Albert Gallatin

In 1788, Gallatin was elected as a delegate to a state convention to discuss possible revisions to the United States Constitution.[19] In the next two years, he served as a delegate to a state constitutional convention and won election to the Pennsylvania House of Representatives. As a public official, he aligned with Anti-Federalists and spent much of his time in the state and national capital of Philadelphia. His service on the Ways and Means Committee earned him a strong reputation as an expert in finance and taxation.[20]

Gallatin won election to the United States Senate in early 1793, and he took his seat in December of that year. He quickly emerged as a prominent opponent of Alexander Hamilton's economic program, but was declared ineligible for a seat in the Senate in February 1794 because he had not been a citizen for the required nine years prior to election.[21] The dispute itself had important ramifications. At the time, the Senate held closed sessions. However, with the American Revolution only a decade ended, the senators were leery of anything which might hint that they intended to establish an aristocracy, so they opened up their chamber for the first time for the debate over whether to unseat Gallatin. Soon after, open sessions became standard procedure for the Senate.[22]

Gallatin had strongly opposed the 1791 establishment of an excise tax on whiskey, as whiskey trade and production constituted an important part of the Western economy.[23] In 1794, after Gallatin had been removed from the Senate and returned to Friendship Hill, the Whiskey Rebellion broke out among disgruntled farmers opposed to the federal collection of the whiskey tax. Gallatin did not join in the rebellion, but criticized the military response of the President George Washington's administration as an overreaction.[24] Gallatin helped persuade many of the angered farmers to end the rebellion, urging them to accept that "if any one part of the Union are suffered to oppose by force the determination of the whole, there is an end to government itself and of course to the Union."[25] The rebellion collapsed as the army moved near, and there was no fighting.

In the aftermath of the Whiskey Rebellion, Gallatin won election to the United States House of Representatives, taking his seat in March 1795.[26] Upon his return to Congress, Gallatin became the leading financial expert of the Democratic-Republican Party. In 1796, Gallatin published A Sketch on the Finances of the United States, which discussed the operations of the Treasury Department and strongly attacked the Federalist Party's financial program.[27] Some historians and biographers believe that Gallatin founded the House Ways and Means Committee in order to check Hamilton's influence over financial issues, but historian Patrick Furlong argues that Hamilton's Federalist allies were actually responsible for founding the committee.[28] After James Madison declined to seek re-election in 1796, Gallatin emerged as the Democratic-Republican leader in the House of Representatives.[29] During the Quasi-War with France, Gallatin criticized military expenditures and opposed passage of the Alien and Sedition Acts.[30] In the contingent election that decided the outcome of the 1800 presidential election, Gallatin helped Thomas Jefferson secure victory over his ostensible running mate, Aaron Burr.[31]

Albert Gallatin, signature

Gallatin's mastery of public finance made him the obvious choice as Jefferson's Secretary of the Treasury; as Jefferson put it, Gallatin was "the only man in the United States who understands, through all the labyrinths Hamilton involved it, the precise state of the Treasury." Gallatin received a recess appointment in May 1801 and was confirmed by the Senate in January 1802.[32] Along with Secretary of State Madison and Jefferson himself, Gallatin became one of the three key officials in the Jefferson administration.[33] As Jefferson and Madison spent the majority of the summer months at their respective estates, Gallatin was frequently left to preside over the operations of the federal government.[34] He also acted as a moderating force on Jefferson's speeches and policies, in one case convincing Jefferson to refrain from calling for the abolition of the General Welfare Clause.[35] Gallatin also argued against the United States going into trade with the newly liberated Haiti, going as far as to claim that the right of self-determination should be denied to others occasionally, especially if those "others" in question were not white.[36]

With Gallatin taking charge of fiscal policy, the new administration sought to lower taxation (though not import duties), spending, and the national debt; debt reduction in particular had long been a key goal of the party and Gallatin himself.[37] When Gallatin took office in 1801, the national debt stood at $83 million. By 1812, the U.S. national debt had fallen to $45.2 million.[38] Burrows says of Gallatin:

His own fears of personal dependency and his small-shopkeeper's sense of integrity, both reinforced by a strain of radical republican thought that originated in England a century earlier, convinced him that public debts were a nursery of multiple public evils—corruption, legislative impotence, executive tyranny, social inequality, financial speculation, and personal indolence. Not only was it necessary to extinguish the existing debt as rapidly as possible, he argued, but Congress would have to ensure against the accumulation of future debts by more diligently supervising government expenditures.[39]

Shortly after taking office, Gallatin worked with House Ways and Means Committee Chairman John Randolph to reduce federal spending and reduce or abolish all internal taxes, including the tax on whiskey.[40] He presided over dramatic reductions in military spending, particularly for the United States Navy.[41] Despite his opposition to debt, Gallatin strongly supported and arranged the financing for the Louisiana Purchase, in which the U.S. bought French Louisiana. Both Jefferson and Gallatin regarded control of the port of New Orleans, which was ceded in the purchase, as the key to the development of the Western United States. Jefferson had doubts about the constitutionality of the purchase, but Gallatin helped convince the president that a constitutional amendment authorizing the purchase was impractical and unnecessary. Gallatin also championed and helped plan the Lewis and Clark Expedition to explore lands west of the Mississippi River.[42]

