In both respects the situation of the United States is totally dissimilar....
"An addition to the debt is doubtless an evil, but experience having now shown with what rapid progress the revenue of the Union increases in time of peace, with what facility the debt, formerly contracted, has in a few years been reduced, a hope may confidently be entertained that all the evils of the war will be temporary and easily repaired, and that the return of peace will, without any effort, afford ample resources for reimbursing whatever may have been borrowed during the war." He then enumerates the several branches of revenue which might be selected to provide for the interest of war loans and to cover deficiencies.

First, a considerable increase of the duties on importations; and here he says:-- "Without resorting to the example of other nations, experience has proven that this source of revenue is in the United States the most productive, the easiest to collect, and the least burthensome to the great mass of the people.2d.Indirect taxes, however ineligible, will doubtless be cheerfully paid as _war taxes_, if necessary.3d.Direct taxes are liable to a particular objection arising from unavoidable inequality produced by the general rule of the Constitution.

Whatever differences may exist between the relative wealth and consequent ability of paying of the several States, still the tax must necessarily be raised in proportion to their relative population." The Orders in Council of November 11, 1807, avowedly adopted to compel all nations to give up their maritime trade or accept it through Great Britain, reached Washington on December 18, 1807, and were immediately replied to by the United States by an embargo act on December 22.

The history of the political effect of this measure is beyond the limits of this economic study, and will be touched upon in a later chapter, but the result of its application upon the Treasury falls within this analysis of the methods of Mr.Gallatin's administration.
On December 18 Gallatin wrote Jefferson that "in every point of view, privations, sufferings, revenue, effect on the enemy, politics at home, etc.," he preferred "war to a permanent embargo;" nevertheless he was called upon to draft the bill.

The correctness of Mr.Gallatin's prevision was soon apparent.