revenue will be thought to be one of the primary objects to which the power of Government extends. It has long been apprehended, that an ill administration of the new Constitution was more to be feared, as inimical to the liberties of the people, than any hostility from the principles of the Constitution. Of all the operations of Government, those which concern taxation are the most delicate as well as the most important. This observation applies to all governments. Revenue is the soul of Government, and if such a soul had not been breathed into our body politic, it would have been a lifeless carcass, fit only to be buried. I would wish this soul might be actuated by rational principles, that, in establishing a revenue system, we might go on a superior principle to that which has heretofore been the governing principle in the United States; that we might consider what was most adequate to the object. The nature of the revenue system in this Government is to the last degree important; for want of the soul, the late Government was found utterly incapable of invigorating and protecting industry, or securing the Union; therefore these seem to be the great objects which we are to accomplish. I consider the present question as a direct application to the principles of the Constitution; it will either support or destroy them. If the revenue system should fall with oppressive weight on the people, if it shall injure some in their dearest interests, it will shake the foundation of the Government. However the newspapers may stand your friends, and trumpet forth panegyrics on the new Constitution, if your administration does not give satisfaction, you will find all ineffectual that they can do, whilst the people are against you. This being admitted, the Government will not push their regulations too far; they will consider the weaknesses and prejudices of the individual members of the Union. When they lay a tax, they will consider how far it is agreeable to them, and how far the measure is wise in itself. If it is said the article to be taxed is a luxury, and the Government is zealous to correct the vice, they will be careful they do not do it in too severe a manner; the principle would be capable of great expansion: all the enjoyments of social life are luxuries, and, as objects of revenue, we ought to set a price on the enjoyment, without suppressing their use altogether. Neither ought we to consider what the article in this point of view is able to pay, so much as what we may reasonably expect to collect from it. I believe various opinions are entertained on this subject. I have been told, the sentiments of some respectable merchants favor high duties, but I know there are as respectable gentlemen, whose judgment and information are much to be relied upon, decidedly of the contrary opinion, who think that we are treading upon ice; that if we impose these high duties at this time, we are doing an irreparable injury to our country; to that opinion I am myself inclined. I do apprehend very great inconveniences will result from pursuing these measures. I fear the collection would be insecure, your laws not be executed, and, of consequence, [MAY, 1789. your Government fall into contempt. In collecting a revenue, I would determine with accuracy what might be expected; but in case of high duties, no calculation can be made; it rests with the self-interest of individuals to determine what shall be paid. Notwithstanding all the observations which gentlemen have made, to show the proba bility of collecting the duties with certainty, I have still very serious doubts, and if the Govern ment cannot colleet the revenue, the system is not worth supporting. Government is founded in necessity, its powers are to check the unruly sallies of self-interest; to restrain which requires an unwearied attention in every department of Govern ment. It can hardly be thought good policy, therefore, to incite them, by great allurements, to violate the laws, to which mankind are naturally too prone. Now, we know that there are but two ways to prevent the perpetration of fraud upon the revenue, arising from an impost upon the importation of merchandise; one is, to lay the duties so low as not to offer an inducement to smuggling; the other is, by increasing the impediments and risk, so as to counterbalance the temptation. The checks and precautions ought to amount to a complete evidence that the law cannot be evaded, otherwise we not only suffer a loss of money but of reputation also. Taking it upon this principle, I am at a loss to imagine how gentlemen can suppose they can collect thirty or forty per cent. on the value of goods imported, unless our laws are better constructed than the laws of other nations. In those countries, where the best regulations have been adopted upon the experience of ages, it is found impossible, in cases of high duties, to prevent illicit trade; how can we, then, who have not that experience, nor a more nervous Executive, expect to raise forty per cent. in the first instance? For my part, I despair of it. What grounds have gentlemen for entertaining such ideas? Do they think there is any thing in our local situation to enable them to make sure work of it? They have