Before and after the Louisiana Purchase, Gallatin presided over a major expansion of public land sales. With the goal of selling land directly to settlers rather than to land speculators, Gallatin increased the number of federal land offices from four to eighteen. In 1812, Congress established the General Land Office as part of the Department of Treasury, charging the new office with overseeing public lands.[43] To help develop western lands, Gallatin advocated for internal improvements such as roads and canals, especially those that would connect to territories west of the Appalachian Mountains. In 1805, despite his earlier constitutional reservations, Jefferson announced his support for federally-financed infrastructure projects. Three years later, Gallatin put forward his Report on Roads and Canals, in which he advocated for a $20 million federal infrastructure program. Among his proposals were canals through Cape Cod, the Delmarva Peninsula, and the Great Dismal Swamp, a road stretching from Maine to Georgia, a series of canals connecting the Hudson River with the Great Lakes, and various other canals to connect seaports like Charleston with interior regions. Resistance from many congressional Democratic-Republicans regarding cost, as well as hostilities with Britain, prevented the passage of a major infrastructure bill, but Gallatin did win funding for the construction of the National Road. The National Road linked the town of Cumberland, on the Potomac River, with the town of Wheeling, which sat on the Ohio River.[44] Many of Gallatin's other proposals were eventually carried out years later by state and local governments, as well as private actors.[45]

Throughout much of Jefferson's presidency, France and Britain engaged in the Napoleonic Wars. During Jefferson's second term, both the British and French stepped up efforts to prevent American trade with their respective enemy. Particularly offensive to many Americans was the British practice of impressment, in which the British forced captured American sailors to crew British ships. Jefferson sent James Monroe to Britain to negotiate a renewal and revision of the 1795 Jay Treaty, but Jefferson rejected the treaty that Monroe reached with the British.[46] After the 1807 Chesapeake–Leopard affair, Jefferson proposed, over Gallatin's strong objections, what would become the Embargo Act of 1807. That act forbade all American ships from engaging in almost all foreign trade, and it remained in place until its repeal in the final days of Jefferson's presidency. Despite Gallatin's objection to the embargo, he was tasked with enforcing it against smugglers, who were able to evade the embargo in various ways. The embargo proved ineffective at accomplishing its intended purpose of punishing Britain and France, and it contributed to growing dissent in New England against the Jefferson administration.[47] Overcoming Jefferson's declining popularity and the resentment at the embargo, Secretary of State Madison won the 1808 presidential election.[48]

Bureau of Engraving and Printing portrait of Gallatin as Secretary of the Treasury

After taking office, Madison sought to appoint Gallatin as Secretary of State, which was generally seen as the most prestigious cabinet position. Opposition from the Senate convinced Madison to retain Gallatin as Secretary of the Treasury, and Robert Smith instead received the appointment as Secretary of State. Gallatin was deeply displeased by the appointment of Smith, and he was frequently criticized by Smith's brother, Senator Samuel Smith, as well as journalist William Duane of the influential Philadelphia Aurora. He considered resigning from government service, but Madison convinced him to stay on as a key cabinet official and adviser.[49]

In 1810, Gallatin published Report on the Subject of Manufactures, in which he unsuccessfully urged Congress to create a $20 million federal loan program to support fledgling manufacturers.[50] He was also unable to convince Congress to renew the charter of the First Bank of the United States (commonly known as the national bank). Although the national bank had been established as part of Hamilton's economic program, and Jefferson believed that it was "one of the most deadly hostility existing against the principles and form of our Constitution," Gallatin saw the national bank as a key part of the country's financial system. In a letter to Jefferson, Gallatin argued that the bank was indispensable because it served as a place of deposit for government funds, a source of credit, and a regulator of currency. In January 1811, the national bank was effectively abolished after the House and the Senate both defeated bills to recharter the national bank in extremely narrow votes. In response, Gallatin sent a letter to Madison, asking for permission to resign and criticizing the president for various actions, including his failure to take a strong stance on the national bank. Shortly afterwards, Madison replaced Secretary of State Smith with James Monroe, and Gallatin withdrew his resignation request.[51]

Following the repeal of the Embargo Act of 1807, Gallatin was charged with enforcing the Non-Intercourse Act of 1809, which lifted parts of the trade embargo but still prevented American ships from engaging in trade with the British and French empires.[49] In 1811, Congress replaced the Non-Intercourse Act of 1809 with a law known as Macon's Bill Number 2, which authorized the president to restore trade with either France or Britain if either promised to respect American neutrality. As with previous embargo policies pursued by the federal government under Jefferson and Madison, Macon's Bill Number 2 proved to be ineffective at halting the attacks on American shipping.[52] In June 1812, Madison signed a declaration of war against Britain, beginning the War of 1812.[53]

Madison ordered an invasion of Canada by relying on mostly state militias, but British forces defeated the invasion. The U.S. experienced some successes at sea, but were unable to break a British blockade of the United States. With the abolition of the national bank, the drop in import duties due to the war, and the inability or unwillingness of state banks to furnish credit, Gallatin struggled to fund the war. Reluctantly, he drafted and won passage of several new tax laws, as well as an increase in tariff rates. He also sold U.S. securities to investors, and an infusion of cash from wealthy investors Stephen Girard, John Jacob Astor, and David Parish proved critical to the financing of the war. During the War of 1812, the national debt grew dramatically, going from $45 million in early 1812 to $127 million in January 1816.[54]