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Fishkill, July 12, 1781.
I send you the first number of a series of papers which I intend to publish on matters of the greatest importance to these States. I hope they will be read with as much candor and attention as the object of them deserves, and that no conclusions will be drawn till these are fully developed.
I am sir,
Your most ob’t humble servant,
A.B.
It would be the extreme of vanity in us not to be sensible that we began this revolution with very vague and confined notions of the practical business of government. To the greater part of us it was a novelty; of those who under the former constitution had had opportunities of acquiring experience, a large proportion adhered to the opposite side, and the remainder can only be supposed to have possessed ideas adapted to the narrow colonial sphere in which they had been accustomed to move, not of that enlarged kind suited to the government of an independent nation.
There were, no doubt, exceptions to these observations,—men in all respects qualified for conducting the public affairs with skill and advantage. But their number was small; they were not always brought forward in our councils; and when they were, their influence was too commonly borne down by the prevailing torrent of ignorance and prejudice.
On a retrospect, however, of our transactions, under the disadvantages with which we commenced, it is perhaps more to be wondered at that we have done so well than that we have not done better. There are, indeed, some traits in our conduct as conspicuous for sound policy as others for magnanimity. But, on the other hand, it must also be confessed, there have been many false steps, many chimerical projects and utopian speculations, in the management of our civil as well as of our military affairs. A part of these were the natural effects of the spirit of the times, dictated by our situation. An extreme jealousy of power is the attendant on all popular revolutions, and has seldom been without its evils. It is to this source we are to trace many of the fatal mistakes which have so deeply endangered the common cause; particularly that defect which will be the object of these remarks—a want of power in Congress.
The present Congress, respectable for abilities and integrity, by experience convinced of the necessity of change, are preparing several important articles, to be submitted to the respective States, for augmenting the powers of the Confederation. But though there is hardly at this time a man of information in America who will not acknowledge, as a general proposition, that in its present form it is unequal either to a vigorous prosecution of the war or to the preservation of the Union in peace; yet when the principle comes to be applied to practice, there seems not to be the same agreement in the modes of remedying the defect; and it is to be feared, from a disposition which appeared in some of the States on a late occasion, that the salutary intentions of Congress may meet with more delay and opposition than the critical posture of the States will justify.
It will be attempted to show, in a course of papers, what ought to be done, and the mischiefs of a contrary policy.
In the first stages of the controversy, it was excusable to err. Good intentions, rather than great skill, were to have been expected from us. But we have now had sufficient time for reflection, and experience as ample as unfortunate, to rectify our errors. To persist in them becomes disgraceful, and even criminal, and belies that character of good sense, and a quick discernment of our interests, which, in spite of our mistakes, we have been hitherto allowed. It will prove that our sagacity is limited to interests of inferior moment, and that we are incapable of those enlightened and liberal views necessary to make us a great and a flourishing people.
History is full of examples where, in contests for liberty, a jealousy of power has either defeated the attempts to recover or preserve it, in the first instance, or has afterward subverted it by clogging government with too great precautions for its felicity, or by leaving too wide a door for sedition and popular licentiousness. In a government framed for durable liberty, not less regard must be paid to giving the magistrate a proper degree of authority to make and execute the laws with rigor, than to guard against encroachments upon the rights of the community. As too much power leads to despotism, too little leads to anarchy, and both, eventually, to the ruin of the people. These are maxims well known, but never sufficiently attended to, in adjusting the frames of governments. Some momentary interest or passion is sure to give a wrong bias, and pervert the most favorable opportunities.
No friend to order or to rational liberty can read without pain and disgust the history of the Commonwealths of Greece. Generally speaking, they were a constant scene of the alternate tyranny of one part of the people over the other, or of a few usurping demagogues over the whole. Most of them had been originally governed by kings, whose despotism (the natural disease of monarchy) had obliged their subjects to murder, expel, depose, or reduce them to a nominal existence, and institute popular governments. In these governments, that of Sparta excepted, the jealousy of power hindered the people from trusting out of their own hands a competent authority to maintain the repose and stability of the Commonwealth; whence originated the frequent revolutions and civil broils with which they were distracted. This, and the want of a solid federal union to restrain the ambition and rivalship of the different cities, after a rapid succession of bloody wars, ended in their total loss of liberty, and subjugation to foreign powers.
