COLONEL HAMILTON'S SPEECH ON IMPOST, IN THE ASSEMBLY OF NEW YORK, ON THE 18th OF FEBRUARY, I787.
The subject upon which this speech was delivered, must be familiarly known to every person acquainted with the history of the United States. Before the establishment of the Federal Constitution, the power of providing for the public exigencies by laying duties and imposts, resided only in the' assemblies of the different states. When therefore it became necessary to defray the expenses of the general government and to pay the debts incurred by the Union, the congress of that day had no further power than that of making requisitions for the amount upon the several state assemblies.
Through the misconduct of those assemblies, requisitions actually became a nullity, or, to adopt the words of Washington, were " little better than a jest and a bye-word throughout the land." Among the many efforts made by congress and by the best men of the union, to save the country from the ruin and disgrace it seemed likely to incur from this delinquency on the part of the state legislatures, was a proposal to them to confer upon congress the prerogative of laying an impost.
It was upon this important question, the speech was made by General, then Colonel Hamilton, of which the following is a fragment.
The beginning of this speech went to obviate an objection raised against granting the impost to congress, viz. that the measure was inconsistent with the constitution of the state. After a long and eloquent discussion of that point, Col. Hamilton proceeded as follows:
Flattering myself it will appear to the committee that the constitution at least offers us no impediment, I shall proceed to other topics of objection. The next that presents itself, is a supposed danger to liberty, from granting legislative power to congress.
But before I enter upon this subject, to remove the aspersions thrown upon that body, I shall give a short history of some material facts relating to the origin and progress of the business. To excite the jealousies of the people, it has been industriously represented as an undue attempt to acquire an increase of power. It has been forgotten, or intentionally overlooked, that, considering it in the strongest light, as a proposal to alter the confederation, it is only exercising a power which the confederation has in direct terms reposed in congress; who, as before observed, are by the thirteenth article, expressly authorized to propose alterations.
But so far was the measure from originating in improper views of that body, that, if I am rightly informed, it did not originate there at all: it was first suggested by a convention of the four eastern states and New York, at Hartford: and I believe was proposed there by the deputies of this state. A gentleman on our bench, unconnected with congress, who now hears me, (I mean judge Hobart) was one of them. It was dictated by a principle which bitter experience then taught us, and which in peace or war will always be found true—that adequate supplies to the federal treasury, can never flow from any system, which requires the intervention of thirteen deliberatives, between the call and the execution.
Congress agreed to the measure, and recommended it. This state complied without hesitation. All parts of the government, senate, assembly, and council of revision, concurred. Neither the constitution nor the public liberty presented any obstacle. The difficulties from these sources are a recent discovery.
So late as the first session of the legislature after the evacuation of the city, the governor of the state, in his speech to both houses, gave a decided countenance to the measure: this he did, though not in express terms, yet by implications not to be misunderstood.
The leading opponents of the impost, of the present day, have all of them, at other times, either concurred in the measure in its most exceptionable form, and without the qualifications annexed to it by the proposed bill; or have, by other instances of conduct, contradicted their own hypothesis on the constitution, which professedly forms the main prop of their opposition.
The honourable member in my eye, (Mr. Jones,) at the last session, brought in a bill for granting to congress the power of regulating the trade of the union. This surely includes more ample legislative authority than is comprehended in the mere power of levying a particular duty. It indeed goes to a prodigious extent, much farther than on a superficial view can be imagined. Can we believe that the constitutional objection, if well founded, would so long have passed undiscovered? Or is it fair to impute to congress, criminal motives for proposing a measure, which was first recommended to them by five states; or for persisting in that measure, after the unequivocal experience they have had, of the total inefficacy of the mode provided in the confederation, for supplying the treasury of the union?
I leave the answer to these questions to the good sense and candor of the committee; and shall return to the examination of the question, how far the power proposed to be conferred upon congress would be dangerous to the liberty of the people? And here I ask, Whence can this danger arise? The members of congress arc chosen annually by the several legislatures. They are removable at any moment at the pleasure of those legislatures. They come together with different habits, prejudices, and interests. They are, in fact, continually changing. How is it possible for a body so composed, to be formidable to the liberties of states, several of which are large empires in themselves?
The subversion of the liberty of these states could not be the business of a day. It would, at least, require time, premeditation, and concert. Can it be supposed, that the members of a body so constituted, would be unanimous in a scheme of usurpation? If they were not, would it not be discovered and disclosed? If we could even suppose this unanimity among one set of men, can we believe that all the new members, who arc yearly sent from one state or another, 'would instantly enter into the same views? Would there not be found one honest man to warn his country of the danger?