told us, that the Governments of the Southern and Middle States heretofore collected the duties with tolerable certainty. I admit it, because there are natural causes existing there rendering the collection practicable; but there are no such causes to the Eastward. The Chesapeake and Delaware are the two great avenues through which the navi gation must enter into those countries; the other avenues are few, and may be easily guarded. Add to this another consideration, that their trade is principally carried on in large vessels, and by foreigners; their citizens are generally concerned in agriculture. These circumstances compounded operate thus. If they are subjected to high duties, strangers have less knowledge of the country, and are without the connexion necessary to insure success to smuggling; besides, the people, considering the money as coming out of the pockets of foreigners, are more desirous of having it paid with certainty, than they would probably be if it was demanded of their friend and neighbor. But let us consider the situation of Massachusetts and New Hampshire. The MAY, 1789.] Duties on Imports. [H. OF R. other means, and we shall stand a monument of imbecility to future ages. foreign shipping employed in their trade is very inconsiderable, consequently the motive which operates in Virginia will be insensibly felt in those If gentlemen will consider how large a revenue States; but the citizens of Massachusetts are may be drawn from the commerce of this extengenerally a commercial people, the greater pro-sive and fertile country, they will know the value portion along the coast are engaged in commerce. Perhaps, if I thought so highly of State honors as the subject demands, I might be concerned at being obliged to speak the truth; but the duty I owe to the Union induces me to forego every consideration of that nature. If I am under an impression that your laws will be unpopular, and left without that support from the people necessary for their due execution, I must come forward and warn you of the danger. From the experience we have had of the opposition of our people to the British acts of Parliament, because they were either unjust or unpopular, I am led to fear, if the same opinion is entertained with respect to our ordinances, that they will be defeated in a similar manner. The habit of smuggling pervades our country. We were taught it when it was considered rather as meritorious than criminal; therefore we have just reason to apprehend their success in evading the public impositions, although the temptations should be small. of the stake they play for, and not risk it at a single cast. If we begin with laying moderate duties, it will redound to our honor, and give our constituents a confidence in the Government. When this shall be well established, and when they find themselves happy under its benign influence, they will be bound by an interest arising from experience, as well as by principle, to support you. Under these manifestations of mutual regard, the duties may increase as the wants of Government demand, without exciting clamor or complaint. If my principles are right, and they rest upon the sure basis of experience, it will not be enough that gentlemen say our duties will probably be collected; they must go further, and demonstrate that there cannot be a reasonable doubt entertained of our success. The magnitude of the object we risk demands as great a degree of certainty as to its effects as the nature of the case will admit. If a heavy impost is the least beyond what the powers of Government can reach, a punctual collection of the difference in the duties will not compensate for the hazard we I submit it to gentlemen to say, whether there is any other reason for laying high duties but what arises from pecuniary considerations? If there be not, and it is well known that a moderate duty realizes as much revenue as a high one, gentlemen will concur in the reduction. It is easy to determine by experience, that it will be agreeable to the citizens; if so, it will bring them in individually to the aid of the Government, which they will learn to venerate and obey. How much better is this than holding out temptations for men to enrich themselves and beggar your treasury, to trample on your laws, and despise the Government itself? The State of Massachusetts has a prodigious extent of seacoast, of near one thousand miles in length, indented with innumerable bays and riv-engage in. ers, forming the finest, most accessible, and secure st harbors in the world. It must be impossible to guard them all, even if our population was crowded; add to this, that there are two thousand sail of vessels, large and small, coming in and going out constantly. If this statement is true, I ask gentlemen whether a law can be enforced that is repugnant to the judgment, feelings, and interests of so large a proportion of the people, possessing every possible advantage to elude your grasp? The former Government, with a wakeful vigilance and anxious desire, endeavored in vain to seize this object. The State Governments, instituted by the people themselves for their particular benefit, have hitherto been unable to execute laws of this nature. If the same cause for