New York prospered even more. People in the Empire State were deeply involved in the trade with the enemy, but the real source of their prosperity was the largess of the federal government. The second of the army’s two major supply routes originated in New York City and ran up the Hudson River and then north to the frontier or west to Lake Ontario.63 To support American troops in the state, the federal government spent enormous sums of money. Although the price of rations varied, it usually cost about $500,000 to feed 10,000 troops for a year, and more than $1 million to pay their wages.64
One army contractor in New York sold $500,000 in rations in 1812, $250,000 over three months in 1813, and $850,000 over a seven-month period in 1814. Another received $270,000 from the government over a three-month period in 1814, and this covered less than half of his expenses.65 The army paymaster also disbursed large sums in the state—$400,000 to pay soldiers in the last three months of 1813 alone.66 Government expenditures had a particularly buoyant effect on New York agriculture. “The market for the produce of the farmer,” said Governor Daniel Tompkins in late 1812, “has experienced an unexpected and unusual rise.”67
The middle states benefited not only from war contracts but also from manufacturing. Many small industrial plants established during the early years of the restrictive system flourished during the war.68 In Pennsylvania, Republican leaders saw manufacturing as the nation’s salvation because, unlike commerce, it did not lead to foreign entanglements. “Years of experience,” said Governor Simon Snyder in late 1811, “must convince us that foreign commerce is a good but of a secondary nature, and that happiness and prosperity must be sought for within the limits of our country and not in foreign connections.”69
Like the middle states, the West also prospered during the war. Military operations in this region brought in large sums of federal money, particularly to Kentucky and Ohio. More than $400,000 was sent to these two states in late 1812, and a contractor there said this was “but a drop in the Bucket.” An additional $1 million would be needed for the first three months of 1813.70 The Miami Exporting Company of Cincinnati—which was actually a bank—took in over $1 million in government drafts in a seven-month period in 1812–1813.71 In fact, the government spent so much on its western operations in the first year of the war that John Armstrong accused westerners of profiteering—of selling produce at three times the peace price and of putting everyone on the payroll. “The war is [considered] a good thing,” he grumbled, “and is to be nursed.”72
According to Henry Clay, so much specie flowed into the West during the war that eastern bills of exchange (which normally sold at a premium) began passing at a discount. In effect, the West’s traditional debtor relationship with the East was temporarily reversed. Clay attributed this state of affairs to “the effects of the War, and the military operations in that quarter.”73 Western banks were able to build up large specie reserves and only reluctantly suspended payment when the banking collapse came in 1814. According to Congressman Joseph Hawkins, “the banks of Kentucky and Ohio (where specie abounded) had at length been compelled in self-defence to stop payment.”74
Western cities—Pittsburgh, Cincinnati, Lexington, Louisville, and St. Louis—all enjoyed a booming prosperity during the war.75 A Boston merchant visiting Lexington in 1813 was surprised at the prosperity he saw. “I find in this country an entire reverse of New-England in regard to business. Here there is no competition, and every thing [is] brisk and profitable. The war, so far from depressing the people of the Western States, is making the greater proportion of them rich.”76 Rural areas also benefited because of the army’s huge appetite for provisions. Commodity prices rose, and western farmers had a ready market for their produce.77 Even after military expenditures fell off in 1814, the western economy continued to flourish. “Blessed with bountiful crops,” said Governor Isaac Shelby in late 1814, “we have great reason . . . to congratulate each other on the plentiful appearance which our country exhibits.”78
In sharp contrast to the middle and western states, the South suffered during the war. People living in the Chesapeake region made their share of money from privateering, manufacturing, and government contracts, and when the militia was called out in 1813 and 1814 federal money flowed into the region. But the South was heavily dependent on the export of agricultural produce, and this trade evaporated in 1813 when the British stopped issuing licenses and established their blockade.
