On February 27, 1807, Mr.Gallatin made a special report on the state of the debt from 1801 to 1807, showing a diminution, notwithstanding the Louisiana purchase, of $14,260,000.
In the summer of 1807 war with England seemed inevitable.

Gallatin had the satisfaction to report a full treasury,--the amount of specie October 7, 1807, reaching over eight and one half millions,--and an annual unappropriated surplus, which could be confidently relied upon, of at least three millions of dollars.

On this subject his remarks in the light of subsequent history are of extreme interest.

While refraining from any recommendations as to the application of this surplus, either to "measures of security and defense," or to "internal improvements which, while increasing and diffusing the national wealth, will strengthen the bonds of union," as "subjects which do not fall within the province of the Treasury Department," he proceeds to consider the advantage of an accumulation in the Treasury.

In this report he rises with easy flight far above the purely financial atmosphere into the higher plane of political economy.
"A previous accumulation of treasure in time of peace might in a great degree defray the extraordinary expenses of war and diminish the necessity of either loans or additional taxes.