evasion exists under the General Government, will it not produce the same effect? I know of no peculiar power residing in us that the State Governments were not in the possession of at the time they made unsuccessful efforts to obtain revenue by a system of high duties: what, then, do we expect? The merchants are to associate, and form a phalanx in our support; private honor is to be called in aid of public measures. If this is done, what then? I have no doubt of the virtue and patriotism of many of these gentlemen; the most respectable merchants will disdain to smuggle; but there will ever be found a band of inferior characters, I care not what you call them, infamous parricides, ready to defraud your revenue by evasion, or any other means in their power. These men will get the business into their hands, and being under no restraint of honor or virtue, rob you by secret means of the great essential to the well-being of the Government. It will become impracticable to support it by Mr. MADISON. The right understanding of this subject is of great importance. The discussion has been drawn out to a very considerable length on former occasions. The chain of ideas on which the subject is suspended, is not very long, nor consists of many links. The present Constitution was framed to supply the defects of the one that has preceded it. The great and material defects of it are well known to have arisen from its inability to provide for the demands of justice and security of the Union. To supply those defects, we are bound to fulfil the public engagements; expectation is anxiously waiting the result of our deliberations; it cannot be satisfied without a sufficient revenue to accomplish its purposes. We cannot obtain the money any other way but by taxation. Among the various objects of this nature, an impost on merchandise imported is preferable to all others, and among the long list of articles included in the bill, there is not one more proper for the purpose than the article under consideration. The public sentiment has strongly pointed it out as an object of revenue. I con H. OF R.] Duties on Imports. [MAY, 1789. ceive, therefore, that it will be our duty to draw make up mine, from the best materials in my from this source all the money that it is capable power. I pay great respect to the opinions of of yielding. I am sure that it will not exceed mercantile gentlemen, and am willing to concede our wants, nor extend to the injury of our com- much to them, so far as their opinions are regumerce. How far the powers of Government are lated by experience; but if I am to be guided by capable of going on this occasion, is matter of this information, it will not lead me to agree to opinion; we have had no direct experiment of the reduction of the duties in the manner conwhat can be done under the energy and popu-tended for. It is said, that if we reduce at all, larity of the new system; we must recur to other we must go through the whole. Now I doubt sources for information, and then, unless the cir- whether the duty on the article of rum exceeds cumstances are alike, the comparison may not be that proportion which pervades the long list betrue. We have been referred to the experience fore us. It does not amount to more than thirty of other nations; if that is to guide us on this per cent., while some other articles stand at forty; subject, I am sure we shall find precedents for some articles again that are not enumerated, but going much further than is now proposed. If I which fall within the general mass at five per do not mistake the calculations that I have seen cent., are more likely to be introduced clandes of duties on importation, they amount to more on tinely than this article, if it stood at fifty per an average than fifteen per cent.; the duty on ar- cent. I am sure, if we reduce the whole system dent spirits in all nations exceeds what is in con- in the manner now proposed, all the duty we templation to be laid in the United States. I am shall be able to collect will be very incompetent sensible that the means which are used by those to what the public necessities demand. We must nations to ensure the collection, would be odious turn our eyes, then, to some other source that and improper in this country; but I believe the will fill up the deficiency. There are but two means which this country is capable of using, objects to which, in this dilemma, we can have without exciting complaint or incurring too much recourse-direct taxation and excises. Direct expense, would be as adequate to secure a duty of taxation is not contemplated by any gentleman fifteen per cent. as the powers of any other nation on this floor, nor are our constituents prepared for could be to obtain ninety or one hundred per cent. such a system of revenue; they expect it will not If we consult the experience of the United States, be applied to, until it is found that sufficient it does not admonish us that we are proceeding funds cannot be obtained in any other way. Extoo far; there are duties now under collection, in cises would give particular disgust in some States, some States, that amount nearly to the same as therefore gentlemen will not make up the defi those we have in contemplation. A