In time of peace it is almost sufficient to defray the expenses of a war; in time of war it is hardly competent to support the expenses of a peace establishment.
Sinking at once, under adverse circumstances, from fifteen to six or eight millions of dollars, it is only by a persevering application of the surplus which it affords us in years of prosperity, to the discharge of the debt, that a total change in the system of taxation or a perpetual accumulation of debt can be avoided.

But if a similar application of such surplus be hereafter strictly adhered to, forty millions of debt, contracted during five or six years of war, may always, without any extraordinary exertions, be reimbursed in ten years of peace.

This view of the subject at the present crisis appears necessary for the purpose of distinctly pointing out one of the principal resources within reach of the United States.

But to be placed on a solid foundation, it requires the aid of a revenue sufficient at least to defray the ordinary expenses of government, and to pay the interest on the public debt, including that on new loans which may be authorized." From this plain declaration, it was evident that the sum necessary to pay interest on new loans, and provide for their redemption by the operation of the sinking fund, could not be obtained from the ordinary sources of revenue, and that resort must be had to extraordinary imposts or direct taxation.

On January 10, 1812, in response to an inquiry of the Ways and Means Committee as to an increase of revenue in _the event of a war_, Gallatin submitted a project for war loans of ten millions a year, irredeemable for ten years.