Part 19

Having said thus much on the propriety of these taxes, I shall pray leave to assure you of my ready acquiescence in the choice of any others, which may be more agreeable to the United States in Congress, praying them nevertheless to consider, that as the situation of the respective States is widely different, it will be wise to adopt a variety of taxes, because by that means the consent of all will be more readily obtained, than if such are chosen as will fall heavy only on particular States.

The next object is the collection, which, for the most obvious reasons ought to be by authority derived from the United States. The collection of a land tax, as has been above observed, will be very simple. That of the poll may be equally so, because certificates of the payment may annually be issued to the collectors, and they be bound to return the certificates or the money, and empowered to compel a payment by every man not possessed of a certificate. If in addition to this, those who travel from one State to another be obliged to take out and pay for a new certificate in each State, that would operate a useful regulation of police; and a slight distinction between those and the common certificates would still preserve their utility in numbering the people.

It is not necessary to dwell on the mode of collecting these branches of revenue, because in reason, a determination on the propriety of the taxes should precede it. I will only take the liberty to drop one idea with respect to the impost already required. It is conceived that laws should be so formed, as to leave little or nothing to the discretion of those by whom they are executed; that revenue laws, in particular, should be guarded in this respect from odium; being, as they are, sufficiently odious in themselves; and therefore it would have been well to have stipulated the precise sum payable on different species of commodities. The objection is, that the list to be accurate must be numerous. But as this accuracy is necessary, the description ought to be very short and general, so as to comprise many commodities under one head; and the duty ought to be fixed according to their average value. The objection against this regulation, is, that the tax on fine commodities would be trivial, and on coarse commodities great. This indeed is true; but it is desirable for two reasons. First, that coarse and bulky commodities could not be smuggled to evade the heavy duty; and that fine commodities would not be smuggled to evade the light duty. Secondly, that coarse commodities, generally speaking, minister to the demands of necessity or convenience, and fine commodities to those of luxury. The heavy duty on the former would operate an encouragement to produce them at home, and by that means a stoppage of our commerce in time of war would be most felt by the wealthy, who have always the most abundant means of procuring relief.

I shall now, Sir, take the liberty to suppose, that the revenues I have mentioned, or some others, to the amount of at least two millions net annual produce, were asked for and obtained, as a pledge to the public creditors, to continue until the principal and interest of the debts contracted or to be contracted, shall be finally paid. This supposition is made, that I may have an opportunity, thus early, to express my sentiments on the mode of appropriation. It would be as follows; any one of the revenues being estimated, a loan should be opened on the credit of it, by subscription to a certain amount, and public debts of a particular description, or specie, be received in payment of the subscriptions. This funded debt should be transferable under particular forms, calculated for the prevention of fraudulent, and facilitating of honest negotiations. In like manner on each of these revenues should subscriptions be opened, proceeding by degrees so as to prevent any sudden revolutions in money matters, such revolutions being always more or less injurious.

I should further propose, that the surplus of each of these revenues, (and care should be taken that there would be a surplus,) should be carried to a sinking fund; on the credit of which, and of the general promises of government, new loans should be opened when necessary. The interest should be paid half yearly, which would be convenient to the creditors and to the government, as well as useful to the people at large; because by this means, if four different loans were opened at different times, the interest would be payable eight times in the year; and thus the money would be paid out of the treasury as fast as it came in; which would require four officers to manage the business, keep them in more constant and regular employment, dispense the interest so as to command the confidence and facilitate the views of the creditors, and return speedily the wealth obtained by taxes into the common stock.

I know it will be objected, that such a mode of administration would enable speculators to perform their operations. A general answer to this would be, that any other mode would be more favorable to them. But further, I conceive, first, that it is much beneath the dignity of government to intermeddle in such consideration. Secondly, that speculators always do least mischief where they are left most at liberty. Thirdly, that it is not in human prudence to counteract their operations by laws; whereas, when left alone, they invariably counteract each other; and fourthly, that even if it were possible to prevent speculation, it is precisely the thing which ought not to be prevented; because he who wants money to commence, pursue, or extend his business, is more benefited by selling stock of any kind, even, at a considerable discount, than he could be by the rise of it at a future period; every man being able to judge better of his own business and situation than the government can for him.

