern States, not much more
numerous than the people of the Union in 1812, and with a far larger
proportion of slaves, supported during four years the burden of an
army numbering nearly five hundred thousand men. For the same period
the Northern people, not much exceeding twenty millions in number,
lent their government more than five hundred million dollars a year.
The efforts of 1864, proportioned to the population, were nearly ten
times as great as those of 1814, when Secretary Jones looked with
well-founded alarm at the prospect of borrowing thirty millions for the
year, and of maintaining an army which could scarcely be expected to
number forty thousand rank-and-file.
The United States, with a proper currency and untouched resources,
should have found no serious difficulty in borrowing thirty or even
fifty millions a year in 1814; but they were in reality on the verge
of bankruptcy, although the national resources were probably ample.
The amount of private capital available for loans was uncertain, and
the amount of circulating medium was equally doubtful. Timothy Pitkin
of Connecticut, perhaps the best authority in Congress, thought that
the paid bank capital of the United States did not much exceed sixty
millions,[476] and that the notes of these banks in circulation did not
reach thirty millions. His estimate of paid bank capital was probably
liberal, but his estimate of the circulation was eight or ten millions
too small. Had the Treasury been able to count on the use of these
resources, they might have answered all necessary purposes; but between
the mistakes of the government and the divisions of the people, the
Treasury was left with no sound resources whatever.
The first and fatal blow to the Treasury was the loss of the Bank
of the United States, which left the government without financial
machinery or a sound bank-note circulation. The next blow, almost
equally severe, was the loss of the Massachusetts and Connecticut
banks, which were the strongest in the Union. Whether the
responsibility for the loss rested on the Executive, Congress, or the
two States might be a subject for dispute; but whoever was responsible,
the effect was ruinous. The New England banks were financial agents
of the enemy. The bank capital of Massachusetts including Maine was
about twelve and a quarter million dollars; that of Connecticut
exceeded three millions. The whole bank capital of New England reached
eighteen millions,[477] or nearly one third of the paid bank capital
of the whole country, if Pitkin’s estimate was correct. That nearly
one third of the national resources should be withdrawn from the aid
of government was serious enough; but in reality the loss was much
greater, for New England held a still larger proportion of the specie
on which the bank circulation of other States depended.
The system of commercial restrictions was responsible for thus, at
the most critical moment of the war, throwing the control of the
national finances into the hands of the Boston Federalists. Against
the protests of the Federalists, manufactures had been forced upon
them by national legislation until New England supplied the Union
with articles of necessary use at prices practically fixed by her own
manufacturers. From the whole country specie began to flow toward
Boston as early as the year 1810, and with astonishing rapidity after
the war was declared. The British blockade stimulated the movement,
and the embargo of December, 1813, which lasted till April, 1814, cut
off every other resource from the Southern and Western States. Unable
longer to send their crops even to New England for a market, they were
obliged to send specie, and they soon came to the end of their supply.
The Massachusetts banks, which reported about $820,000 in specie in
1809, returned more than $3,680,000 in June, 1812; which rose to
$5,780,000 in June, 1813, and reached nearly $7,000,000 in June, 1814.
In five years the Massachusetts banks alone drew more than six million
dollars in specie from the Southern and Middle States,[478] besides
what they sent to Canada in payment for British bills.
No one knew how much specie the country contained. Gallatin afterward
estimated it at seventeen million dollars,[479] and of that amount the
banks of New England in 1814 probably held nearly ten millions. The
Massachusetts banks, with seven millions in specie, had a bank-note
circulation of less than three millions. The Middle, Southern, and
Western States must have had a bank-note circulation approaching forty
millions in paper, with seven or eight millions in specie to support
it,[480] while the paper was constantly increasing in quantity and the
specie constantly diminishing. Bank paper, as was believed, could not
with safety exceed the proportion of three paper dollars to every
specie dollar in the bank vaults; but the banks in 1814 beyond New
England were circulating at least four paper dollars to every silver
or gold dollar, and in many cases were issuing paper without specie in
their possession.
Already the banks of New England were pressing their demands on those
of New York, which in their turn called on Philadelphia and Baltimore.
The specie drained to New England could find its way back only by means
of government loans, which New England refused to make in any large
amount. On the other hand, Boston bought freely British Treasury notes
at liberal discount, and sent coin to Canada in payment of them.[481]
Probably New England lent to the British government during the war more
money than she lent to her own. The total amount subscribed in New
England to the United States loans was less than three millions.
This situation was well understood by Congress. In the debate of
February, 1814, the approaching dangers were repeatedly pointed out.
The alarm was then so great that the Committee of Ways and Means
reported a bill to incorporate a new national bank with a capital of
thirty million dollars, while Macon openly advocated the issue of
government paper,[482] declaring that “paper money never was beat.”
Congress after a diffuse debate passed only a loan bill for twenty-five
millions, and an Act for the issue of five million interest-bearing
Treasury notes, leaving with the President the option to issue five
millions more in case he could not borrow it. The legislation was
evidently insufficient, and satisfied no one. “You have authorized a
loan for twenty-five millions,” said Grundy in the debate of April 2,
“and have provided for the expenditure of so much money. Where is the
money?”
Without attempting to answer this question, April 18 Congress
adjourned.