In comparison of our governments with those of the ancient republics, we must, without hesitation, give the preference to our own; because every power with us is exercised by representation, not in tumultuary assemblies of the collective body of the people, where the art or impudence of the Orator or Tribune, rather than the utility or justice of the measure, could seldom fail to govern. Yet, whatever may be the advantage on our side in such a comparison, men who estimate the value of institutions, not from prejudices of the moment, but from experience and reason, must be persuaded that the same jealousy of power has prevented our reaping all the advantages from the examples of other nations which we ought to have done, and has rendered our constitutions in many respects feeble and imperfect.
Perhaps the evil is not very great in respect to our State constitutions; for, notwithstanding their imperfections, they may for some time be made to operate in such a manner as to answer the purposes of the common defence and the maintenance of order and they seem to have, in themselves, and in the progress of society among us, the seeds of improvement.
But this is not the case with respect to the Federal Government; if it is too weak at first, it will continually grow weaker. The ambition and local interests of the respective members will be constantly undermining and usurping upon its prerogatives till it comes to a dissolution, if a partial combination of some of the more powerful ones does not bring it to a more speedy and violent end.
July 19, 1781.
In a single state where the sovereign power is exercised by delegation, whether it be a limited monarchy or a republic, the danger most commonly is, that the sovereign will become too powerful for his constituents. In federal governments, where different states are represented in a general council, the danger is on the other side—that the members will be an overmatch for the common head; or, in other words, that it will not have sufficient influence and authority to secure the obedience of the several parts of the confederacy.
In a single state the sovereign has the whole legislative power as well as the command of the national forces—of course an immediate control over the persons and property of the subjects; every other power is subordinate and dependent. If he undertakes to subvert the constitution, it can only be preserved by a general insurrection of the people. The magistrates of the provinces, counties, or towns into which the State is divided, having only an executive and police jurisdiction, can take no decisive measures for counteracting the first indications of tyranny; but must content themselves with the ineffectual weapon of petition and remonstrance. They cannot raise money, levy troops, nor form alliances. The leaders of the people must wait till their discontents have ripened into a general revolt, to put them in a situation to confer the powers necessary for their defence. It will always be difficult for this to take place; because the sovereign, possessing the appearance and forms of legal authority, having the forces and revenues of the state at his command, and a large party among the people besides,—which with those advantages he can hardly fail to acquire—he will too often be able to baffle the first motions of the discontented, and prevent that union and concert essential to the success of their opposition.
The security, therefore, of the public liberty must consist in such a distribution of the sovereign power, as will make it morally impossible for one part to gain an ascendency over the others, or for the whole to unite in a scheme of usurpation.
In federal governments, each member has a distinct sovereignty, makes and executes laws, imposes taxes, distributes justice, and exercises every other function of government. It has always within itself the means of revenue; and on an emergency, can levy forces. If the common sovereign should meditate or attempt any thing unfavorable to the general liberty, each member, having all the proper organs of power, can prepare for defence with celerity and vigor. Each can immediately sound the alarm to the others, and enter into leagues for mutual protection. If the combination is general, as is to be expected, the usurpers will soon find themselves without the means of recruiting their treasury or their armies; and for want of continued supplies of men and money, must, in the end, fall a sacrifice to the attempt. If the combination is not general, it will imply that some of the members are interested in that which is the cause of dissatisfaction to others, and this cannot be an attack upon the common liberty, but upon the interests of one part in favor of another part; and it will be a war between the members of the federal union with each other, not between them and the federal government. From the plainest principles of human nature, two inferences are to be drawn: one, that each member of a political confederacy will be more disposed to advance its own authority upon the ruins of that of the confederacy, than to make any improper concession in its favor, or support it in unreasonable pretensions; the other, that the subjects of each member will be more devoted in their attachments and obedience to their own particular governments, than to that of the union.
It is the temper of societies as well as of individuals to be impatient of constraint, and to prefer partial to general interest. Many cases may occur where members of a confederacy have, or seem to have, an advantage in things contrary to the good of the whole, or a disadvantage in others conducive to that end. The selfishness of every part will dispose each to believe that the public burdens are unequally apportioned, and that itself is the victim. These and other circumstances will promote a disposition for abridging the authority of the federal government; and the ambition of men in office in each state will make them glad to encourage it. They think their own consequence connected with the power of the government of which they are a part; and will endeavor to increase the one as the means of increasing the other.