Suppose the worst: suppose the combination entered into, and continued: the execution would at least announce the design; and the means of defense would be easy. Consider the separate power of several of these states, and the situation of all. Consider the extent, populousness, and resources of Massachusetts, Virginia, Pennsylvania; I might add, of New York, Connecticut, and other states. Where could congress find means sufficient to subvert the government and liberties of either of these states? Or rather, where find means sufficient to effect the conquest of all? If an attempt was made upon one, the others, from a sense of common danger, would make common cause: and they could immediately unite, and provide for their joint defense.
There is one consideration of immense force in this question, not sufficiently attended to. It is this, that each state possesses in itself the full powers of government; and can at once, in a regular and constitutional way, take measures for the preservation of its rights. In a single kingdom or state, if the rulers attempt to establish a tyranny, the people can only defend themselves by a tumultuous insurrection. They must run to arms without concert or plan; while the usurpers, clothed with the forms of legal authority, can employ the forces of the state to suppress them in embryo, and before they can have time or opportunity to give system to their opposition. With us the case is widely different. Each state has a government completely organized in itself; and can at once enter into a regular plan of defense with the forces of the community at its.command; it can immediately form connections with its neighbors, or even with foreign powers, if necessary.
In a contest of this kind, the body of the people will always be on the side of the state-governments. This will not only result from their love of liberty, and regard to their own safety, but from other strong principles of human nature. The state-governments operate upon those immediate familiar personal concerns, to which the sensibility of individuals is awake. The distribution of private justice belonging to them, they must always appear to the senses of the people as the immediate guardians of their rights. They will, of course, have the strongest hold on their attachment, respect and obedience. Another circumstance will contribute to the same end: far the greatest number of offices and employments are in the gift of the states separately: the weight of official influence will, therefore, be in favour of the state-governments: and with all these advantages, they cannot fail to carry the people along with them in every contest with the general government, in which they are not palpably in the wrong, and often when they are. What is to be feared from the efforts of congress to establish a tyranny, with the great body of the people, under the direction of their state-governments, combined in opposition to their views? Must not their attempts recoil upon themselves, and terminate in their own disgrace? Or rather would not these considerations, if they were insensible to other motives, forever restrain them from making such attempts?
The causes taken notice of, as securing the attachment of the people to their local governments, present us with another important truth—the natural imbecility of federal governments, and the danger that they will never be able to exercise power enough to manage the general affairs of the union. Though the states will have a common interest, yet they will also have a particular interest. For example, as a part of the union, it will be the interest of every state, that the general government should be supplied with the revenues necessary for the national purposes: but it will be the particular interest of each state, to pay as little itself, and to let its neighbors pay as much as possible. Particular interests have always more influence upon men than general. The several states, therefore, consulting their immediate advantage, may be considered as so many eccentric powers, tending in a contrary direction to the government of the union: and as they will generally carry the people along with them, the confederation will be in continual danger of dissolution.
This, Mr. Chairman, is the real rock upon which the happiness of this country is likely to split. This is the point to which our fears and cares should be directed. To guard against this, and not to terrify ourselves with imaginary dangers from the specter of power in congress, will be our true wisdom.
But let us examine a little more closely the measure under consideration. What does the bill before us require us to do? merely to grant certain duties on imposts to the United States, for the short period of twenty-five years, to be applied to the discharge of the principal and interest of the debts contracted for the support of the late war; the collection of which, duties, is to be made by officers appointed by the state, but accountable to congress according to such general regulations as the United States shall establish; subject to these important checks, that no citizen shall be carried out of the state for trial; that all prosecutions shall be in our own courts; that no excessive fines or penalties shall be imposed; and that a yearly account of the proceeds and application of the revenue shall be rendered to the legislature; on failure of which, it reserves to itself a right of repealing its grant.
Is it possible for any measure to be better guarded? or is it possible that a grant for such precise objects, and with so many checks, can be dangerous to the public liberty?
Having now, I trust, satisfactorily shown that the constitution offers no obstacle to the measure and that the liberty of the people cannot be endangered by it—it remains only to consider it in the view of revenue.
The sole question left for discussion, is, whether it be an eligible mode of supplying the federal treasury or not?
The better to answer this question, it will be of use to examine how far the mode by quotas and requisitions has been found competent to the public exigencies.
The universal delinquency of the states, during Ac war, shall be passed over with the bare mention of it. The public embarrassments were a plausible apology for that delinquency: and it was hoped the peace would produce greater punctuality—the experiment has disappointed that hope to a degree, which confounds the least sanguine. A comparative view of the compliances of the several states, for the five last years, will furnish a striking result.