duty col- ciency from that quarter. I think, upon the lected under the feeble operation of the State whole, it is better to try what will be produced by Governments, cannot be supposed beyond our a plan which is favored by the public sentiment. powers, when those duties have been collected by This will give a support to our laws equal to the them, with feeble powers, but under a competi-greatest energy of a strong execution. The citi tion, not to say opposition, of the neighboring zens of America know that their individual inStates. I am led, from a knowledge of these cir- terest is connected with the public. We shall cumstances, to believe that when we have estab- then have the strong motive of interest acting in lished some general rule, and have the co-opera- favor of the Government in a peculiar manner. tion of all the members of the Union, we shall But I am not inclined to trust too much to this be able to do what is proposed by this bill, better security. I would take in the aid of the best reguthan any one State could execute it with its sepa-lations in our power to provide; these, acting in rate strength. If we consult the opinion of the merchants, we shall not find them a very sure guide. Merchants do not pretend to infallibility; but if they did, they have given a proof to the contrary, by their difference of opinion on this subject. Gentlemen of that profession, both within these walls and out of doors, have been as much divided on this point as any other description of men. I believe them to be the best informed as to the probable effects of an impost system, but they are not exempt from the infirmities of human nature. We know there is an essential difference between the interest of merchants and the interest of commerce; we know there may be distinctions also between the interest of commerce and of revenue; and that in some cases we must sacrifice the one to the other. I am not sure that we are not under the necessity of doing both in the business before us. It is barely matter of opinion what revenue the General Government will be able to draw from the system now proposed. This being the case, I have endeavored to concert, would give a moral certainty to the faithful collection of the revenue. But if gentlemen notwithstanding will persist in contending against such a system, and cannot offer us a substitute, we must fail of the primary object for which the Government was created. If upon experience we find that the duties cannot be safely collected, it may be proper to reduce them; but if we set them too low in the first instance, and they do not yield a sufficiency to answer the just demands of the public creditors and the expenses of Government, the public reputation must suffer. but I need not inform gentlemen we are surrounded with difficulties; they are seen on every side; they appear as few and as surmountable on the side of the bill, as they do in any other part of the prospect. If we give way on this article, we are to do so upon all others. It is not for any reason peculiar to Jamaica spirits that the reduction is moved for; hence, I conceive, if gentlemen meet with suecess in opposing this duty, we shall be reduced to a system inadequate to our wants, and MAY, 1789.] thereby defeat the chief object of our appoint- not think it contains any new matter that will ment. Mr. BLAND. I join with the gentlemen who are disposed to lower the duties. Although I feel the necessity we are under of raising revenue, as much as any other gentleman possibly can, yet I think we ought to deliberate fully upon the means before we adopt them. It is demonstrable, nay, it is self-evident, that laying high duties, in the first instance, will beget smuggling; and I fear our regulations respecting the collection, will prove the impracticability of defeating the practice. But when we come to consider the subject in another point of view, I trust such a system will be found unnecessary. The enumerated articles in this bill are very numerous; they are taxed from fifty per cent. downwards; the general mass pays five per cent. The calculations made by the late Congress, who no doubt maturely considered the subject, found a list of eight articles only, and those at one-fourth, or one-fifth of the rate now proposed, would produce a revenue of nine hundred and fifteen thousand six hundred and fifty-six dollars annually. When we add to this calculation a circumstance of notoriety, the increase of our importation, we shall find that we levy, or mean to levy, greater sums than the public necessities require. There will not be found specie enough within the United States to pay the duties: four times the rate of what the former Congress recommended, will produce three millions six hundred thousand dollars. The enumeration is four times as great also; hence we may infer that the amount will reach thirteen or fourteen millions. At least, we shall be convinced that we are upon too high a scale. But where is the necessity of raising the impost to this degree? There are other means of revenue, and such as will not give disgust. We have already proposed a duty on tonnage; there is the Post Office, and some other things which the ingenuity of Government can devise, and is