The particular governments will have more empire over the minds of their subjects than the general one, because their agency will be more direct, more uniform, and more apparent. The people will be habituated to look up to them as the arbiters and guardians of their personal concerns, by which the passions of the vulgar, if not of all men, are most strongly affected; and in every difference with the confederated body, will side with them against the common sovereign.
Experience confirms the truth of these principles. The chief cities of Greece had once their council of Amphyctions, or States-general, with authority to decide and compose the differences of the several cities, and to transact many other important matters relative to the common interest and safety. At their first institution, they had great weight and credit; but never enough to preserve effectually the balance and harmony of the confederacy; and in time their decrees only served as an additional pretext to that side whose pretensions they favored. When the cities were not engaged in foreign wars, they were at perpetual variance among themselves. Sparta and Athens contended twenty-seven years for the precedence, or rather dominion, of Greece, till the former made herself mistress of the whole; and till, in subsequent struggles, having had recourse to the pernicious expedient of calling in the aid of foreign enemies, the Macedonians first and afterward the Romans became their masters.
The German Diet had formerly more authority than it now has, though like that of Greece never enough to hinder the great potentates from disturbing the repose of the empire, and mutually wasting their own territories and people.
The Helvetic League is another example. It is true it has subsisted nearly five hundred years; but in that period the cantons have had repeated and furious wars with each other, which would have made them an easy prey to their more powerful neighbors, had not the reciprocal jealousy of these prevented either from taking advantage of their dissensions. This and their poverty have hitherto saved them from total destruction, and kept them from feeling the miseries of foreign conquest, added to those of civil war. The federal government is too weak to hinder their renewal, whenever the ambition or fanaticism of the principal cantons shall be disposed to rekindle the flame. For some time past, indeed, it has been in a great measure nominal; the Protestants and Catholics have had separate diets, to manage almost all matters of importance; so that in fact, the general diet is only kept up to regulate the affairs of the common bailliages and preserve a semblance of union; and even this, it is probable would cease, did not the extreme weakness of the cantons oblige them to a kind of coalition.
If the divisions of the United Provinces have not proceeded to equal extremities, there are peculiar causes to be assigned. The authority of the Stadt-holder pervades the whole frame of the republic, and is a kind of common link by which the provinces are bound together. The jealousy of his progressive influence, in which more or less they all agree, operates as a check upon their ill-humors against one another. The inconsiderableness of each province separately, and the imminent danger to which the whole would be exposed of being overrun by their neighbors in case of disunion, is a further preservative against the phrensy of hostility; and their importance and even existence depending entirely upon frugality, industry, and commerce, peace both at home and abroad is of necessity the predominant object of their policy.
August 9, 1781.
The situation of these States is very unlike that of the United Provinces. Remote as we are from Europe, in a little time we should fancy ourselves out of the reach of attempts from abroad, and in full liberty, at our leisure and convenience, to try our strength at home. This might not happen at once, but if the Federal Government should lose its authority it would certainly follow. Political societies in close neighborhood must either be strongly united under one government, or there will infallibly exist emulations and quarrels; this is in human nature, and we have no reason to think ourselves wiser or better than other men. Some of the larger States, a small number of years hence, will be in themselves populous, rich, and powerful in all those circumstances calculated to inspire ambition and nourish ideas of separation and independence. Though it will ever be their true interest to preserve the Union, their vanity and self-importance will be very likely to overpower that motive, and make them seek to place themselves at the head of particular confederacies independent of the general one. A schism once introduced, competitions of boundary and rivalships of commerce will easily afford pretexts for war.
European powers may have many inducements for fomenting these divisions and playing us off against each other; but without such a disposition in them, if separations once take place we shall, of course, embrace different interests and connections. The particular confederacies, leaguing themselves with rival nations, will naturally be involved in their disputes, into which they will be the more readily tempted by the hope of making acquisitions upon each other and upon the colonies of the powers with whom they are respectively at enmity.
We already see symptoms of the evils to be apprehended. In the midst of a war for our existence as a nation—in the midst of dangers too serious to be trifled with, some of the States have evaded or refused compliance with the demands of Congress in points of the greatest moment to the common safety. If they act such a part at this perilous juncture, what are we to expect in a time of peace and security? Is it not to be feared that the resolutions of Congress would soon become like the decisions of the Greek Amphyctions, or like the edicts of a German Diet?