Commodity prices began to sag at the end of 1812 and then dropped precipitously in 1813. In response Georgia, Maryland, and North Carolina enacted stay laws to protect debtors.79 Conditions got worse in 1814, when Virginia wheat fell below 50 cents a bushel, and farmers began feeding it to their livestock.80 Tobacco farmers fared no better. A North Carolina congressman complained in 1812 that he had “not Sold a Single pound of my Small crops of tobacco for the three Last years,” and by 1814 Jefferson reported that tobacco was “not worth the pipe it is smoked in.”81 “The whole country watered by the rivers which fall into the Chesapeake,” concluded John Randolph, “is in a state of paralysis.”82 People living in the lower South were also dependent on the export of produce, and they too suffered from the war. “I believe that if the war should last three years longer,” William Lowndes said in 1814, “I shall not be worth more than 50 negroes after paying my debts.”83
New England also suffered during the war, although some critics have suggested otherwise. In late 1814, Niles’ Register, a Republican magazine published by Hezekiah Niles in Baltimore, cited statistics showing that between 1810 and 1814 specie deposits in Massachusetts banks had risen from $1.6 million to $6.4 million. This increase was the result of a favorable balance of trade with the rest of the Union, and Niles claimed that it was proof that Massachusetts was prospering.84
In normal times Niles might have been right, but the times were anything but normal. In fact, the banks in Massachusetts pursued a conservative fiscal policy throughout this period, increasing their loans by only 33 percent and their note issue by only 25 percent.85 Moreover, once the banks in the South and West suspended specie payments, those in New England had to retrench, calling in existing loans and refusing to make new ones. “The solid banks,” said John Quincy Adams, “were enabled to maintain their integrity, only by contracting their operations to an extent ruinous to their debtors, and themselves.”86 As a consequence, money became so tight that even the state governments could not borrow the funds they needed.87
Many New Englanders, to be sure, prospered during the war. Most farmers fared well, and some money could be made from privateering, manufacturing, and trade with the enemy. Those with government contracts also prospered. Paul Revere and Eli Whitney, for example, both supplied munitions to the army.88 But New England was too far east to profit from the big army contracts, and few regulars were stationed in the region. New England also called out fewer militia than any other region, and the state governments had to bear a larger share of the cost because of a shortage of federal funds and a dispute over the command of the troops.89 Indeed, of the $12.6 million that the federal government spent on the wages of militia during the war, only 3.5 percent went to New England.90
With extensive commercial and fishing operations, New England was too dependent on the sea to prosper in any war with a great naval power. Massachusetts alone owned more than a third of the nation’s ship tonnage.91 By the fall of 1813 there were 250 idle ships in Boston harbor, and people were moving out of the city to look for work elsewhere.92 Many of the ships rotted from inactivity—a significant capital loss. Conditions worsened in 1814. By the end of the year, it cost as much as 75 percent of a ship’s value to insure it for a voyage, and a Boston firm reported that it was “extremely difficult” to sell anything except for immediate consumption and impossible to buy anything except for cash.93
Other seaports in New England experienced a similar fate. Property values in Newburyport plummeted 37 percent during the war, and the number of people on public relief rose from 20 t
o 244.94 “In Newburyport,” said a contemporary, “the Rich have become poor, & those, who were in comfortable Circumstances, are Mendicants.”95 Summing up, a Massachusetts Federalist said: “We are in a deplorable situation, our commerce dead; our revenue gone; our ships rotting at the wharves. . . . Our treasury drained—we are bankrupts.”96
Disaffection in New England
Prosperity in the middle and western states no doubt contributed to the popularity of the war, but deteriorating economic conditions had the opposite effect in New England. By the fall of 1814, all eyes were on what a New Jersey Federalist called “the cloud arising in the East,” a cloud that was “black, alarming, portentous.”97 Growing sectionalism in New England was a source of grave concern to Republicans. “It is too plain,” William Duane told Jefferson, “that we are not all republicans nor all federalists—and the spirit of faction in the East . . . has been too much encouraged.”98 A Philadelphia Republican expressed fear that the moderates in New England “would be driven of[f] the stage by Marats Robenspears Bounapartes etc.,” and the Russian minister claimed that “there is not a state in Europe which, in similar circumstances, would not have been considered on the eve of revolution.”99
