<P> While the London government was well administered, in terms of its army, navy, and financial offices, the government in Washington was badly organized, with inexperience, incompetence and confusion the main hallmarks . The federal government's management system was Designed to minimize the federal role before 1812 . The Republicans in power deliberately wanted to downsize the power and roles of the federal government; when the war began, the Federalist opposition worked hard to sabotage operations . Problems multiplied rapidly in 1812, and all the weaknesses were magnified, especially regarding the Army and the Treasury . There were no serious reforms before the war ended . In financial matters, the decentralizing ideology of the Republicans meant they wanted the First Bank of the United States to expire in 1811, when its 20 - year charter ran out . Its absence made it much more difficult to handle the financing of the war, and cause special problems in terms of moving money from state to state, since state banks were not allowed to operate across state lines . The bureaucracy was terrible, often missing deadlines . On the positive side, over 120 new state banks were created all over the country, and they issued notes that financed much of the war effort, along with loans raised by Washington . Some key Republicans, especially Secretary of the Treasury Albert Gallatin realized the need for new taxes, but the Republican Congress was very reluctant and only raised small amounts . The whole time, the Federalists in Congress and especially the Federalist - controlled state governments in the Northeast, and the Federalist - aligned financial system in the Northeast, was strongly opposed to the war and refused to help in the financing . Indeed, they facilitated smuggling across the Canadian border, and sent large amounts of gold and silver to Canada, which created serious shortages in the US . Across the two and half years of the war, 1812--1815, the federal government took in more money than it spent . Cash out was $119.5 million, cash in was $154.0 million . Two - thirds of the income was borrowing that had to be paid back in later years; the national debt went from $56.0 million in 1812 to $127.3 million in 1815 . Out of the GDP (gross domestic product) of about $925 million (in 1815), this was not a large burden for a national population of 8 million people . A new Second Bank of the United States was set up in 1816, and after that the financial system performed very well, even though there was still a shortage of gold and silver . </P> <P> U.S. leaders assumed that Canada could be easily overrun . Former President Jefferson optimistically referred to the conquest of Canada as "a matter of marching". Many Loyalist Americans had migrated to Upper Canada after the Revolutionary War . There was also significant non-Loyalist American immigration to the area due to the offer of land grants to immigrants, and the U.S. assumed the latter would favour the American cause, but they did not . In prewar Upper Canada, General Prévost was in the unusual position of having to purchase many provisions for his troops from the American side . This peculiar trade persisted throughout the war in spite of an abortive attempt by the U.S. government to curtail it . In Lower Canada, which was much more populous, support for Britain came from the English elite with strong loyalty to the Empire, and from the French - speaking Canadien elite, who feared American conquest would destroy the old order by introducing Protestantism, Anglicization, republican democracy, and commercial capitalism; and weakening the Catholic Church . The Canadien inhabitants feared the loss of a shrinking area of good lands to potential American immigrants . </P> <P> In 1812--13, British military experience prevailed over inexperienced American commanders . Geography dictated that operations take place in the west: principally around Lake Erie, near the Niagara River between Lake Erie and Lake Ontario, and near the Saint Lawrence River area and Lake Champlain . This was the focus of the three - pronged attacks by the Americans in 1812 . Although cutting the St. Lawrence River through the capture of Montreal and Quebec would have made Britain's hold in North America unsustainable, the United States began operations first in the western frontier because of the general popularity there of a war with the British, who had sold arms to the Native Americans opposing the settlers . </P> <P> The British scored an important early success when their detachment at St. Joseph Island, on Lake Huron, learned of the declaration of war before the nearby American garrison at the important trading post at Mackinac Island in Michigan . A scratch force landed on the island on July 17, 1812, and mounted a gun overlooking Fort Mackinac . After the British fired one shot from their gun, the Americans, taken by surprise, surrendered . This early victory encouraged the natives, and large numbers moved to help the British at Amherstburg . The island totally controlled access to the Old Northwest, giving the British nominal control of this area, and, more vitally, a monopoly on the fur trade . </P>

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