But as these evils are at a little distance, we may perhaps be insensible and short-sighted enough to disregard them. There are others that threaten our immediate safety. Our whole system is in disorder; our currency depreciated, till in many places it will hardly obtain a circulation at all; public credit at its lowest ebb; our army deficient in numbers, and unprovided with every thing; the Government, in its present condition, unable to command the means to pay, clothe, or feed their troops; the enemy making an alarming progress in the Southern States, lately in complete possession of two of them, though now in part rescued by the genius and exertions of a general without an army; a force under Cornwallis still formidable to Virginia.
We ought to blush to acknowledge that this is a true picture of our situation, when we reflect that the enemy's whole force in the United States, including their American levies and the late reinforcements, is little more than fourteen thousand effective men; that our population, by recent examination, has been found to be greater than at the commencement of the war; that the quantity of our specie has also increased; that the country abounds with all the necessaries of life, and has a sufficiency of foreign commodities, with a considerable and progressive commerce; that we have, beyond comparison, a better stock of warlike materials than when we began the contest, and an ally as willing as able to supply our further wants; and that we have on the spot five thousand auxiliary troops, paid and subsisted by that ally, to assist in our defence.
Nothing but a general disaffection of the people or mismanagement in their rulers can account for the figure we make, and for the distresses and perplexities we experience contending against so small a force.
Our enemies themselves must now be persuaded that the first is not the cause, and we know it is not. The most decided attachment of the people could alone have made them endure, without a convulsion, the successive shocks in our currency, added to the unavoidable inconveniences of war. There is perhaps not another nation in the world that would have shown equal patience and perseverance in similar circumstances. The enemy have now tried the temper of almost every part of America, and they can hardly produce in their ranks a thousand men who, without their arts and seductions, have voluntarily joined their standard. The miseries of a rigorous captivity may perhaps have added half as many more to the number of the American levies at this time in their armies. This small accession of force is the more extraordinary, as they have at some periods been apparently in the full tide of success, while every thing wore an aspect tending to infuse despondency into the people of this country. This has been remarkably the case in the Southern States.
They for a time had almost undisturbed possession of two of them, and Cornwallis, after over-running a great part of a third, after two victorious battles, only brought with him into Virginia about two hundred Tories;—in the State where he thought himself so well established, that he presumptuously ventured to assure the minister there was not a rebel left, a small body of continental troops have been so effectually seconded by the militia of that vanquished country as to have been able to capture a number of his troops more than equal to their own, and to repossess the principal part of the State.
As in the explanation of our embarrassments nothing can be alleged to the disaffection of the people, we must have recourse to the other cause—of impolicy and mismanagement in their rulers.
Where the blame of this may lie is not so much the question as what are the proper remedies, yet it may not be amiss to remark that too large a share has fallen upon Congress. That body is no doubt chargeable with mistakes, but perhaps its greatest has been too much readiness to make concessions of the powers implied in its original trust. This is partly to be attributed to an excessive complaisance to the spirit which has evidently actuated a majority of the States, a desire of monopolizing all power in themselves. Congress has been responsible for the administration of affairs, without the means of fulfilling that responsibility.
It would be too severe a reflection upon us to suppose that a disposition to make the most of the friendship of others, and to exempt ourselves from a full share of the burthens of the war, has had any part in the backwardness which has appeared in many of the States to confer powers and adopt measures adequate to the exigency. Such a sentiment would neither be wise, just, generous, nor honorable; nor do I believe the accusation would be well founded, yet our conduct makes us liable to a suspicion of this sort. It is certain, however, that too sanguine expectations from Europe have unintentionally relaxed our efforts by diverting a sense of danger, and begetting an opinion that the inequality of the contest would make every campaign the last.
We did not consider how difficult it must be to exhaust the resources of a nation circumstanced like that of Great Britain; whose government has always been distinguished for energy, and its people for enthusiasm. Nor did we in estimating the superiority of our friends make sufficient allowance for that want of concert which will ever characterize the operations of allies, or for the immense advantage to the enemy of having their forces, though inferior, under a single direction.
Finding the rest of Europe either friendly or pacific, we never calculated the contingencies which might alter that disposition; nor reflected that the death of a single prince, the change or caprice of a single minister, was capable of giving a new face to the whole system.
