The Economic Policies of Alexander Hamilton. Hamilton Alexander

our grant without removing themselves further from the object than they now are. To gain one State they must have lost all the others. The grants of every State are accompanied with a condition that similar grants be made by the other States. It is not denied that our act is essentially different from theirs. Their acts give the United States the power of collecting the duty; ours reserves it to the State, and makes it receivable in paper-money.

      The immediate consequences of accepting our grant would be a relinquishment of the grants of other States. They must take the matter up anew, and do the work over again to accommodate it to our standard. In order to anchor one State, would it have been wise to set twelve, or at least eleven others, afloat?

      It is said, that the States which have granted more would certainly be willing to grant less. They would easily accommodate their acts to that of New York, as more favorable to their own power and security.

      But would Massachusetts and Virginia, which have no paper-money of their own, accede to a plan that permitted other States to pay in paper while they paid in specie? Would they consent that their citizens should pay twenty shillings in the pound, while the citizens of Rhode Island paid only four, the citizens of North Carolina ten, and of other States in different degrees of inequality, in proportion to the relative depreciation of their paper? Is it wise, in this State, to cherish a plan that gives such an advantage to the citizens of other States over its own?

      The paper-money of the State of New York, in most transactions, is equal to gold and silver; that of Rhode Island is depreciated to five for one; that of North Carolina to two for one; that of South Carolina may perhaps be worth fifteen shillings in the pound.

      If the States pay the duties in paper, is it not evident that for every pound of that duty consumed by the citizen of New York he would pay twenty shillings, while the citizen of South Carolina would pay fifteen shillings; of North Carolina, ten shillings; and Rhode Island, only four!

      This consideration alone is sufficient to condemn the plan of our grant of last session, and to prove incontestably that the States which are averse to emitting a paper currency, or have it in their power to support one when emitted, would never come into it.

      Again, would those States which by their public acts demonstrate a conviction that the powers of the Union require augmentation; which are conscious of energy in their own administration—would they be willing to concur in a plan which left the collection of the duties in the hands of each State; and of course subject to all the inequalities which a more or less vigorous system of collection would produce?

      This too is an idea which ought to have great weight with us. We have better habits of government than are to be found in some of the States; and our constitution admits of more energy than the constitution of most of the other States. The duties, therefore, would be more effectually collected with us than in such States, and this would have a similar effect to the depreciation of the money, in imposing a greater burthen on the citizens of this State.

      If any State should incline to evade the payment of the duties, having the collection in its own hands, nothing would be easier than to effect it, and without materially sacrificing appearances.

      It is manifest, from this view of the subject, that we have the strongest reasons, as a State, to depart from our own act; and that it would have been highly injudicious in Congress to have accepted it.

      If there even had been a prospect of the concurrence of the other States in the plan, how inadequate would it have been to the public exigencies, fettered with the embarrassments of a depreciating paper!

      It is to no purpose to say, that the faith of the State was pledged by the act to make the paper equal to gold and silver; and that the other States would be obliged to do the same. What greater dependence can be had on the faith of the States pledged to this measure, than on the faith they pledged in the Confederation sanctioned by a solemn appeal to heaven? If the obligation of faith in one case has had so little influence upon their conduct in respect to the requisitions of Congress, what hope can there be that they would have greater influences in respect to the deficiencies of the paper-money?

      There yet remains an important light in which to consider the subject in the way of revenue. It is a clear point that we cannot carry the duties upon imports to the same extent by separate arrangements as by a general plan—we must regulate ourselves by what we find done in the neighboring States: while Pennsylvania has only two and a half per cent. on her importations, we cannot greatly exceed her. To go much beyond it would injure our commerce in a variety of ways, and would defeat itself. While the ports of Connecticut and Jersey are open to the introduction of goods free from duty, and the conveyance from them to us is so easy—while they consider our imposts as an ungenerous advantage taken of them, which it would be laudable to elude, the duties must be light or they would be evaded. The facility to do it, and the temptation of doing it, would be both so great, that we should collect perhaps less by an increase of the rates than we do now. Already we experience the effects of this situation. But if the duties were to be levied under a common direction, with the same precautions everywhere to guard against smuggling, they might be carried without prejudice to trade to a much more considerable height.

      As things now are, we must adhere to the present standard of duties, without any material alterations. Suppose this to produce fifty thousand pounds a year. The duties to be granted to Congress ought, in proportion, to produce double that sum. To this it appears, by a scheme now before us, that additional duties might be imposed for the use of the State, on certain enumerated articles, to the amount of thirty thousand pounds. This would be an augmentation of our national revenue by indirect taxation to the extent of eighty thousand pounds a year, an immense object in a single State, and which alone demonstrates the good policy of the measure.

      It is no objection to say that a great part of this fund will be dedicated to the use of the United States. Their exigencies must be supplied in some way or other. The more is done towards it by means of the impost, the less will be to be done in other modes. If we do not employ that resource to the best account, we must find others in direct taxation. And to this are opposed all the habits and prejudices of the community. There is not a farmer in the State who would not pay a shilling in the voluntary consumption of articles on which a duty is paid, rather than a penny imposed immediately on his house and land.

      There is but one objection to the measure under consideration that has come to my knowledge, which yet remains to be discussed. I mean the effect it is proposed to have upon our paper currency. It is said the diversion of this fund would leave the credit of the paper without any effectual support.

      Though I should not be disposed to put a consideration of this kind in competition with the safety of the Union, yet I should be extremely cautious about doing any thing that might affect the credit of our currency. The Legislature having thought an emission of paper advisable, I consider it my duty as a representative of the people to take care of its credit. The farmers appeared willing to exchange their produce for it; the merchants on the other hand had large debts outstanding. They supposed that giving a free circulation to the paper would enable their customers in the country to pay, and as they perceived that they would have it in their power to convert the money into produce, they naturally resolved to give it their support.

      These causes combined to introduce the money into general circulation, and having once obtained credit, it will now be able to support itself.

      The chief difficulty to have been apprehended in respect to the paper, was to overcome the diffidence which the still recent experience of depreciating paper had instilled into men's minds. This, it was to have been feared, would have shaken its credit at its outset, and if it had once begun to sink, it would be no easy matter to prevent its total decline.

      The event has, however, turned out otherwise, and the money has been fortunate enough to conciliate the general confidence. This point gained, there need be no apprehensions of its future fate, unless the government should do something to destroy that confidence.

      The causes that first gave it credit still operate, and will in all probability continue so to do. The demand for money has not lessened, and the merchant has still the same inducement to countenance the circulation of the paper.

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