6 Gallatin spent his first years in the US in New England, trying to earn a living. Eventually, he taught French at Harvard. With his early savings, he purchased some land in Fayette County, Pennsylvania and in 1784, he settled there. 7 1788-1801: Politics Once established in Pennsylvania, Gallatin became politically active at the local and later at the federal level. This marked the beginning of a second distinct period of Albert Gallatin’s life. This period lasted from approximately 1788 to 1801, when the newly elected president, Thomas Jefferson, appointed Gallatin as his Secretary of the Treasury. 8 These final few years of the 18th century were an extraordinary period in American history and politics. During the second half of the 1780s, the Constitution was written, adopted and eventually ratified; the first federal government under the Constitution was formed and George Washington, who had presided over the Constitutional Assembly, was elected first President of the United States – in 1789. President Washington appointed Hamilton, whom he had relied on greatly during the War of Independence, as his Secretary of the Treasury. From 1789 to 1800, Hamilton built the foundation of what was to become the federal financial system of the United States.
15  Jefferson was elected president in 1800, but did not appoint Gallatin until 1801 – even though it had been his intention from the start. See for example Wright and Cowen, op.cit., p. 93, for details. BIS Review 106/2008  3  priorities included a change in Hamilton’s tax structure in order to better reflect the Republican Party’s ideology and its constituencies. He also focused on the need to increase transparency in fiscal policy. He progressed rapidly on both fronts. Internal taxes were soon abolished. The federal government came to rely almost exclusively on import tariffs, which Gallatin saw as luxury taxes that did not burden his farming constituency. 16 Gallatin also convinced Congress to pass the law of 1801, which required an annual report by the Secretary of the Treasury to the President. He submitted the first of these reports later that year. Moreover, the minting of dollars was somewhat scaled back under Gallatin. To compensate, he allowed foreign coins to circulate along with the dollar. These measures were not taken because Gallatin was opposed to the Mint. Rather, the Mint proved to be very costly for the federal purse. Therefore, Gallatin saw the reduction of its operations as a way for the government to save money, in line with his primary objective of fiscal consolidation.