We are at this time more sanguine than ever. The war with the Dutch, we believe, will give such an addition of force to our side as will make the superiority irresistible. No person can dispute this, if things remain in their present state; but the extreme disparity of the contest is the very reason why this cannot be the case. The neutral powers will either effect a particular or a general accommodation, or they will take their sides. There are three suppositions to be made: one, that there will be a compromise between the United Provinces and England, for which we are certain the mediation of Austria and Russia has been offered; another, a pacification between all the belligerent powers, for which we have reason to believe the same mediation has been offered; the third, a rejection of the terms of mediation and a more general war.
Either of these suppositions is a motive for exertion. The first will place things in the same, probably in a worse, situation than before the declaration of the war against Holland. The composing of present differences may be accompanied with a revival of ancient connections; and at least would be productive of greater caution and restraint in a future intercourse with us.
The second, it is much to be dreaded, would hazard a dismemberment of a part of these States; and we are bound in honor, in duty, and in interest, to employ every effort to dispossess the enemy of what they hold. A natural basis of the negotiation with respect to this continent will be, that each party shall retain what it possesses at the conclusion of the treaty, qualified perhaps by a cession of particular points for an equivalent elsewhere. It is too delicate to dwell on the motives to this apprehension; but if such a compromise sometimes terminates the disputes of nations originally independent, it will be less extraordinary where one party was originally under the dominion of the other.
August 30, 1781
The preceding numbers are chiefly intended to confirm an opinion, already pretty generally received, that it is necessary to augment the powers of the Confederation. The principal difficulty yet remains to fix the public judgment definitely on the points which ought to compose that augmentation.
It may be pronounced with confidence that nothing short of the following articles can suffice.
1st.—The Power of Regulating Trade, comprehending a right of granting bounties and premiums by way of encouragement, of imposing duties of every kind as well for revenue as regulation, of appointing all officers of the customs, and of laying embargoes in extraordinary emergencies.
2d.—A moderate-levied tax, throughout the United States, of a specific rate per pound or per acre, granted to the Federal Government in perpetuity, and, if Congress think proper, to be levied by their own collectors.
3d.—A moderate capitation-tax on every male inhabitant above fifteen years of age, exclusive of common soldiers, common seamen, day laborers, cottagers, and paupers, to be also vested in perpetuity, and with the same condition of collection.
4th.—The disposal of all unlocated land for the benefit of the United States (so far as respects the profits of the first sale and the quit-rents), the jurisdiction remaining to the respective States in whose limits they are contained.
5th.—A certain proportion of the product of all mines discovered, or to be discovered, for the same duration, and with the same right of collection as in the second and third articles.
6th.—The appointment of all land (as well as naval) officers of every rank.
The three first articles are of IMMEDIATE NECESSITY; the three last would be of great present, but of much greater future, utility; the whole combined would give solidity and permanency to the Union.
The great defect of the Confederation is, that it gives the United States no property; or, in other words, no revenue, nor the means of acquiring it, inherent in themselves and independent on the temporary pleasure of the different members. And power without revenue, in political society, is a name. While Congress continue altogether dependent on the occasional grants of the several States, for the means of defraying the expenses of the Federal Government, it can neither have dignity, vigor, nor credit. Credit supposes specific and permanent funds for the punctual payment of interest, with a moral certainty of the final redemption of the principal.
In our situation it will probably require more, on account of the general diffidence which has been excited by the past disorders in our finances. It will perhaps be necessary, in the first instance, to appropriate funds for the redemption of the principal in a determinate period, as well as for the payment of interest.
It is essential that the property in such funds should be in the contractor himself, and the appropriation dependent on his own will. If, instead of this, the possession or disposal of them is dependent on the voluntary or occasional concurrence of a number of different wills not under his absolute control, both the one and the other will be too precarious to be trusted. The most wealthy and best established nations are obliged to pledge their funds to obtain credit, and it would be the height of absurdity in us, in the midst of a revolution, to expect to have it on better terms. This credit being to be procured through Congress, the funds ought to be provided, declared, and vested in them. It is a fact that verifies the want of specific funds that the circumstance which operates powerfully against our obtaining credit abroad is, not a distrust of our becoming independent, but of our continuing united, and with our present Confederation the distrust is natural. Both foreigners and the thinking men among ourselves would have much more confidence in the duration of the Union, if they were to see it supported on the foundation here proposed.
There are some among us ignorant enough to imagine that the war may be carried on without credit, defraying the expenses of the year with what may be raised within the year. But this is for want of a knowledge of our real resources and expenses.