So much would not perhaps have been said on the head of this objection, if it did not naturally lead to a position, which has hitherto been ruinous, and might prove fatal. There are many men, and some of them honest men, whose zeal against speculation leads them to be sometimes unmindful not only of sound policy, but even of moral justice. It is not uncommon to hear, that those who have bought the public debts for small sums, ought only to be paid their purchase money. The reasons given are, that they have taken advantage of the distressed creditor, and shown a diffidence in the public faith. As to the first, it must be remembered, that in giving the creditor money for his debt, they have at least afforded him some relief, which he could not obtain elsewhere, and if they are deprived of the expected benefit, they will never afford such relief again. As to the second, those who buy up the public debts, show at least as much confidence in the public faith as those who sell them. But allowing, for argument sake, that they have exhibited the diffidence complained of, it would certainly be wiser to remove than to justify it. The one mode tends to create, establish, and secure public credit, and the other to sap, overturn, and destroy it. Policy is, therefore, on this, as I believe it to be on every other occasion, upon the same side of the question with honesty. Honesty tells us, that the duty of the public to pay, is like the same duty in an individual. Having benefited by the advances, they are bound to replace them to the party, or to his representatives. The debt is a species of property, and whether disposed of for the whole nominal value, or the half, for something, or for nothing, is totally immaterial. This right of receiving and the duty of paying must always continue the same. In a word, that government which can, through the intervention of its Courts, compel payment of private debts, and performance of private contracts, on principles of distributive justice, but refuses to be guided by those principles as to their own contracts, merely because they are not amenable to human laws, shows a flagitious contempt of moral obligations, which must necessarily weaken, as it ought to do, their authority over the people.

Before I conclude this long letter, it would be unpardonable not to mention a fund, which has long since been suggested, and dwells still on the minds of many. You doubtless, Sir, anticipate my naming of what are called the back lands. The question as to the property of those lands, I confess myself utterly incompetent to decide, and shall not for that reason presume to enter on it. But it is my duty to mention, that the offer of a pledge, the right of which is contested, would have ill consequences, and could have no good ones. It could not strengthen our credit, because no one would rely on such a pledge, and the recurrence to it would give unfavorable impressions of our political sagacity. But admitting that the right of Congress is clear, we must remember also, that it is disputed by some considerable members of the confederacy. Dissentions might arise from hasty decisions on this subject. And a government torn by intestine commotions, is not likely to acquire or maintain credit at home or abroad.

I am not, however, the less clear in my opinion, that it would be alike useful to the whole nation, and to those very constituent parts of it, that the entire disposition of those lands should be in Congress. Without entering, therefore, into the litigated points, I am induced to believe, and for that reason to suggest, the proposing this matter to the States as an amicable arrangement. I hope to be pardoned when I add, that considering the situation of South Carolina and Georgia, it might be proper to ask their consent to matters of the clearest right. But that supposing the right to be doubtful, urging decision in the present moment, might have a harsh and ungenerous appearance.

But if we suppose this matter to be arranged either in the one mode or in the other, so that the right of Congress be rendered indisputable (for that is a previous point of indispensable necessity) the remaining question will be, as to the appropriation of that fund. And I confess it does not appear to me, that the benefits resulting from it are such as many are led to believe. When the imagination is heated in pursuit of an object, it is generally overrated. If these lands were now in the hands of Congress, and they were willing to mortgage them to their present creditors, unless this were accompanied with a due provision for the interest, it would bring no relief. If these lands were to be sold for the public debts, they would go off for almost nothing. Those who want money could not afford to buy land. Their certificates would be bought up for a trifle. Very few monied men would become possessed of them, because very little money would be invested in so remote a speculation. The small number of purchasers would easily and readily combine; of consequence they would acquire the lands for almost nothing, and effectually defeat the intentions of government; leaving it still under the necessity of making further provision, after having needlessly squandered an immense property.

This reasoning is not new. It has been advanced on similar occasions before, and the experience, which all America has had of the sales of confiscated estates and the like, will now show that it was well founded. The back lands then will not answer our purpose, without the necessary revenues. But those revenues will alone produce the desired effect. The back lands may afterwards be formed into a fund, for opening new loans in Europe on a low interest, redeemable within a future period, (for instance twenty years) with a right reserved to the creditors of taking portions of those lands on the non-payment of their debts, at the expiration of the time. Two modes would offer for the liquidation of those debts. First, to render payment during the term to those who would not consent to alter the nature of the debt; which, if our credit be well established, would place it on the general footing of national faith. And secondly, to sell portions of the land (during the term) sufficient to discharge the mortgage. I persuade myself, that the consent of the reluctant might be obtained, and that this fund might hereafter be converted to useful purposes. But I hope that in a moment when the joint effort of all is indispensable, no causes of altercation may be mingled unnecessarily in a question of such infinite magnitude as the restoration of public credit. Let me add, Sir, that unless the money of foreigners be brought in for the purpose, sales of public lands would only absorb that surplus wealth, which might have been exhaled by taxes; so that in fact no new resource is produced. And that while, as at present, the demand for money is so great as to raise interest to five per cent per month, public lands must sell extremely low, were the title ever so clear. What then can be expected, when the validity of that title is one object of the war?

