Conspiracy against the Public Credit

Among the mischievous enemies of the government were selfish men who secretly supplied the British blockading squadrons from our shores, and received British manufactures in pretended neutral vessels, by the sale of which enormous profits were realized. This system of public mischief had become so deplorable in its consequences, that late in 1813 the President recommended the passage of an Embargo act, shutting up American ports to ingress and egress. It was done; but almost simultaneously with the passage of the act came news of Napoleon's reverses and prospects of peace in Europe. This intelligence was soon followed by the assurance of the British government of a willingness on its part to treat for peace with the Americans; but in these assurances, there was no disposition shown on the part of that government to recede one iota from its assumption of the right of search and impressment. The language of Lord Castlereagh was that his government was willing to treat with that of the United States "upon principles of perfect reciprocity not inconsistent with the established maxims of public law [the 'Rule of 1756'] and with the maritime rights of the British empire." Our government, sincerely anxious for peace, interpreted this generously, and added to the commission sent abroad to treat for Russian mediation, two other members authorized to join the others and negotiate a treaty with commissioners of the British government. There were now loud clamors for a repeal of the Embargo act, and it was repealed in April, 1814.

Meanwhile as these preliminary movements did not, by any means, give full assurance of peace, our government prepared to prosecute the war as vigorously as possible, notwithstanding the finances were in a wretched condition, and the public credit was so weak that United States Treasury notes had fallen seventeen per cent below par. From the beginning the government was compelled to ask for loans, and the Peace Faction made such persistent opposition for the purpose of embarrassing the administration, that in every case a bonus had to be paid for all sums borrowed. On a loan of $16,000,000, authorized at the beginning of 1813, the lenders received a bonus of about $2,000,000. In March, 1814, the darkest period of the war, a loan of $25,000,000 was authorized, when the Peace Faction at public meetings, through the newspapers and even from the pulpit, cast every possible embarrassment in the way of the government. Their opposition assumed the character of virtual treason. They violently denounced the government and those who dared to lend it money; and by inflammatory publications and personal threats, they intimidated many capitalists who were disposed to lend. The result was that not one-half of the amount of the proposed loan was obtained, and that only by the payment on $11,400,000 of a bonus of $2,852,000. Over the failure of the government these unpatriotic men rejoiced, and pointed to it as an evidence that the people were opposed to war. So disastrous was this attempt to loan money, that only one more of a like nature was made through the remainder of the war, the deficiency being made up by the issue of Treasury notes.

Failing to accomplish their object in full by this movement (for banks and patriotic men loaned money to the government), the Peace Faction struck another blow at the public credit, and obtained the aid of the Boston banks in giving it intensity. The banks out of New England were the principal lenders to the government, and measures were taken to drain them of their specie, and so produce an utter inability on their part to pay their subriptions. Boston banks sent the notes of New York banks and those further south, which they held, with a demand for their redemption in specie, and at the same time drafts were drawn on the New York banks for the balances due the Boston corporations to the total amount of about $8,000,000. A panic was created and great commercial embarrassment ensured, for banks so drained were compelled to contract their discounts. This conspiracy against the public credit was potent and ruinous in its effects. To make the blow more intensely fatal, the conspirators made arrangements with agents of the government authorities of Lower Canada, whereby a very large amount of British government bills, drawn on Quebec, were transmitted to New York, Philadelphia and Baltimore, and offered on such advantageous terms that capitalists were induced to purchase them. By this means an immense amount of gold was transmitted to Canada, and so placed beyond the reach of the government of the United States and put into the hands of the enemy. Had the conspirators fully succeeded the national armies must have been disbanded, and our country might have been reduced to a dependency of Great Britain.