It may be demonstrated that the whole amount of the revenue which these States are capable of affording will be deficient annually five or six millions of dollars for the support of civil government and of the war.
This is not a conjecture hazarded at random, but the result of experiment and calculation; nor can it appear surprising, when it is considered that the revenues of the United Provinces, equal to these States in population, beyond comparison superior in industry, commerce, and riches, do not exceed twenty-five millions of guilders, or about nine millions and a half of dollars. In times of war they have raised a more considerable sum, but it has been chiefly by gratuitous combinations of rich individuals, a resource we cannot employ, because there are few men of large fortunes in this country, and these for the most part are in land. Taxes in the United Provinces are carried to an extreme which would be impracticable here. Not only the living are made to pay for every necessary of life, but even the dead are tributary to the public for the liberty of interment at particular hours. These considerations make it evident that we could not raise an equal amount of revenue in these States. Yet, in ’76, when the currency was not depreciated, Congress emitted, for the expenses of the year, fourteen millions of dollars. It cannot be denied that there was a want of order and economy in the expenditure of public money, nor that we had a greater military force to maintain at that time than we now have; but, on the other hand, allowing for the necessary increase in our different civil lists, and for the advanced prices of many articles, it can hardly be supposed possible to reduce our annual expense very much below that sum. This simple idea of the subject, without entering into details, may satisfy us that the deficiency which has been stated is not to be suspected of exaggeration.
Indeed, nations the most powerful and opulent are obliged to have recourse to loans in time of war, and hence it is that most of the states of Europe are deeply immersed in debt. France is among the number, notwithstanding her immense population, wealth, and resources. England owes the enormous sum of two hundred millions sterling. The United Provinces, with all their prudence and parsimony, owe a debt of the generality of fifty millions, besides the particular debts of each province. Almost all the other powers are more or less in the same circumstances.
While this teaches us how contracted and uninformed are the views of those who expect to carry on the war without running in debt,—it ought to console us with respect to the amount of that which we now owe, or may have occasion to incur in the remainder of the war. The whole, without burthening the people, may be paid off in twenty years after the conclusion of peace.
The principal part of the deficient five or six millions must be procured by loans from private persons at home and abroad. Every thing may be hoped from the generosity of France which her means will permit, but she has full employment for her revenues and credit in the prosecution of the war on her own part. If we judge of the future by the past, the pecuniary succors from her must continue to be far short of our wants, and the contingency of a war on the continent of Europe makes it possible they may diminish rather than increase.
We have in a less degree experienced the friendship of Spain in this article.
The Government of the United Provinces, if disposed to do it, can give us no assistance. The resources of the republic are chiefly mortgaged for former debts. Happily, it has extensive credit, but it will have occasion for the whole to supply its own exigencies.
Private men, either foreigners or natives, will not lend to a large amount, but on the usual security of funds properly established. This security Congress cannot give till the several States vest them with revenue, or the means of revenue, for that purpose.
Congress have wisely appointed a superintendent of their finances,—a man of acknowledged abilities and integrity, as well as of great personal credit and pecuniary influence.
It was impossible that the business of finance could be ably conducted by a body of men however well composed or well intentioned. Order in the future management of our moneyed concerns, a strict regard to the performance of public engagements, and of course the restoration of public credit may be reasonably and confidently expected from Mr. Morris’ administration if he is furnished with materials upon which to operate—that is, if the Federal Government can acquire funds as the basis of his arrangements. He has very judiciously proposed a National Bank, which, by uniting the influence and interest of the moneyed men with the resources of government, can alone give it that durable and extensive credit of which it stands in need. This is the best expedient he could have devised for relieving the public embarrassments, but to give success to the plan it is essential that Congress should have it in their power to support him with unexceptionable funds. Had we begun the practice of funding four years ago, we should have avoided that depreciation of the currency which has been pernicious to the morals and to the credit of the nation, and there is no other method than this to prevent a continuance and multiplication of the evils flowing from that prolific source.
April 18, 1782.
The vesting Congress with the power of regulating trade ought to have been a principal object of the Confederation for a variety of reasons. It is as necessary for the purposes of commerce as of revenue. There are some who maintain that trade will regulate itself, and is not to be benefited by the encouragements or restraints of government. Such persons will imagine that there is no need of a common directing power. This is one of those wild speculative paradoxes, which have grown into credit among us, contrary to the uniform practice and sense of the most enlightened nations.