President Madison found New England’s disaffection alarming. William Wirt described him in October 1814 as “miserably shattered and woe-begone.” “His mind seems full of the New England revolt,” said Wirt; “he introduced the subject & continued to press it, painful as it obviously was to him.”100 The following month the subject still weighed heavily on the president’s mind. “You are not mistaken,” he wrote a friend, “in viewing the conduct of the Eastern states as the source of our greatest difficulties in carrying on the war; as it certainly is the greatest if not the sole inducement with the enemy to persevere in it.”101
Federalist Election Gains and Republican Disillusionment
Throughout the war the Republicans had hoped that favorable election results would shore up their majorities and silence the opposition, but their hopes were never fulfilled. In the elections of 1812, the Federalists had gained control of six of the 18 states (Massachusetts, Connecticut, Rhode Island, New Jersey, Delaware, and Maryland).102 The following year they lost New Jersey but won Vermont and New Hampshire, which gave them control over all of New England. In 1814 they retained control of these same seven states.103
The Republicans fared no better in congressional elections. Most states held their elections for the Fourteenth Congress in 1814 even though this Congress did not convene until the end of 1815. In the House, Republican strength, which had declined from 75 percent in the Twelfth Congress to 63 percent in the Thirteenth, rose slightly to 65 percent in the Fourteenth Congress. In the Senate, however, Republican strength continued to slide: from 82 percent in the Twelfth Congress to 78 percent in the Thirteenth, to 67 percent in the Fourteenth. Although the leading Senate “Invisibles”—Samuel Smith, William Branch Giles, and Michael Leib—were not returned to the Fourteenth Congress, the regular Republicans were little better off than they had been in the Thirteenth Congress.104
Thus in neither Congress nor the country were the Republicans able to win the decisive majorities they sought. Although they counted on the war to enhance their popularity and silence the Federalists, the effect of the conflict was just the opposite. In New England especially, the war served as a catalyst for a Federalist revival. As a result, Federalists achieved a more commanding position in this region than at any time since the 1790s.
It was not only the Federalists who opposed the administration. Many Republicans did, too. The Clintonians and “Invisibles” disliked the administration’s management of the war, and the Old Republicans objected to the war itself. The election of 1812 had revealed deep-seated hostility to the Virginia Dynasty, and by 1814 even regular Republicans had become disillusioned with the party’s leadership. “If we have another disastrous campaign in Canada,” said George Hay of Virginia, “the republican cause is ruined, and Mr. M[adison] will go out covered with the Scorn of one party, and the reproaches of the other.” “Without a change in the management of the war on the Canadian frontier,” added Nathaniel Macon, “the republican party must go down[.] The people of every part of the Nation, will be disgusted with an administration, who have declared war, without ability to conduct it, to a favorable issue.”105
With the disasters of 1814—particularly the burning of Washington—the president and his advisers suffered a further loss in public esteem. “The President is much railed at by many of the Democrats,” said a Philadelphia merchant. “The whole administration is blamed for the late disastrous occurrences at Washington,” declared a Virginia Republican. “Without money, without soldiers & without courage,” concluded Federalist Rufus King, “the President and his Cabinet are the objects of very general execration.”106
More Cabinet Changes
The shortage of men and money, expanding trade with the enemy, deteriorating economic conditions, growing disaffection in New England, and discontent within the Republican party—all of these contributed to the crisis of 1814. To compound the nation’s problems, a new round of cabinet changes made it difficult for the administration to respond to the crisis quickly. John Armstrong had resigned from the War Department in August 1814 after being blamed for the burning of Washington.107 In September Secretary of the Treasury George W. Campbell, who suffered from poor health and was overwhelmed by the nation’s financial problems, followed suit.108 That same month William Jones, who had fallen deeply into debt, announced that he would resign from the Navy Department no later than December 1.109 These resignations forced the president to scramble for replacements.
