The Economic Policies of Alexander Hamilton. Hamilton Alexander

might, in reality, operate as a very unequal tax.

      Third Objection.—“That by granting to Congress a power to collect moneys from the commerce of these States, indefinitely as to time and quantity, and for the expenditure of which they are not to be accountable to the States, they would become independent of their constituents; and so the proposed impost is repugnant to the liberty of the United States.”

      Admitting the principle of this objection to be true, still it ought to have no weight in the present case, because there is no analogy between the principle and the fact.

      Firstly. The fund proposed is sufficiently definite as to time, because it is only co-extensive with the existence of the debt contracted, and to be contracted, in the course of war. Congress are persuaded that it is as remote from the intention of their constituents to perpetuate that debt, as to extinguish it at once by a faithless neglect of providing the means to fulfil the public engagements. Their ability to discharge it in a moderate time, can as little be doubted as their inclination; and the moment that debt ceases, the duty, so far as respects the present provision, ceases with it.

      The resolution recommending the duty specifies the object of it to be the discharge of the principal and interest of the debts already contracted, or which may be contracted, on the faith of the United States, for supporting the present war.

      Secondly. The rate per cent. is fixed; and it is not at the option of the United States to increase it. Though the product will vary according to the variations in trade, yet, as there is this limitation of the rate, it cannot be properly said to be indefinite as to quantity.

      By the Confederation, Congress have an absolute discretion in determining the quantum of revenue requisite for the national expenditure. When this is done, nothing remains for the States, separately, but the mode of raising. No State can dispute the obligation to pay the sum demanded, without a breach of the Confederation; and when the money comes into the treasury, the appropriation is the exclusive province of the Federal Government. This provision of the Confederation (without which it would be an empty form) comprehends in it the principle, in its fullest latitude, which the objection under consideration treats as repugnant to the liberty of the United States,—to wit, an indefinite power of prescribing the quantity of money to be raised, and of appropriating it when raised.

      If it be said that the States, individually, having the collection in their own hands, may refuse a compliance with exorbitant demands, the Confederation will answer, that this is a point of which they have no constitutional liberty to judge. Such a refusal would be an exertion of power, not of right; and the same power which could disregard a requisition made on the authority of the Confederation, might at any time arrest the collection of the duty.

      The same kind of responsibility which exists with respect to the expenditure of money furnished in the forms hitherto practised, would be equally applicable to the revenue from the imports.

      The truth is, the security intended to the general liberty in the Confederation consists in the frequent election, and in the rotation, of the members of Congress, by which there is a constant and an effectual check upon them. This is the security which the people in every State enjoy against the usurpations of their internal governments; and it is the true source of security in a representative republic. The government, so constituted, ought to have the means necessary to answer the end of its institution. By weakening its hands too much, it may be rendered incapable of providing for the interior harmony or the exterior defence of the State.

      The measure in question, if not within the letter, is within the spirit, of the Confederation. Congress, by that, are empowered to borrow money for the use of the United States; and, by implication, to concert the means necessary to accomplish the end. But without insisting upon this argument, if the Confederation has not made proper provision for the exigencies of the States, it will be at all times the duty of Congress to suggest further provisions; and when their proposals are submitted to the unanimous consent of the States, they can never be charged with exceeding the bounds of their trust. Such a consent is the basis and sanction of the Confederation, which expressly, in the thirteenth article, empowers Congress to agree to, and propose, such additional provision.

      The remarks hitherto made have had reference, principally, to the future prosecution of the war. There still remains an interesting light in which the subject ought to be viewed.

      The United States have already contracted a debt in Europe and in this country, for which their faith is pledged. The capital of this debt can only be discharged by degrees; but a fund for this purpose, and for paying the interest annually, on every principle of policy and justice, ought to be provided. The omission will be the deepest ingratitude and cruelty to a large number of meritorious individuals, who, in the most critical periods of the war, have adventured their fortunes in support of our independence. It would stamp the national character with indelible disgrace.

      An annual provision for the purpose will be too precarious. If its continuance and application were certain, it would not afford complete relief. With many, the regular payment of interest by occasional grants would suffice; but with many more it would not. These want the use of the principal itself; and they have a right to it; but since it is not in our power to pay off the principal, the next expedient is to fund the debt, and render the evidences of it negotiable.

      Besides the advantage to individuals from this arrangement, the active stock of the nation would be increased by the whole amount of the domestic debt, and of course the abilities of the community to contribute to the public wants; the national credit would revive, and stand hereafter on a secure basis.

      This was another object of the proposed duty.

      If it be conceded that a similar fund is necessary, it can hardly be disputed that the one recommended is the most eligible. It has been already shown that it affects all parts of the community in proportion to their consumption, and has therefore the best pretensions to equality. It is the most agreeable tax to the people that can be imposed, because it is paid insensibly, and seems to be voluntary.

      It may, perhaps, be imagined that it is unfavorable to commerce; but the contrary can easily be demonstrated. It has been seen that it does not diminish the profit of the merchant, and of course can be no diminution of his inducements to trade. It is too moderate in its amount to discourage the consumption of imported goods, and cannot, on that account, abridge the extent of importations. If it even had this effect, it would be an advantage to commerce, by lessening the proportion of our imports to our exports, and inclining the balance in favor of this country.

      The principal thing to be consulted for the advancement of commerce is to promote exports. All impediments to these, either by way of prohibition, or by increasing the prices of native commodities, decreasing by that means their sale and consumption at foreign markets, are injurious. Duties on exports have this operation. For the same reason taxes on possessions and the articles of our own growth or manufacture, whether in the form of a land-tax, excise, or any other, are more hurtful to trade than impost duties. The tendency of all such taxes is to increase the prices of those articles which are the objects of exportation, and to enable others to undersell us abroad. The farmer, if he pays a heavy land-tax, must endeavor to get more for the products of his farm; the mechanic and laborer, if they find the necessaries of life grow dearer by an excise, must endeavor to exact higher wages: and these causes will produce an increase of prices within, and operate against foreign commerce.

      It is not, however, to be inferred that the whole revenue ought to be drawn from imports; all extremes are to be rejected. The chief thing to be attended to is that the weight of the taxes fall not too heavily, in the first instance, upon particular parts of the community. A judicious distribution to all kinds of taxable property, is a first principle in taxation. The tendency of these observations is only to show that taxes on possessions, on articles of our own growth and manufacture, are more prejudicial to trade than duties on imports.

      The observations which conclude the letter on which these remarks are made, naturally lead to reflections that deserve the serious attention of every member of the Union. There is a happy mean between too much confidence and excessive jealousy, in which the health and prosperity of a State consist. Either extreme is a dangerous vice. The first is a