Contradicted by the numerous institutions and laws that exist everywhere for the benefit of trade, by the pains taken to cultivate particular branches and to discourage others, by the known advantages derived from those measures, and by the palpable evils that would attend their discontinuance, it must be rejected by every man acquainted with commercial history. Commerce, like other things, has its fixed principles, according to which it must be regulated. If these are understood and observed, it will be promoted by the attention of government; if unknown, or violated, it will be injured—but it is the same with every other part of administration.
To preserve the balance of trade in favor of a nation ought to be a leading aim of its policy. The avarice of individuals may frequently find its account in pursuing channels of traffic prejudicial to that balance, to which the government may be able to oppose effectual impediments. There may, on the other hand, be a possibility of opening new sources, which, though accompanied with great difficulties in the commencement, would in the event amply reward the trouble and expense of bringing them to perfection. The undertaking may often exceed the influence and capitals of individuals, and may require no small assistance, as well from the revenue as from the authority of the state.
The contrary opinion, which has grown into a degree of vogue among us, has originated in the injudicious attempts made at different times to effect a regulation of prices. It became a cant phrase among the opposers of these attempts, that trade must regulate itself; by which at first was only meant that it had its fundamental laws, agreeable to which its general operations must be directed, and that any violent attempts in opposition to these would commonly miscarry. In this sense the maxim was reasonable, but it has since been extended to militate against all interference by the sovereign; an extreme as little reconcilable with experience or common sense as the practice it was first framed to discredit.
The reasonings of a very ingenious and sensible writer, by being misapprehended, have contributed to this mistake. The scope of his argument is not, as by some supposed, that trade will hold a certain invariable course independent on the aid, protection, care, or concern of government; but that it will, in the main, depend upon the comparative industry, moral and physical advantages of nations; and that though, for a while, from extraordinary causes, there may be a wrong balance against one of them, this will work its own cure, and things will ultimately return to their proper level. His object was to combat that excessive jealousy on this head, which has been productive of so many unnecessary wars, and with which the British nation is particularly infected; but it was no part of his design to insinuate that the regulating hand of government was either useless or hurtful. The nature of a government, its spirit, maxims, and laws, with respect to trade, are among those constant moral causes which influence its general results, and when it has by accident taken a wrong direction, assist in bringing it back to its natural course. This is everywhere admitted by all writers upon the subject; nor is there one who has asserted a contrary doctrine.
Trade may be said to have taken its rise in England under the auspices of Elizabeth, and its rapid progress there is in a great measure to be ascribed to the fostering care of government in that and succeeding reigns.
From a different spirit in the government, with superior advantages, France was much later in commercial improvements; nor would her trade have been at this time in so prosperous a condition, had it not been for the abilities and indefatigable endeavors of the great Colbert. He laid the foundation of the French commerce, and taught the way to his successors to enlarge and improve it. The establishment of the woollen manufacture in a kingdom where nature seemed to have denied the means, is one, among many proofs, how much may be effected in favor of commerce by the attention and patronage of a wise administration.
The number of useful edicts passed by Louis XIV., and since his time, in spite of frequent interruptions from the jealous enmity of Great Britain, has advanced that of France to a degree which has excited the envy and astonishment of its neighbors.
The Dutch, who may justly be allowed a preeminence in the knowledge of trade, have ever made it an essential object of state. Their commercial regulations are more rigid and numerous than those of any other country; and it is by a judicious and unremitted vigilance of government that they have been able to extend their traffic to a degree so much beyond their natural and comparative advantages.
Perhaps it may be thought that the power of regulation will be best placed in the governments of the several States, and that a general superintendence is unnecessary. If the States had distinct interests, were unconnected with each other, their own governments would then be the proper, and could be the only, depositories of such a power; but as they are parts of a whole, with a common interest in trade, as in other things, there ought to be a common direction in that as in all other matters. It is easy to conceive that many cases may occur in which it would be beneficial to all the States to encourage or suppress a particular branch of trade, while it would be detrimental to either to attempt it without the concurrence of the rest, and where the experiment would probably be left untried for fear of a want of that concurrence.
No mode can be so convenient as a source of revenue to the United States. It is agreed that imposts on trade, when not immoderate, or improperly laid, are one of the most eligible species of taxation. They fall in a great measure upon articles not of absolute necessity, and being partly transferred to the price of the commodity, are so far imperceptibly paid by the consumer. It is therefore that mode which may be exercised by the Federal Government with least exception or disgust. Congress can easily possess all the information necessary to impose the duties with judgment, and the collection can without difficulty be made by their own officers.