entitled to, for the purpose of revenue; if it is therefore unnecessary to levy such oppressive taxes, what other pretext can be set up for adopting the system? Independent of every other consideration, this ought to induce us to lower them. But there are other and weighty considerations; but as they have been well urged by the gentleman from Massachusetts, (Mr. AMES,) I shall not touch upon them. It is said that it is merely matter of opinion whether they are too high or not; if so, let us be careful not to venture too far on such ground. It will be much better to reduce it in the manner proposed by the gentleman from South Carolina, and increase it hereafter, than strain the measure too high at present. Mr. SHERMAN. After this subject had been debated in a Committee of the Whole, and then in the House, upon the report, and every argument that could be thought of had been urged, both on the general and particular amount of the duties proposed, and the probable effects of a deduction, I did not expect to have heard the same debate take place again. Gentlemen have a large field to display their abilities in, but I do induce a single gentleman to alter his opinion on the subject. The great object is to raise a sum of money adequate to supply our wants; and let us dispute as we will about the mode, the fact is it must be raised. The people have sent their representatives here for this purpose; it is for their benefit that we raise the money, and not for any peculiar advantage to ourselves; the objects are to pay the debts, and to provide for the general welfare of the community. The first of these objects I take to be, that we pay our debts. There are very many meritorious characters who furnished us with essentials in the hour of imminent danger, who, from the imbecility of our former Government, have not been able to get even the interest of what they loaned us. I believe it is the first wish of the people throughout the United States to do justice to the public creditors, and to do it in such a manner, that each may contribute an equal part according to his abilities. We have very considerable arrearages due on this account, upon not only the domestic but foreign debt; there are several instalments not yet discharged, and considerable of the interest not yet paid. No statement can be made of the expenses of Government, so as to ascertain what quantity of revenue will be demanded on that head, but saying that they will be much the same under this Government as the former, and we shall have occasion for a very considerable sum to defray the expenses. I believe we are not able to make a very accurate calculation of what the system proposed in the bill will yield. The late Congress contemplated a million of dollars from this source, which, in aid of the requisition, they supposed sufficient for the purpose of paying the instalments of the national debt and interest; but that sum alone will now be found very short of what is wanted, without the aid of direct taxes. It is very material that we lay the burden as equal as possible, in whatever mode we pursue to obtain revenue: a great deal of care has been taken in distributing the proportion with equity; I apprehend, therefore, that we shall not be able to make it much more equitable by any alteration than it is at present. I think, also, that the people will pay more freely a duty of this nature than they will in direct taxes. If gentlemen prevail in getting the duties lowered to what the late Congress proposed, they will find themselves obliged to have recourse to direct taxation for a million and a half, or two millions of dollars. It then only remains for us to consider, whether it will be more agreeable to the people to reduce the impost in this manner, and raise the deficiency by direct taxes. If these duties are to be considered as a tax on the trading part of the community alone, they are improper; but this, I believe, is not the case; the consumer pays them eventually, and they pay no more than they choose, because they have it in their power to determine the quantity of taxable articles they will use. A tax left to be paid at discretion must be more agreeable than any other. The merchant considers that part of his capital applied to the payment of the duties the same as if employed in trade, and gets the same profit upon it, as on the original cost of the commodity. [MAY, 1789. time that it raises revenue, tend to enrich the country, by promoting the industry and economy of our citizens. and will give all the assistance in the execution of the law that is in their power; and as the mercantile part of the people will see that it is equally As to the tax on distilled spirit, it will be felt as laid, though it may be something higher than the little as any other whatever; and from this source States have hitherto required, they will submit we are to expect a very considerable proportion themselves to our ordinance, and use their influof the revenue. If we attend to what every body ence to aid the collection. I know there will be says abroad, we shall have a great deal to do, for some characters concerned in an illicit trade, actthere is a great variety of opinion. I have re-ing without principle, but I think