The London government is well administered, in…

1815 CE

The London government is well administered, in terms of its army, navy, and financial offices, in contrast with the government in Washington, which is badly organized, with inexperience, incompetence and confusion the main hallmarks.

The federal government's management system before 1812 had been designed to minimize the federal role.

The Republicans in power had deliberately wanted to downsize the power and roles of the federal government; when the war began, the Federalist opposition had worked hard to sabotage operations.

Problems had multiplied rapidly in 1812, and all the weaknesses had been magnified, especially regarding the Army and the Treasury.

There will be no serious reforms before the war ends.

In financial matters, the decentralizing ideology of the Republicans meant they had wanted the First Bank of the United States to expire in 1811, when its twenty-year charter ran out.

Its absence has made it much more difficult to handle the financing of the war, and cause special problems in terms of moving money from state to state, since state banks are not allowed to operate across state lines.

The bureaucracy is terrible, often missing deadlines.

On the positive side, over one hundred and twenty new state banks have been created all over the country, and they issue notes that have financed much of the war effort, along with loans raised by Washington.

Some key Republicans, especially Secretary of the Treasury Albert Gallatin, realize the need for new taxes, but the Republican Congress is very reluctant and only raises small amounts.

The whole time, the Federalists in Congress and especially the Federalist-controlled state governments in the Northeast, and the Federalist-aligned financial system in the Northeast, art strongly opposed to the war and refuse to help in the financing.

Indeed, they facilitate smuggling across the Canadian border, and send large amounts of gold and silver to Canada, which has created serious shortages in the US.

Across the two and half years of the war, 1812–1815, the federal government has taken in more money than it has spent.

Cash out is $119.5 million, cash in is $154.0 million.

Two-thirds of the income is borrowing that has to be paid back in later years; the national debt has gone from $56.0 million in 1812 to $127.3 million in 1815.

Out of the gross domestic product of about $925 million n 1815, this is not a large burden for a national population of eight million people.

A new Second Bank of the United States will be set up in 1816, and after that the financial system will perform very well, even though there is still a shortage of gold and silver.