During that period, as appears by a statement on our files, New Hampshire, North Carolina, South Carolina, and Georgia, have paid nothing. I say nothing, because the only actual payment, is the trifling sum of about seven thousand dollars, by New Hampshire. South Carolina indeed has credits, but these are merely by way of discount, on the supplies furnished by her during the war, in consideration of her peculiar sufferings and exertions while the immediate theater of it.
Connecticut and Delaware have paid about one-third of their requisitions. Massachusetts, Rhode Island, and Maryland, about one half. Virginia, about three-fifths. Pennsylvania, nearly the whole, and New York, more than her quota.
These proportions are taken on the specie requisitions; the indents have been very partially paid, and in their present state, are of little account.
The payments into the federal treasury have declined rapidly each year. The whole amount, for three years past, in specie, has not exceeded one million four hundred thousand dollars, of which New York has paid one hundred per cent, more than her proportion. This sum, little more than four hundred thousand dollars a year, it will readily be conceived, has been exhausted in the support of the civil establishments of the union, and the necessary guards and garrisons at public arsenals, and on the frontiers; without any surplus for paying any part of the debt, foreign or domestic, principal or interest.
Things are continually growing worse; the last year in particular produced less than two hundred thousand dollars, and that from only two or three states. Several of the states have been so long unaccustomed to pay, that they seem no longer concerned even about the appearances of compliance.
Connecticut and Jersey have almost formally declined paying any longer. The ostensible motive is the non-concurrence of this state in the impost system. The real one must be conjectured from the fact.
Pennsylvania, if I understand the scope of some late resolutions, means to discount the interest she pays on her assumption to her own citizens: in which case, there will be little coming from her to the United States. This seems to be bringing matters to a crisis.
The pecuniary support of the federal government has of late devolved almost entirely upon Pennsylvania and New York. If Pennsylvania refuses to continue her aid, what will be the situation of New York? Are we willing to be the Atlas of the union? or are we willing to see it perish?
This seems to be the alternative. Is there not a species of political knight-errantry in adhering pertinaciously to a system which throws the whole weight of the confederacy upon this state, or upon one or two more? Is it not our interest on mere calculations of state policy to promote a measure which operating under the same regulations in every state, must produce an equal, or nearly equal effect every where, and oblige all the states to share the common burden?
If the impost is granted to the United States, with a power of levying it, it must have a proportional effect in all the states; for the same mode of collection everywhere, will have nearly the same result every where.
What must be the final issue of the present state of things? Will the few states that now contribute, be willing to contribute much longer? Shall we ourselves be long content with bearing the burden singly? Will not our zeal for a particular system soon give way to the pressure of so unequal a weight? and if all the states cease to pay, what is to become of the union? It is sometimes asked, why do not congress oblige the states to do their duty: but where are the means? Where are the fleets and armies, where the federal treasury to support those fleets and armies, to enforce the requisitions of the union? All methods, short of coercion, have repeatedly been tried in vain.
Let us now proceed to another most important inquiry. How are we to pay our foreign debt?
This, I think, is estimated at about seven millions of dollars, which will every year increase with the accumulations of interest. If we pay neither principal nor interest, we not only abandon all pretensions to character as a nation, but we endanger the public peace. However it may be in our power to evade the just demands of our domestic creditors, our foreign creditors must and will be paid.
They have power to enforce their demands: and sooner or later they may be expected to do it. It is not my intention to endeavor to excite the apprehensions of the committee, but I would appeal to their prudence. A discreet attention to the consequences of national measures is no impeachment of our firmness.
The foreign debt, I say, must sooner or later be paid: and the longer provision is delayed, the heavier it must fall at last.
We require about one million, six hundred thousand dollars to discharge the interest and instalments of the present year; about a million annually, upon an average, for ten years more; and about three hundred thousand dollars for another ten years.
The product of the impost may be computed at about a million of dollars annually. It is an increasing fund— this fund would not only suffice for the discharge of the foreign debt, but important operations might be in grafted upon it, towards the extinguishment of the domestic debt.
Is it possible to hesitate about the propriety of adopting a resource so easy in itself, and so extensive in its effects?
Here I may expect to be told there is no objection to employing this resource; the act of the last session does it. The only dispute is about the mode. We are willing to grant the money, but not the power required from us. Money will pay our debts: power may destroy our liberties. It has been insinuated that nothing but a lust of power would have prevented congress from accepting the grant in the shape it has already passed the legislature.
This is a severe charge; if true, it ought undoubtedly to prevent our going a step further. But it is easy to show that congress could not have accepted 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 consequence of accepting our grant would be a relinquishment of the grants of the 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 the 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 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 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 great burden 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 obligations of faith in one case, have had so little influence upon their conduct in respect to the requisitions of congress; what hope can there be that they would have greater influence in respect to the deficiencies of the paper money?