we can restrain ceived information from a gentleman of know- them. If there is a degree of infamy attached to ledge and experience on this point, and he says the wretches concerned in smuggling, and the that it is his opinion, and the general opinion of practice is detested by the community, a man will those about him, that the duty on distilled spirits scarcely be able to carry on such trade with ad is too low by one half: the same are the senti- vantage. It appears to me, therefore, that we had ments even of the importers of this article. The best let the system remain as it is; the duties are duty on it cannot be said to be unequal, as it has reasonable, and will operate as equitably on the been contended on other articles; it is pretty gen-people at large as practicable; it will, at the same erally consumed throughout the United States. The State I belong to is at a considerable distance from the West Indies, yet she consumes no inconsiderable quantity, much more than I wish she did. The gentleman from South Carolina seems to suppose that the duty will bear harder upon his State than upon others. I cannot think it will be the case; but if they consume more, they should agree to a high duty, in order to lessen the consumption. As to the subject of collection, they refer us to what was done under the Government of Britain: in my opinion the comparison does not hold good. It was thought lawful by the people of America to evade those duties, because they were unconstitutionally laid; they were not represented in the Parliament of Great Britain, and it is a principle that taxation is founded upon representation. As to the collection of the State duties since the peace, I think the Governments have labored under greater disadvantages than the United States will under this system; the duties that were collected by them went into the treasury of the particular State into which the goods were imported; the people who consumed those goods in other States, thought it a peculiar hardship to pay into their funds what they thought ought to belong to the United States. The great embarrassment arose from this inequality; under the present system, each State will pay alike, and will be alike benefited. One gentleman has observed, that there is not money enough to pay all the duties imposed in this bill; but is it not as easy to introduce money as merchandise? When there is a demand for it, the merchants will bring it in, for they can as well bring less of a commodity and more money; so that, if this should take place, the objection will be done away. It is in this way that we must be supplied with cash, because we have neither gold nor silver mines to draw it from; if we get it, it must be imported and will be imported, if it is more advantageous than the importation of other articles. I think we ought to rely a great deal on the virtue of our constituents; they will be convinced of the necessity of a due collection of the revenue; they will know that it must be done in this way, or it will be by direct taxation. I believe the people will prefer this mode of raising revenue, Mr. WHITE.-When this system first came before the committee, I was opposed to enter into an enumeration, because I supposed much time would be taken up in the discussion, which would be an absolute loss of revenue, perhaps to a greater amount than the difference between the duties of such a system and the one proposed by the late Congress; but as it was thought proper by the committee to proceed in the way that we have done, it would be presumption in me to say, that the duty on every article has been perfectly digested and properly laid, but I believe every article stands as well as can be upon the information we are in possession of. I believe very few, if any, of the articles can be disapproved of. The gentlemen last up has anticipated every thing that occurred to me on the subject. The question appears to turn upon this point, whether the duties can be collected or not? For my part I have no doubt but they can. It has justly been said by the gentleman from Massachusetts (Mr. AMES) that money is the soul of government; that, without such a soul, government cannot exist; then it will be necessary that we obtain this vivifying principle. The most popular mode of doing it is by way of impost, and I believe it was a prevailing motive with the people to adopt the new Constitution. I am satisfied in my own mind that it will be the most agreeable and least oppressive of any mode in our power: if a popular measure could be effected without law, what may we not expect from the co-operation of both? Before the Revolution, a private commercial combination regulated the importations between America and Britain. If any man was suspected of an infraction of the non-importation agreement, his conduct was strictly watched; if his guilt was discovered, he was published and held up to the world as an enemy to his country. Something like this may be expected to take place now; because every man is convinced of the importance and necessity of enforcing the revenue laws of the Union. This, in addition to our legal establishments, will give an efficacy to public measures which other countries are unacquainted with. |