I have the honor to be, &c.

ROBERT MORRIS.

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TO THE PRESIDENT OF CONGRESS.

Office of Finance, July 30th, 1782.

Sir,

I do myself the honor to enclose for the inspection of Congress, estimates for the service of the year 1783, amounting in the whole to eleven millions. I should be strictly justified in praying a requisition of the United States for that sum, but I conceive that the demands made should be the lowest which our circumstances will possibly admit of. I am persuaded, that if the United States in Congress will adopt those means of economy, which are in their power, we may save two millions; and, therefore, on a presumption that those means will be adopted, I shall ask only nine millions. Congress will observe, that the estimates of the Marine Department amount to two millions and a half; whereas there was no estimate made for that service in the last year, any more than for the Civil List. There can be no doubt that the enemy have changed their mode of warfare, and will make their principal exertions in the naval line. It becomes us, therefore, to make like exertions, and that for the plainest reasons.

Experience has shown that the efforts to obtain a large army have for many years proved utterly fruitless. The only effect of those efforts, has been to enhance the price of such men as were obtained, and thereby to disable the States, who exerted themselves to raise recruits, from pouring supplies into the public Treasury. Thus we have not only been unable to get more men, but also to pay and support those which we had gotten. Admitting, however, that the required number were obtained and properly supported as an army, these things are clear; first, that without naval aid we could not make an impression on the enemy's posts. Secondly, that they would be able to harass and distress us in every quarter, by predatory incursions. Thirdly, that they would prevent us from receiving those supplies, which are necessary alike to the operations and existence of an army. And, fourthly, that their inroads on our commerce would produce such distress to the country, as to make our revenues utterly unproductive, and finally bring our affairs to destruction.

An army, therefore, without a navy would be burdensome, without being able to give essential aid, supposing the enemy to have changed their system of carrying on the war. But if we had a navy, we should be able, first, to prevent the enemy from making predatory incursions. Secondly, we should, at least, keep the ships they have on our coast together, which would prevent them from injuring our commerce, or obstructing our supplies. Thirdly, if they kept in this country an equal or superior force, we should by that means have made a powerful diversion in favor of our allies, and contributed to give them a naval superiority elsewhere. Fourthly, if our enemy did not keep an equal or superior force in this country, we should be able by cruising to protect our commerce, annoy theirs, and cut off the supplies directed to their posts, so as to distress their finances and relieve our own. Fifthly, by economising our funds, and constructing six ships annually, we should advance so rapidly to maritime importance, that our enemy would be convinced, not only of the impossibility of subduing us, but also of the certainty that his forces in this country must eventually be lost, without being able to produce any possible advantage. And, sixthly, we should, in this mode, recover the full possession of our country, without the expense of blood or treasure, which must attend any other mode of operations; and while we are pursuing those steps, which lead to the possession of our natural strength and defence.

I trust, Sir, that the influence of these considerations, will not only lead the councils of America to adopt the measures necessary for establishing a navy, but that by economising as much as possible, we may be able (from the sums now to be asked for) to do more in that line than is contained in the estimate; but as this must depend on circumstances, which we cannot command, so it is not prudent or proper to rely on it. Having already stated the lowest necessary sum at nine millions, I proceed, Sir, to propose that four millions be borrowed, which will reduce the quotas to five millions. I make this proposition, under the idea, that the plans contained in my letter of yesterday's date be adopted. The quotas then being five millions, the sum total of what will be taken from the people will amount to only seven millions; and of that, full twelve hundred thousand will be paid back as the interest of our domestic debt, so as not to be, in fact, any burden on the whole people, though a necessary relief to a considerable part of them. On this plain statement I shall make no comment. I shall only pray, that as much expedition may attend the deliberations on these objects as the importance of them will permit, so that the States may be in a situation to make speedy decisions. And this is the more necessary, as the negotiations for a loan must be opened in Europe early next winter.