Monroe, who had taken over as acting secretary of war after Armstrong’s departure, accepted the position on a permanent basis.110 Madison offered Monroe’s old State Department post to Daniel D. Tompkins, governor of New York, but he declined, fearing that his enemies would ruin him if he left the state before justifying some unauthorized defense expenditures.111 Madison therefore left Monroe in charge as acting secretary of state. The Navy Department, always a difficult post for Republicans to fill, was offered to Captain John Rodgers, but he declined after learning that he would have to give up his naval commission. The president’s next choice was Benjamin W. Crowninshield, a Massachusetts merchant who accepted the post only reluctantly. Although able enough, Crowninshield was without political clout and did not assume office until the war was nearly over.112
Alexander J. Dallas of Pennsylvania took over as head of the Treasury Department. Although he had refused to join the cabinet earlier in the year, with Armstrong now gone Dallas agreed to serve, even though he regarded the Treasury Department as “the forlorn hope of executive enterprize.”113 A Jamaica-born lawyer educated in Great Britain, Dallas sported aristocratic clothing, had a bearing of social and intellectual superiority, and was known to be conservative on many issues.114 A Virginia Republican described him as “a man of great labor and some talents” but without “that weight of character, which the times require.”115 Many Pennsylvania Republicans disliked Dallas, but such were his known talents and such was the deplorable condition of the Treasury that even his enemies agreed to accept his appointment. “Tell Doctor Madison,” Senator Abner Lacock reportedly said, “that we are now willing to submit to his Philadelphia lawyer for head of the treasury. The public patient is so very sick that we must swallow anything the doctor prescribes, however nauseous.”116
Congress Convenes in Crisis Mode
With the nation in the throes of a crisis and his cabinet in a state of flux, President Madison summoned the Thirteenth Congress for its third and last session. Normally Congress met in November or December, but the previous spring congressional Republicans had called for an October meeting.117 By August, however, the nation’s military and financial situation had deteriorated so badly that Madison pushed the date up to September 19. An early meeting was essential, he said, to deal with “great and weighty matters.”118
Many congressmen were surprised at the extent of damage they found in Washington. “The ruins of the public edifices,” said Jonathan Roberts, “is more complete than I had anticipated.”119 With government buildings destroyed, everyone had to find new quarters. Madison stayed for a month with his brother-in-law, Richard Cutts, and then moved into the Octagon House, the former residence of the French minister. Cabinet officials rented private buildings to house their departments.120 With the exception of the French mission, the diplomatic corps fled to Philadelphia, the Russian minister complaining that Washington had “become still more uncomfortable and more expensive than before.”121 Crawford’s Hotel, a popular Georgetown haunt for congressmen and capital visitors, was more crowded than usual. “I am surrounded,” said William Wirt, “by a vast crowd & bustle of legislators and gentlemen of the turf assembled for the races which commence here tomorrow.”122
Alexander J. Dallas (1759–1817) took control of American finances near the end of the war when he was appointed secretary of the treasury. Although his aristocratic bearing did not endear him to many of his fellow Republicans, they swallowed his appointment in the hope of averting national bankruptcy. (Portrait by Freeman Thorp after an original by Gilbert Stuart. Wikimedia Commons)
Congress commandeered the patent office—one of the few undamaged government buildings. According to William Jones, members of Congress were “in bad temper, grumbling at everything.”123 No doubt the cramped quarters contributed to this mood. Federalist Daniel Webster called the new chambers “confined, inconvenient, and unwholesome,” and Republican Jesse Bledsoe said that the representatives’ room was “too small” and that “Every Kind of privation is enormous.”124
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