They can have no temptation to abuse this power, because the motive of revenue will check its own extremes. Experience has shown that moderate duties are more productive than high ones. When they are low, a nation can trade abroad on better terms, its imports and exports will be larger, the duties will be regularly paid, and arising on a greater quantity of commodities, will yield more in the aggregate than when they are so high as to operate either as a prohibition, or as an inducement to evade them by illicit practices.
It is difficult to assign any good reason why Congress should be more liable to abuse the powers with which they are entrusted than the State Assemblies. The frequency of the election of the members is a full security against a dangerous ambition, and the rotation established by the Confederation makes it impossible for any state, by continuing the same men, who may put themselves at the head of a prevailing faction, to maintain for any length of time an undue influence in the national councils. It is to be presumed that Congress will be in general better composed for abilities, as well as for integrity, than any assembly on the continent.
But to take away any temptation from a cabal to load particular articles, which are the principal objects of commerce to particular States, with a too great proportion of duties, to ease the others in the general distribution of expense, let all the duties, whether for regulation or revenue, raised in each State, be credited to that State, and let it, in like manner, be charged for all the bounties paid within itself for the encouragement of agriculture, manufactures, or trade. This expedient will remove the temptation; for as the quotas of the respective States are to the determined by a standard of land, agreeable to the eighth article of the Confederation, each will have so much the less to contribute otherwise, as it pays more on its commerce. An objection, has been made in a late instance to this principle. It has been urged that as the consumer pays the duty, those States which are not equally well situated for foreign commerce, and which consume a great part of the imports of their neighbors, will become contributors to a part of their taxes. This objection is rather specious than solid.
The maxim, that the consumer pays the duty, has been admitted in theory with too little reserve; frequently contradicted in practice. It is true, the merchant will be unwilling to let the duty be a deduction from his profits, if the state of the market will permit him to incorporate it with the price of his commodity. But this is often not practicable. It turns upon the quantity of goods at market in proportion to the demand. When the latter exceeds the former, and the competition is among the buyers, the merchant can easily increase his price, and make his customers pay the duty. When the reverse is the case, and the competition is among the sellers, he must then content himself with smaller profits and lose the value of the duty, or at least a part of it. When a nation has a flourishing and well-settled trade, this more commonly happens than may be imagined, and it will, many times, be found that the duty is divided between the merchant and the consumer.
Besides this consideration which greatly diminishes the force of the objection, there is another which entirely destroys it. There is a strong reciprocal influence between the prices of all commodities in a State, by which they, sooner or later, attain a pretty exact balance and proportion to each other. If the immediate productions of the soil rise, the manufacturer will have more for his manufacture, the merchant for his goods; and the same will happen with whatever class the increase of price begins. If duties are laid upon the imports in one State, by which the prices of foreign articles are raised, the products of land and labor within that State will take a proportionate rise; and if a part of those articles are consumed in a neighboring State, it will have the same influence there as at home. The importing State must allow an advanced price upon the commodities which it receives in exchange from its neighbor, in a ratio to the increased price of the article it sells. To know, then, which is the gainer or loser, we must examine how the general balance of trade stands between them. If the importing State takes more of the commodities of its neighbor than it gives in exchange, that will be the loser by the reciprocal augmentation of prices; it will be the gainer if it takes less, and neither will gain or lose if the barter is carried on upon equal terms. The balance of trade, and consequently the gain, or loss, in this respect, will be governed more by the relative industry and frugality of the parties than by their relative advantages for foreign commerce.
Between separate nations this reasoning will not apply with full force, because a multitude of local and extraneous circumstances may counteract the principle; but from the intimate connections of these States, the similitude of governments, situations, customs, manners, political and commercial causes will have nearly the same operation in the intercourse between the States, as in that between the different parts of the same State. If this should be controverted, the objection drawn from the hypothesis of the consumer paying the duty must fall at the same time; for as far as this is true it is as much confined in its application to a State within itself as the doctrine of a reciprocal proportion of prices.
General principles in subjects of this nature ought always to be advanced with caution; in an experimental analysis there are found such a number of exceptions as tend to render them very doubtful; and in questions which affect the existence and collective happiness of these States, all nice and abstract distinctions should give way to plainer interests, and to more obvious and simple rules of conduct.