I have the honor to be, &c.

ROBERT MORRIS.[9]

[9] _August 1st._ This day many people expected that my engagements to supply the Paymaster General with money to discharge the notes, which, under that engagement he had issued to the officers of the army on account of their pay, would be broken, and, consequently, that my public credit would be lost, and a train of evils, easy to be conceived, ensue to the United States. But having warranted Mr Pierce, the Paymaster General, to give his notes in February last to all the officers of our army, viz. to all subalterns for the amount of three months' pay, that is, for January, February, and March, 1782, I have for some time past been providing for the performance of this engagement, and to accomplish it, have been distressed in a variety of channels. When this engagement was taken, it was at the pressing instance of the Commander in Chief, and to enable the officers to clothe themselves, which they could not have done without that seasonable aid. At the time this engagement was made, I had a right to expect that four millions of dollars would be paid into the treasury of the United States; as, agreeable to the requisitions of Congress, two millions were to be paid on the 1st day of April, and two millions on the 1st day of July. Instead of receiving those sums, I have not to this hour received fifty thousand dollars on account thereof, and have, therefore, been compelled to raise this money by selling bills of exchange on France. Upon sending for Mr Pierce's return of the notes I issued, I find they amount to one hundred and forty thousand two hundred and sixtysix dollars; of which Mr Sands is possessed of thirtynine thousand, which he has delivered up on my paying part of the amount now, and part to be paid a short time hence, which leaves to be provided for about eightyfive thousand nine hundred and fortysix dollars; and as this debt will be punctually paid, it leaves only an unprovided balance of fifteen thousand three hundred and twenty dollars, which I think will be ready before payment is demanded; so that the hopes and expectations of the malicious and disaffected will in this instance be disappointed. _Diary._

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TO THE GOVERNOR OF RHODE ISLAND.

Office of Finance, August 2d, 1782.

Sir,

I presume you have been before this informed, that all the States except Rhode Island, have acceded to the impost law. A committee of Congress lately appointed on this subject, did me the honor to request my attendance, with that of your Delegates, to hear the objections from them, and know from me the circumstances attending the requisition. After a long conversation the committee were about to confer on a report, which, at my request they were pleased to suspend, that I might have the last opportunity of praying your attention to the subject. And I was induced to make that request, as well for the avoiding those disagreeable discussions, which cannot exist between the Union and an individual State without inducing pernicious consequences, as because it appeared to me, that the reasons urged against passing the impost are not conclusive, as some have thought them to be.

Mr Howell was so kind as to promise, that he would state his objections in writing. This he has done, and a copy of them is enclosed. They are,

1st. That the impost would draw a disproportionate supply from either merchant or consumer.

2dly. That Rhode Island imports and consumes more of foreign articles in proportion, than any other State.

3dly. That, from her maritime situation she is exposed to great losses.

4thly. That the exclusive benefit of the impost should be carried to account of the State.

5thly. That the impost will raise prices, and therefore manufactures brought from the neighboring States will draw a revenue from Rhode Island.

6thly. That duties imposed by the neighboring States may compel Rhode Island to subsist by foreign articles.

7thly. That many men will be employed in the collection.

8thly. That it would be evaded by smuggling; and,

9thly. That the collection may be objectionable.

To each of these I will reply in their order.

1st. To determine whether the impost will act proportionably or not, we must consider in what respect the proportion is to be taken. If it be a proportion between two of the States, that will be considered under the second head; if it be a proportion among the people of the same State, it is only recurring to the question, whether the taxes on consumption are useful; for so long as no man pays the tax, but he who chooses to purchase the article, the disproportion, if any, is of his own creating. The necessity of a revenue to a certain amount must be admitted. Is it then wise to raise a part of it from the _consumption_ of foreign articles? I say the consumption, because the tax undoubtedly falls on the consumer and not on the importer. If this be not a wise tax, what shall we substitute? Articles of primary and immediate necessity are made in the State of Rhode Island. Both food and raiment can be had without crossing the Atlantic in search of them. Every man, therefore, is at liberty to use foreign articles or not. If he does use them the tax is voluntary, and therefore cannot be considered as disproportionate, any more than for one man to wear silk while another wears wool.

2dly. That Rhode Island consumes more foreign commodities in proportion than any other State in the Union, cannot be admitted. Rhode Island certainly makes many commodities, but the more southern States are in the habit of importing everything.