Albert Gallatin and his Influence on America
History has always been a fascination of mine. It’s probably no surprise then that the history of money, and all things pertaining to it, would also interest me. I’ve read about the Federal Reserve, and the rise of fractional banking, and the legal differences between banking regulations; heck I’ve read about just the general history of money starting with seashells in China to the import of a uniform alphabet – thank you Phoenicians – to ease the burden of foreign trade. However, the one thing that has always been of utmost interest is the history of people in money. Everybody knows the Barons of Bank: Alexander Hamilton, David Ricardo, the Medici family and Henry Thornton. They’re all well-known names. Despite escaping public familiarity (at least for finance that is) Albert Gallatin is still one of my favorite biographies.
Gallatin was a Swiss immigrant born in Geneva, Switzerland who emigrated at 19 years old. Even though he had secured a recommendation from Benjamin Franklin, Gallatin floundered as a businessman in Maine. After just two years he sent word back home to tell them of his troubles. His family, anticipating his letter, had already secured another recommendation from Dr. Samuel Cooper – Cooper was the minister of a parish attended by a who’s who list of American Revolutionaries and also an alumnus of Harvard College. Cooper secured Gallatin a professorship to teach French at Harvard University in 1782. I’ve always chuckled at Gallatin’s turmoil at the beginning of his American life.
He struggled along for quite a few years; yet, he turned out to be one of America’s top negotiators and diplomats as well as an astute banker (albeit terrible businessman). Given his struggles, there is simply no way for him to have predicted the importance he would have in American history.
Gallatin in Politics
Remembering that he came to America at 19, Gallatin was elected to the Pennsylvania state legislature in 1790 at the age of 29. In 1793 he was elected to the U.S. Senate, however, even though he had been in America for 13 years, the Senate Federalists claimed it did not meet the 9-year citizen requirement to hold office. Ultimately, it came down to a Senate Committee vote and Gallatin was outed along party lines: 14-12.
He went back to Pennsylvania amid the Whiskey Rebellion. President Washington is the one credited with ending the Rebellion with his credible use of force sending the U.S. Army; however, Gallatin (who, mind you, sided with the farmers and opposed the tax) was on the front lines speaking and negotiating for calm. By the time Washington approached the city, Gallatin had already overthrown David Bradford, the rebellion leader, and proposed a compromise with Congress. Congress accepted the compromise of a lower tax, and the Whiskey Rebellion ended without bloodshed. Because of his diplomatic success, he was elected to the U.S. House of Reps in 1795. By 1797, Gallatin was the House Majority Leader and founded the Ways and Means Committee we now know today.
Gallatin’s diplomacy and git r done attitude is what led Thomas Jefferson to select him as the 4th Treasury Secretary in 1801.
Gallatin Pays for America
As Treasury Secretary is where Gallatin truly made a name for himself. When he took office, the debt stood at $80 million. Through a careful repayment of debt, re-structuring the budget, and using surplus of the Treasury, Gallatin reduced the debt to $23 million in eight years. But, in true Billy Mays Fashion THERE’S MORE! During those eight years, the U.S., through Gallatin’s ingenuity, made the Louisiana Purchase for $15 million AND funded the Lewis and Clark expedition in 1804.
Admittedly, there were some downsides to the budget. Gallatin was forced to cut the U.S. Navy and Army down to bare-bones. Thus, when Jefferson wished to intimidate the British with the Embargo of 1807. The embargo failed and then ended up being a central cause to the War of 1812. As the war started, expenditures jumped dramatically to $39 million a year, but the Treasury was only bringing in $15 million a year! To be fair, Gallatin vehemently opposed the embargo for the primary purpose of avoiding war with the British. War aint cheap and unfortunately the First Bank of the United States was just axed by the Democratic Republicans.
Knowing financiers in New England and France would be hesitant to provide deficit funding to the U.S. while engaged in war with the Brits, Gallatin turned to the public. In the first offering of public bonds in the history of the United States! Through this financing method, Gallatin secured $69 million to pay for the $87 million war.
Gallatin, while a fantastic Treasury Secretary, still ended up increasing the National Debt – leaving office the debt stood at $123 million.
While the debt did increase $43 million under his tenure, it was largely not his fault. He reduced the debt down to $23 million before Jefferson and Congress added some unnecessary expenditures.
After leaving the Treasury Gallatin went on to become an even more successful statesman. He helped broker the Treaty of Ghent to end the War of 1812 and then was appointed as the U.S. Minster to France. After that post, he declined another bid, this time by President John Adams, to serve as Secretary of the Treasury and then accepted the post of Minster to Great Britain.
In 1831 he moved to New York City and helped found New York University – commonly known as NYU – and then took a job as the President of the National Bank located in NYC. This bank, renamed the Gallatin Bank during his term, is now professionally referred to as JP Morgan Chase & Co.
Not content to just be an incredible banker and statesman, he later founded the American Ethnological Society (AES) and has been called the Father of American ethnology. AES is still pursuing research and is the oldest professional anthropological association in the United States. Gallatin published two different papers on Native American languages through the AES.
Gallatin died in 1849 at the ripe old age of 88. He’s buried at the Trinity Church in New York City and was the final member of Jefferson’s cabinet to die. It’s said that there was ubiquitous mic drop that echoed through the streets of New York as he departed.