Bitter Money Fights Shaped U.S History
On June 1, 1812, President James Madison asked Congress to consider a declaration of war against
Britain. The Democratic-Republican majority was happy to oblige.
Britain’s insults to the U.S. ranged from seizing its ships
and forcing its sailors into the Royal Navy to supporting
American Indian attacks along the Western frontier.
With war approaching, it fell to Treasury Secretary Albert
Gallatin to figure out a way to pay for it. Gallatin hoped to
borrow the money, but he wanted to raise taxes to cover the
interest on the new debt. He worried that, otherwise, bond
investors would be unwilling to lend large amounts of money to a
young country. But the war hawks were ideologically and
politically opposed to taxes -- particularly the excise
(internal trade) taxes that Gallatin favored.
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