The cost of the war of 1812 is relatively low by today's standards. The actual cost of the war was about 90 million or $1.6 billion in today's prices, but at that time the US economy was only small fraction of what it is today. At the peak of the war, it consumed more than 2% of the American economic output almost as much as the Vietnam war. But to truly understand the cost, you need to realize that in 1813, at the peak of the war total federal revenue was only $15 million, a mere 1/6 of the 90 million in total that the war costed. To put this into perspective, consider the the total revenue in 2016 of $3.27 trillion. Just imagine a war costing 6x that or 18 trillion dollars. Well, this post is not about runaway government spending, but rather paying for the war of 1812. $90 million must have been quite a sticker shock for America, but it had to be paid.
In 1815, the war was over and soldiers were being discharged, and payments were overdue. According to section 16 of the Military Peace Establishment Act of 1802, the paymaster performed his duties at the direction of the President. But, due to financial difficulties, President Madison was unable to fulfill America's financial obligation to the soldiers. Section 13 of the act stated that at no time, should the payment due to "said corps" exceed two months, "unless the circumstances of the case shall render it unavoidable", yet payment to soldiers was often six to twelve month in arrears, and in some cases even more. The problem of paying troops had become unmanageable and Congress needed to Act. Not only were new appropriations needed to pay for the military service during the war, but also pay for the regulars needed on a continual basis as defined in the peace establishment act. In his 1815, annual address to Congress, Madison urged Congress to consider this urgent need for further legislation.
"The execution of the act for fixing the military peace establishment has been attended with difficulties which even now can only be overcome by legislative aid. The selection of officers, the payment and discharge of the troops enlisted for the war, the payment of the retained troops and their reunion from detached and distant stations, the collection and security of the public property in the Quartermaster, Commissary, and Ordnance departments, and the constant medical assistance required in hospitals and garrisons rendered a complete execution of the act impracticable on the 1st of May, the period more immediately contemplated. As soon, however, as circumstances would permit, and as far as it has been practicable consistently with the public interests, the reduction of the Army has been accomplished; but the appropriations for its pay and for other branches of the military service having proved inadequate, the earliest attention to that subject will be necessary; and the expediency of continuing upon the peace establishment the staff officers who have hitherto been provisionally retained is also recommended to the consideration of Congress."Shown in the picture above is a discharge certificate. During the war of 1812, upon discharge soldiers from either the Regular or Volunteer armies received a discharge certificate that became their personal property. If the soldier was owed pay upon his discharge, the solder would present this certificate to the paymaster to collect the pay. In 1815, because the war had ended there were many discharges from the army. One problem for the Army Register was identifying the honorable discharges. Madison wrote to Congress in his address that because the reduction of the army was so great, many meritorious officers of every rank were unavoidably excluded from receiving an honorable discharge. The sheer number of discharges did not allow for a side by side comparison of the candidates, so instead Madison promised that each officer would be judged objectively by a standard set of guidelines. For those which received a less than honorable discharge, Madison was asking that Congress determine the appropriate amount of support for each veteran whether able or disabled.
"The extent of the reduction, indeed, unavoidably involved the exclusion of many meritorious officers of every rank from the service of their country; and so equal as well as so numerous were the claims to attention that a decision by the standard of comparative merit could seldom be attained. Judged, however, in candor by a general standard of positive merit, the Army Register will, it is believed, do honor to the establishment, while the case of those officers whose names are not included in it devolves with the strongest interest upon the legislative authority for such provisions as shall be deemed the best calculated to give support and solace to the veteran and the invalid, to display the beneficence as well as the justice of the Government, and to inspire a martial zeal for the public service upon every future emergency."
http://www.presidency.ucsb.edu/ws/index.php?pid=29457
http://www.warof1812.net/
https://en.wikipedia.org/wiki/Military_Peace_Establishment_Act
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