James Madison Papers

To James Madison from Albert Gallatin, 17 April 1813

From Albert Gallatin

Treasury departmt. April 17th 1813


I have the honour to enclose the copy of a letter written this day to the Secretaries for the War and Navy department, which gives a general view of our fiscal situation for this year, and regulates the sums which in conformity therewith may be monthly drawn during the residue of the year 1813, for the service of each of those departments respectively. I have the honour to be with the highest respect Sir Your obedt. Servant

Albert Gallatin



Treasury Department Apr. 17. 1813.


The loan being now filled, and the probable receipts of the Treasury for this year nearly ascertained, I have the honor to communicate the general result and the amount on which you may rely for the service of your Department.

The Treasury was so far exhausted on the first day of this month that the small unexpended balance dispersed in more than thirty Banks could not have afforded any further resources. This unpleasant situation was principally due to the large requisitions made by the War department during the first quarter of this year; and it is indispensible to adopt some fixed rules which may prevent the recurrence of a similar crisis.

The revenue derived from Customs payable during the remainder of this year is estimated at $9,000,000—

That resulting from the Sales of lands may be estimated at 320,000

Revenue 9,320,000. 

Of the sixteen million loan, there had been received and expended prior to the 1st. of April a sum of $500,000 leaving an unexpended residue of 15,500,000. 

The only remaining resource is that of the Treasury-notes authorised by the act of last session,1 which, though yet uncertain, will be taken at its full amount 5,000,000—

Total of resources 29,820,000

Of the several branches of expenditure there are but two which by law are entitled to a priority, vizt: the civil list, for the payment of which six hundred thousand dollars are annually reserved by virtue of the 1st. section of the act of August 4th. 1790;2 and the payments for the public debt, which, with the exception of the said sum of $600,000 have priority before all other payments, by virtue of the contracts with the creditors, and of the several laws making an annual appropriation for that purpose and pledging that appropriation for the specific objects therein mentioned, which may fall due in the course of each respective year.3

The unexpended balance on that account at the end of last year, together with the annual appropriation for this year, after deducting the sum expended from the 1st. of Jany. to the 31st. of March last, amount to $10,500,000—

Of this sum, $9,000,000 are necessary to satisfy the demands actually due and still payable this year; and the residue of $1,500,000, must also be applied, according to law, to the purchase of stocks unless these should, contrary to every appearance, rise to par.4 To which adding the above mentioned sum of 600,000. 

makes an aggregate of 11,100,000. 

Which deducted from the aggregate of resources 29,820,000. 

Leaves the sum of 18,720,000. 

applicable to all the other expenses, civil, military and naval for the remainder of the year 1813.

The civil, miscellaneous and diplomatic expenses, may, in addition to the above mentioned Sum of 600,000 D., be estimated at about 900,000 

which leaves for the War & Navy Departments 17,820,000. 


That sum of 17,820,000, may I think, be divided between the two departments by alloting $13,320,000, to the War, and $4,500,000 to the Navy Department. Should that distribution be objected to, the President must decide, and the alterations which he may direct, will be obeyed; but the aggregate being a matter of fact and not of discretion cannot be altered, unless Congress shall think fit at their ensuing session to provide further funds. By such funds I do not mean appropriations, which are only an authority to expend, but Ways & Means which shall, in the course of the present year place an additional sum of money in the Treasury.

For the reasons already Stated, it is necessary that the requisitions from each department should be as regular and gradual as the receipts into the Treasury commonly are, and that those from the War/Navy department Should not therefore, for each of the nine last months of the year 1813, exceed one ninth part of the above mentioned sum of $13,320,000/4,500,000 or the monthly average of $1,480,000/500,000. If a less sum should be sufficient for any one month, the undrawn difference may be added to the requisition for any of the ensuing months where it may be wanted. But with that exception, no more than the said sum of $1,480,000/500,000, will be paid monthly by the Treasury on account of the War/Navy Department, without a special order from the President. And in such case, the surplus thus advanced will be invariably deducted from the payment for the ensuing month, in order that there may not be any risk of leaving the payments for the public debt unprovided for. These, as has already been stated, have the priority, and the public faith as well as the laws require that those payments should at all events be made, and that if there be any deficiency, it should fall on the other expenses of government.

With respect to the places where money may be wanted, I believe that it will be in the power of the Treasury, on receiving timely notice, to supply the money in any of the Atlantic States where it may be wanted. But should the same rate of expenditure be continued to the westward, I apprehend that the War/Navy Department will be compelled either to transport specie, or to permit its agents to draw at a discount. And it is not improper to add that this transmission of specie, by draining the places from which we exclusively draw our resources, must have a tendency to curtail those resources. The last loan of $16,000,000 has been obtained in the following places vizt:

States East of New York $486,700—
State of New York 5,720,600—
Philadelphia 6,858,400—
Baltimore & District of Columbia 2,393,300—
State of Virginia 187,000—
Charleston S. C. 354,000

And it seems both just and convenient that, so far as there may be discretion, and so far as it is practicable, the public monies should be expended in the places where they are obtained.

This communication, it would at all events, have been my duty to make, though probably in an unofficial manner as has been the case on former similar occasions. But it has been deemed particularly important not to leave with the gentleman who will act as Secretary of the Treasury, any difficult question unsettled, and to convey at this time, a clear understanding of our real fiscal situation for the present year. I have the honor to be with great respect Sir, your obedt. servt.

(Signed) Albert Gallatin

RC and enclosure (DLC). RC docketed by JM.

1For the act, dated 25 Feb. 1813, see U.S. Statutes at Large description begins The Public Statutes at Large of the United States of America … (17 vols.; Boston, 1848–73). description ends , 2:801–4.

2See ibid., 1:138–39.

3Acts of 29 Apr. 1802 and 10 Nov. 1803 established an $8 million annual appropriation for payment of the public debt. Subsequent acts authorizing government loans, passed in 1810, 1811, 1812, and 1813, stated that “the faith of the United States is hereby pledged to establish sufficient revenues for making up any deficiency that may hereafter take place in the funds hereby appropriated” for the repayment of such loans (ibid., 2:167–70, 245–47, 611, 657, 695, 799).

4Section 3 of the act of 29 Apr. 1802 required that any surplus in the funds appropriated for debt repayment be applied “towards the further and final redemption, by payment, or purchase, of the present debt of the United States.” The loan authorization laws of 1810 through 1813 specified that the commissioners of the sinking fund were “authorized to apply, from time to time, such sum or sums out of the said fund as they may think proper, towards redeeming by purchase, and at a price not above par, the principal” of the public debt (ibid., 2:168, 611, 657, 695, 799).

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