There yet remains an important light, in which to consider the subject in the view of revenue. It is a clear point, that we cannot carry the duties upon imposts 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; we must content ourselves with the same, or nearly the same rate. 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 of doing it, and the temptation to do it, would be both so great, that we should, perhaps, collect less by . an increase of the rates, than we do now. Already do we experience the effects of this situation. But if the duties were to be levied under a common direction, with the same precautions every where to guard against smuggling, they might, without prejudice to trade, be carried to a much more considerable height.
As things now stand, 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 supposed it would 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 any thing that might affect 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. But it appears to me that apprehensions on this ground, are without foundation.
What has hitherto been the principal support of the credit of the paper? Two things: the universal demand for money, and the immediate interest of the merchants to countenance whatever would facilitate the recovery of their debts. The first cause begat a general clamour in the country for a paper emission, and a disposition to uphold its credit. The farmers appeared willing to exchange their produce for it. The merchants, on the other hand, had large debts out-standing. 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 have been 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 public confidence. This point gained, there need be no apprehensions for 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 to do so. The demand for money has not lessened: and the merchant has still the same inducement to countenance the circulation of the paper.
I shall not deny that the outlet which the payment of duties furnished to the merchant, was an additional motive to the reception of the paper. Nor is it proposed to take away this motive. There is now before this house a bill, one object of which is, the establishment of a state impost on certain enumerated articles, in addition to that to be granted to the United States. It is computed, on very good grounds, that the additional duties would amount to about thirty thousand pounds: and, as they would be payable in paper currency, they would create a sufficient demand upon the merchant, to leave him, in this respect, substantially the same inducement which he has now. Indeed, independent of this, the readiness of the trading people to take the money, can never be doubted, while it will freely command the commodities of the country: for this, to them, is the most important use they can make of it.
But besides the state-impost, there must be other taxes: and these will all contribute to create a demand for the money, which is all we now mean, when we talk of funds for its support: for there are none appropriated for the redemption of the paper.
Upon the whole, the additional duties will be a competent substitute for those now in existence: and the general good will of the community towards the paper, will be the best security for its credit.
Having now shown, Mr. Chairman, that there is no constitutional impediment to the adoption of the bill— that there is no danger to be apprehended to the public liberty, from giving the power in question to the United States—and that, in the view of revenue, the measure under consideration is not only expedient but necessary —let us turn our attention to the other side of this important subject: let us ask ourselves, what will be the consequence of rejecting the bill? what will be the situation of our national affairs, if they are left much longer to float in the chaos, in which they are now involved.
Can our national character be preserved without paying our debts? Can the union subsist without revenue? Have we realized the consequences which would attend its dissolution?
If these states are not united under a federal government, they will infallibly have wars with each other: and their divisions will subject them to all the mischiefs of foreign influence and intrigue. The human passions will never want objects of hostility. The western territory is an obvious and fruitful source of contest. Let us also cast our eye upon the map of this state, intersected from one extremity to the other by a large navigable river. In the event of a rupture with them, what is to hinder our metropolis from becoming a prey to our neighbors? Is it even supposable that they would suffer it to remain the nursery of wealth to a distinct community?
These subjects are delicate: but it is necessary to contemplate them, to teach us to form a true estimate of our situation.
Wars with each other would beget standing armies— a source of more real danger to our liberties, than all the power that could be conferred upon the representatives of the people. And wars with each other would lead to opposite alliances with foreign powers, and plunge us into all the labyrinths of European politics.
The Romans, in their progress to universal dominion, when they conceived the project of subduing the refractory spirit of the Grecian republics, which composed the famous Achaean league, began by sowing dissensions among them, and instilling jealousies of each other, and of the common head; and finished by making them a province of the Roman empire.
The application is easy. If there are any foreign enemies, if there are any domestic foes to this country, all their arts and artifices will be employed to effect a dissolution of the union. This cannot be better done than by sowing jealousies of the federal head, and cultivating in each state an undue attachment to its power.
The question being put, there appeared for granting the impost - 21 and against it - 36 Majority 15*
NOTE.* It may not prone an uninteresting observation to such of our readers, as are unacquainted with the circumstances that attended the rejection of this momentous question, to mention, that the members, opposed to vesting the united states in congress assembled, the power to levy the impost, made no attempt to justify their Dotes by arguments, or to invalidate tho/e cogent ones alleged in favour of the measure by col. Hamilton. On this occasion it was (not unaptly) remarked, that the impost mas strangled by a band of mutes (alluding to the Turkish messengers offate).— C.
From the American Museum, Or Repository of Ancient And
Modern Fugitive Pieces, Prose And Poetica, June 1787