to the sum wanted to defray the extraordinary expenses of the war, an annual loan equal to the annual reimbursement of the six per cent. and deferred stocks prescribed by law, will also be required. This, together with the reimbursement of the residue of the converted stock, amounting to 565,000 dollars, will for this year amount, as has been stated in the annual report, to 2,135,000 dollars. As the interest on the existing debt is included in the "current expenses," the loan necessary for the reimbursement of the six per cent. and deferred stocks will, for each subsequent year, amount only to 1,570,000 dollars. The loans for those sums will indeed create no addition to the amount of the debt, but will nevertheless increase the total sum to be annually borrowed. It must also be observed, that if the price of stocks should sink below par, the commissioners of the sinking fund are bound by existing laws to apply the residue of the annual appropriation of eight millions a year to the purchase of stock; and that residue will, this year, amount to 3,640,000 dollars, which in that case must also be borrowed. It is a view of those several considerations, which has created an apprehension that loans to such large amount might not perhaps be obtained on as favourable terms as under other circumstances, and with the powerful assistance of a national bank, had been formerly anticipated. The same view of the subject has most forcibly impressed a conviction of the necessity of an additional revenue. For if further loans be also resorted to for defraying the ordinary expenses and the interest, they must, if at all practicable, be obtained on the most ruinous terms. Excluding that idea, and embracing only the loans which are absolutely necessary, it appears to me more prudent not to limit the rate of interest by law. A discretionary power in that respect is, so far as relates to the executive, altogether ineligible; but is preferable to the risk of leaving the public service unprovided for. It is also for the same reason, requisite that the loans may be made irredeemable for a term not less than ten years.

In a former communication to the committee of ways and means, it was suggested that "treasury notes," bearing interest, might to a certain extent be issued, and to that extent diminish the amount to be directly borrowed. The advantage they would have would result from their becoming a part of the circulating medium, and taking, to a certain degree, the place of bank notes. It is evident, however, that for the same reason the issue must be moderate and never exceed the amount which may circulate without depreciation.

The loans necessary for the present year are: 1st, A sum equal to that which may, during the year, be reimbursed on account of the principal of the debt. 2dly, The amount of expenses which have been or may be authorized by congress and are not included in the annual estimates.

The first sum will certainly amount to 2,135,000 dollars, and may be greater if the stock should sink below par.

The second sum cannot yet be stated, since the extent of the expenses which may be authorized is not yet ascertained, and as the estimates for the additional army, already authorized, have not yet been received by the treasury department.

The deficit of 1,200,000 dollars, (on the peace establishment) is not included as absolutely necessary, although its payment will, as stated in the annual report, leave in the treasury a smaller balance than, under existing circumstances, is eligible.

It may be proper to repeat that so long as the public credit is preserved, and a sufficient revenue is provided, no doubts are entertained of the possibility of procuring on loan, the sums wanted to defray the ordinary expenses of a war; and that the apprehensions expressed relate solely to the terms of the loans, to the rate of interest at which they can be obtained.

The reimbursement of the new debt which may be created, must ultimately depend on the respective revenue and expenditure of. the United States, after the restoration of peace. No artificial provisions, no appropriations or investments of particular funds in certain persons, no nominal sinking fund, however constructed, will ever reduce a public debt unless the net annual revenue shall exceed the aggregate of the annual expenses, including the interest on the debt. Those who create the debt can only estimate what the peace revenue and expenditure will be, and presume that the supposed surplus will be faithfully and perseveringly applied to the payment of the principal.

The current or peace expenses have been estimated at nine millions of dollars. Supposing the debt contracted during the war not to exceed fifty millions, and its annual interest to amount to three millions, the aggregate of the peace expenditure would be no more than twelve millions. And as the peace revenue of the United States may at the existing rate of duties be fairly estimated at fifteen millions, there would remain from the first outset a surplus of three millions of dollars applicable to the redemption of the debt. So far therefore as can be now forseen, there is the strongest reason to believe that the debt thus contracted will be discharged with facility and as speedily as the terms of the loans will permit. Nor does any other plan in that respect appear necessary than to extend the application of the annual appropriation of eight millions, and which is amply sufficient for that purpose, to the payment of interest and reimbursement of the principal of the new debt. No doubt can be entertained of that mode being sufficiently efficacious, since by that plan alone forty six millions of the public debt have been reimbursed during the last eleven years. If the national revenue exceeds the national expense, a simple appropriation for the payment of the principal of the debt, and co-extensive with the object is sufficient, and will infallibly extinguish the debt. If the expense exceeds the revenue, the appropriation of any specific sum and the investment of the interest extinguished, or of any other fund, will prove altogeth nu

gatory; and the national debt will, notwithstanding that apparatus, be annually increased by an amount equal to the deficit in the re

venue..

