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Formation of the Union By Albert Bushnell Hart Characters: 3150

Updated: 2017-12-06 00:02


[Sidenote: Federal finance.]

Although the effort to check the power of the judiciary failed, in another direction Jefferson struck out a new and popular policy. Under the Federalists the taxes had increased from $3,600,000 in 1792 to $10,700,000 in 1800. This increase had been more than balanced by the growth of expenditures. The Indian and French wars had brought unexpected expenses upon the government, and the construction of a little navy was still going on, In 1793 the government spent $3,800,000. In 1800 it spent $10,800,000. Of this amount $6,000,000 went for the army and navy, and $3,000,000 for interest. The deficits had been obscured by a funding system under which payments to the sinking fund were practically made out of borrowed money, so that the debt had risen from $80,000,000 in 1793 to nearly $83,000,000, in 1800.

[Sidenote: Gallatin's finance.]

If peace could be guaranteed, a considerable part of the expenditure could be cut down; and thus taxes might be reduced, and still a surplus be left, out of which to pay instalments on the public debt. In his first annual message the President accordingly advised the reduction of the military and naval forces, and also of the civil officers. Gallatin proceeded to draw up a financial plan: the annual revenue was to be $10,800,000, military expenses were to be cut down to $2,500,000, and the civil expenses to about $1,000,000; the remainder, $7,300,000, was to be devoted to the reduction of the debt.

[Sidenote: Success of the system.]

Neither part of this scheme worked precisely a

s had been expected. The army indeed underwent what Jefferson called a "chaste reformation;" it was cut down from 4,000 to 2,500 men, to the great discontent of the officers. The number of vessels in commission was reduced from about twenty-five to seven, and the construction of vessels on the stocks was stopped, so that in 1802 less than $1,000,000 was spent on the navy. Nevertheless, the civil and miscellaneous expenses of the government grew steadily. Under the Federalist administration, the total expenditures in time of peace, exclusive of interest, had never been more than $3,000,000; in 1802 Gallatin spent $3,700,000, and in 1809 $7,500,000. The debt was, however, rapidly diminished, and in 1809 stood at only $45,000,000; nearly half of the interest charge was thus cut off, and for the first time the government found itself with more money than it knew how to use. The taxes had been reduced by a million and a half, by striking off the unpopular direct tax and excise; the loss was more than met by an unexpected increase in the revenue from customs, which in 1808 stood at $16,000,000,

[Sidenote: Drawbacks.]

To reach this result Jefferson and Gallatin deliberately neglected to make ordinary preparations against attack; fortifications were abandoned, skilled officers dismissed, ships allowed to decay at the wharves or on the stocks, and the accumulation of military material ceased. The only offset to this neglect was the creation of a military school at West Point in 1802, and the training gained by the naval wars against the Barbary powers.

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