Standard Library Edition

AMERICAN STATESMEN

EDITED BY

JOHN T. MORSE, JR.

IN THIRTY-TWO VOLUMES VOL. XIII.

THE JEFFERSONIAN DEMOCRACY

ALBERT GALLATIN

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American Statesmen

STANDARD LIBRARY EDITION

The Home of Albert Gallatin

HOUGHTON, MIFFLIN & CO.

American Statesmen

ALBERT GALLATIN

BY

JOHN AUSTIN STEVENS

BOSTON AND NEW YORK

HOUGHTON, MIFFLIN AND COMPANY

The Riverside Press, Cambridge

Copyright, 1883 and 1898

BY HOUGHTON, MIFFLIN & CO.

All rights reserved

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PREFACE

Every generation demands that history shall be rewritten. This is not alone because it requires that the work should be adapted to its own point of view, but because it is instinctively seeking those lines which connect the problems and lessons of the past with its own questions and circumstances. If it were not for the existence of lines of this kind, history might be entertaining, but would have little real value. The more numerous they are between the present and any earlier period, the more valuable is, for us, the history of that period. Such considerations establish an especial interest just at present in the life of Gallatin.

The Monroe Doctrine has recently been the pivot of American statesmanship. With that doctrine Mr. Gallatin had much to do, both as minister to France and envoy to Great Britain. Indeed, in 1818, some years before the declaration of that doctrine, when the Spanish colonies of South America were in revolt, he declared that the United States would not even aid France in a mediation. Later, in May, 1823, six months before the famous message of President Monroe, Mr. Gallatin had already uttered its idea; when about leaving Paris, on his return from the French mission, he said to Chateaubriand, the French minister of foreign affairs (May 13, 1823): “The United States would undoubtedly preserve their neutrality, provided it were respected, and avoid any interference with the politics of Europe.... On the other hand, they would not suffer others to interfere against the emancipation of America.” With characteristic vanity Canning said that it was he himself who “called the new world into existence to redress the balance of the old.” Yet precisely this had already for a long while been a cardinal point of the policy of the United States. So early as 1808, Jefferson, alluding to the disturbed condition of the Spanish colonies, said: “We consider their interest and ours as the same, and that the object of both must be to exclude all European influence in this hemisphere.”

Matters of equal interest are involved in the study of Mr. Gallatin's actions and opinions in matters of finance. Every one knows that he ranks among the distinguished financiers of the world, and problems which he had to consider are still agitating the present generation. He was opposed alike to a national debt and to paper money. Had the metallic basis of the United States been adequate, he would have accepted no other circulating medium, and would have consented to the use of paper money only for purposes of exchange and remittance. In 1830 he urged the restriction of paper money to notes of one hundred dollars each, which were to be issued by the government. Obviously these must be used chiefly for transmitting funds, and would be of little use for the daily transactions of the people. Yet even this concession was due to the fact that the United States was then a debtor country, and so late as 1839, as Mr. Gallatin said, “specie was a foreign product.” For subsidiary money he favored silver coins at eighty-five per cent. of the dollar value, a sufficient alloy to hold them in the country. Silver was then the circulating medium of the world, the people's pocket money, and gold was the basis and the solvent of foreign exchanges.

Great interest attaches to the application of some other of Gallatin's financial principles to more modern problems; and a careful study of his papers may fairly enable us to form a few conclusions. It may be safely said that he would not have favored a national bank currency based on government bonds. This, however, would not have been because of any objection to the currency itself, but because the scheme would insure the continuance of a national debt. He was too practical, also, not to see that the ultimate security is the faith of the government, and that no filtering of that responsibility through private banks could do otherwise than injure it. Further, it is reasonably safe to say that he would favor the withdrawal both of national bank notes and of United States notes, the greenbacks so-called; and that he would consent to the use of paper only in the form of certificates directly representing the precious metals, gold and silver; also that he would limit the use of silver to its actual handling by the people in daily transactions. He would feel safe to disregard the fluctuations of the intrinsic value of silver, when used in this limited way as a subordinate currency, on the ground that the stamp of the United States was sufficient for conferring the needed value, when the obligation was only to maintain the parity, not of the silver, but of the coin, with gold. He understood that, in the case of a currency which is merely subordinate, parity arises from the guaranty of the government, and not from the quality of the coin; and that only such excess of any subordinate currency as is not needed for use in daily affairs can be presented for redemption. This principle, well understood by him, is recognized in European systems, wherein the minimum of circulation is recognized as a maximum limit of uncovered issues of paper. The circulation of silver, or of certificates based upon it, comes within the same rule.

At the time of the publication of this volume objection was taken to the author's statement that, until the publication of Gallatin's writings, his fame as a statesman and political leader