3,000,000

The annual interest on the existing debt amounts to $2,220,000 And estimating the interest on the new debt at The sum which, on the annual appropriation of eight millions, would, at the restoration of peace, be applicable to the payment of principal, is

- 2,780,000

8,000,000

A sum somewhat less than the presumed surplus of three millions, as above stated, and which will be nearly sufficient to reimburse before the year 1823 the whole existing debt of the United States, with the exception of the three per cent. stock. The loans contracted during the war being made irredeemable for at least ten years, the first reimbursement would fall on that year: and the whole of the appropriations of eight millions after deducting 485,000 dollars for the interest of the three per cent. stock, would henceforth be applicable to the payment of the interest and principal of the new debt. The precise period of final extinguishment, and the precise amount of annual payments will depend on the terms of the loans, and on the number of years for which it may be necessary to make each loan irredeemable. But this skecth is sufficient to show, 1st, That no inconvenience will arise in making the loans irredeemable for ten years, since there is not much probability that they could be sooner discharged. 2dly, That the appropriation of eight millions will be sufficient for their final reimbursement. 3dly, That that reimbursement, and that of the whole debt of the United States (the three per cent. stock excepted) will probably be effected within fifteen years after the restoration of peace. It must always be remembered that those estimates are predicated on the supposition that an additional revenue to the amount already stated, will be provided, and that the increase of debt, during the war, will not exceed fifty millions,

In answering the inquiries of the committee on subjects so intimately connected with the most important questions of national concern, it became an imperious duty to represent every circumstance precisely as it was, or appeared to be, and without exaggerating or disguising any of the difficulties which must be encountered.

To understand these to their full extent will afford the best means of overcoming them; and there is none which appears insurmountable or even discouraging. What appears to be of vital importance is, that the crisis should at once be met by the adoption of efficient measures, which will with certainty provide means commensurate with the expense, and by preserving unimpaired, instead of abusing, that public credit on which the public resources so eminently depend, will enable the United States to persevere

in the contest until an honorable peace shall have been obtained. I have the honour to be, with great respect, sir, your obedient servant, ALBERT GALLATIN.

Honourable Ezekiel Bacon,

chairman committee of ways and means.

MESSAGE

From the President of the United States, transmitting copies of cere tain Documents obtained from John Henry, &c.

March 9th, 1812.-Read and referred to the committee on Foreign Relations, with power to send for persons, papers and records.

To the Senate and House of

Representatives of the United States.

I LAY before congress copies of certain documents which remain in the department of state. They prove that, at a recent period, whilst the United States, notwithstanding the wrongs sustained by them, ceased not to observe the laws of peace and neutrality towards Great Britain, and in the midst of amicable professions and negotiations on the part of the British government, through its public minister here, a secret agent of that government was employed in certain states, more especially at the seat of government in Massachusetts, in fomenting disaffection to the constituted authorities of the nation, and in intrigues with the disaffected, for the purpose of bringing about resistance to the laws, and, eventually, in concert with a British force, of destroying the union and forming the eastern part thereof into a political connection with Great Britain.

In addition to the effect which the discovery of such a procedure ought to have on the public councils, it will not fail to render more dear to the hearts of all good citizens, that happy union of these states, which under Divine Providence, is the guaranty of their liberties, their safety, their tranquillity, and their prosperity. JAMES MADISON.

March 9th, 1812.

DOCUMENTS.

A.

[COPY.]

SIR,

Philadelphia, February 20th, 1812. Much observation and experience have convinced me, that the injuries and insults with which the United States have been so long and so frequently visited, and which cause their present embarrassment, have been owing to an opinion entertained by foreign states," That in any measure tending to wound their pride, or

provoke their hostility, the government of this country could never induce a great majority of its citizens to concur." And, as many of the evils which flow from the influence of this opinion on the policy of foreign nations, may be removed by any act that can produce UNANIMITY AMONG ALL PARTIES IN AMERICA, I voluntarily tender to you, sir, such means as I possess towards promoting so desirable and important an object; which if accomplished, cannot fail to extinguish, perhaps for ever, those expectations abroad, which may protract indefinitely an accommodation of existing differences, and check the progress of industry and prosperity in this rising empire.

I have the honour to transmit herewith the documents and correspondence relating to an important mission, in which I was employed by Sir James Craig, the late governor general of the British provinces in North America, in the winter of the year 1809.

The publication of these papers will demonstrate a fact not less valuable than the good already proposed; it will prove that no reliance ought to be placed on the professions of good faith of an administration, which, by a series of disastrous events, has fallen into such hands as a Castlereagh, a Wellesley or a Liverpool: I should rather say, into the hands of the stupid subalterns, to whom the pleasures and the indolence of those ministers have consigned it. In contributing to the good of the United States by an exposition, which cannot (I think) fail to solve and melt all division and disunion among its citizens; I flatter myself with the fond expectation, that when it is made public in England, it will add one great motive to the many that already exist, to induce that nation to withdraw its confidence from MEN, WHOSE POLITICAL CAREER IS A FRUITFUL SOURCE OF INJURY AND EMBARRASSMENT IN AMERICA; OF INJUSTICE AND MISERY IN IRELAND; OF DISTRESS AND APPREHENSION IN ENGLAND; AND CONTEMPT EVERY WHERE.

In making this communication to you, sir, I deem it incumbent on me, distinctly and unequivocally to state, that I adopt no party views; that I have not changed any of my political opinions; that I neither seek nor desire the patronage, nor countenance of any government, nor of any party; and, that in addition to the motives already expressed, I AM INFLUENCED BY A JUST RESENTMENT of

THE PERFIDY AND DISHONOUR OF THOSE WHO FIRST VIOLATED THE

CONDITIONS UPON WHICH I RECEIVED THEIR CONFIDENCE; who have injured me, and disappointed the expectations of my friends; and left me no choice, but between a degrading acquiescence in injustice, and a retaliation, which is necessary to secure to me my own respect.

This wound will be felt where it is merited; and if SIR JAMES CRAIG still live, his share of the pain will excite no sympathy among those who are at all in the secret of our connection. I have the honour to be, Sir, your obedient servant, &c. &c.

(Signed)

To James Monroe, Esq. Secretary of state,

J. HENRY.