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- Herausgeber: Krill Press
- Kategorie: Geisteswissenschaft
- Sprache: Englisch
- Veröffentlichungsjahr: 2015
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THE WORKS OF ALEXANDER HAMILTON: VOLUME 9
Alexander Hamilton
FIREWORK PRESS
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Copyright © 2015 by Alexander Hamilton
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TABLE OF CONTENTS
Introduction
The Works of Alexander Hamilton: Volume 9
MISCELLANEOUS PAPERS
DEFENCE OF THE FUNDING SYSTEM
the assumption of the state debts (Continued from Vol. VIII.)
PRIVATE CORRESPONDENCE
Private Correspondence
to edward stevens1
to tileman cruger1
to the provincial congress of new york.1
to the provincial congress
to the honorable convention of new york
to the provincial congress
to gouverneur morris, robert livingston, and william allison, esqs.1
To gouverneur morris, etc.
to the committee of the new york convention
to gouverneur morris, etc.
to the committee of the new york convention
to the committee of the new york convention
to william livingston2
to william livingston
to william duer.1
to gouverneur morris
to gouverneur morris
to gouverneur morris
to gouverneur morris
to robert r. livingston1
to dr. hugh knox1
to gouverneur morris
to gouverneur morris
to gouverneur morris
to robert r. livingston
to gouverneur morris
to the honorable john hancock president of congress
to the president of congress
to the president of congress
to washington
to washington
to general gates
to washington
to washington
to general gates
to washington
to general putnam
to governor george clinton2
to governor george clinton3
to william duer, m.c.1
Private Correspondence
to lafayette
to washington
to washington
to elias boudinot1
to lord stirling (?)2
to washington
to washington
to elias boudinot
to elias boudinot
to
to baron steuben
narrative of an affair of honor between general lee and col. laurens1
to the honorable john jay, president of congress
to miss livingston1
to baron stebuen
to otho h. williams1
to major lee or, in his absence, capt. mclane
to col. david henley1
to col. john brooks1
to dr. william gordon1
to james duane3
to baron steuben
to james duane
to colonel john brooks
to john laurens2
to james duane
to james duane
du portail and hamilton to washington1
to john laurens
to doctor william gordon
to washington
to baron steuben
to james duane
to general greene
to baron steuben
to washington
to the chevalier de ternay1
to baron steuben
to baron steuben
to general anthony wayne
to baron steuben
to miss schuyler1
to washington
to general greene
to miss schuyler
to miss schuyler
to john laurens1
to isaac sears1
to James Duane
to washington
to washington
to
to philip schuyler1
to general greene
to washington
to washington
to mrs. hamilton
to washington
to mrs. hamilton
to mrs. hamilton
to mrs. hamilton
to lafayette
to mrs. hamilton
to washington
to washington
to richard k. meade2
to robert morris
to general knox
to robert morris
to comfort sands1
to robert morris
to governor clinton
to robert morris
to governor clinton
to the county treasurers
to robert morris
to john laurens2
to governor clinton
to robert morris
to colonel richard k. meade
to robert morris
to the county treasurers
to robert morris
to timothy pickering1
to robert morris
to robert morris
to robert morris
to robert morris
to robert morris
to de noailles2
to general greene
to robert morris
to lafayette
to the governor of rhode island1
to governor clinton
to governor clinton
to washington
to governor clinton
to washington
to washington
to washington
to washington
to washington
to washington
to washington
to washington
to governor clinton
to governor clinton
to john dickinson 1
to james madison, jr.
to james madison, jr.
to mrs. hamilton
to john jay
to governor clinton
to washington
to washington
to governor clinton
to the honorable thomas mifflin, president of congress
to john barker church 1
to thomas fitzsimmons 1
to gouverneur morris
to gouverneur morris
to de chastellux 1
to his brother, james hamilton—st. thomas
to israel wilkes2
to washington
to nathaniel hazard
to messrs. semphill & co.
to john thomas, esq., sheriff of westchester
to washington
tO ———————1
to major peirce
to auldjo
to rufus king1
to colonel jeremiah wadsworth2
to rufus king
to washington
to washington
to james madison, jr.
to james madison, jr.
to gouverneur morris
to james madison, jr.
to john sullivan, esq., president of the state of new hampshire
to james madison, jr.
to james madison, jr.
to james madison, jr.
to james madison, jr.
to james madison, jr.
to james madison, jr.
to james madison, jr.
to nathaniel chipman 1
to james madison, jr.
to washington
to samuel broome1
to governor wm. livingston
to washington
to theodore sedgwick1
to nathaniel chipman
to theodore sedgwick
to washington
to james madison, jr.
to theodore sedgwick
to rufus king
to oliver wolcott
to lafayette
to james madison, jr.
to washington
to timothy pickering
to col. r. h. harrison2
to henry lee1
to william duer
to Ædanus burke1
to timothy pickering
to winn
to washington
to washington
to washington
to john jay
to washington
to william seton1
to
to washington1
to washington
to washington
to benjamin goodhue1
to mrs. martha walker
to rufus ring
to rufus ring
to timothy pickering
to william seton
to william seton (Private.)
to william duer
to william seton
to william seton
to the president, directors, etc., of the bank of new york
to william seton (Private.)
to william seton (Private.)
to a friend
to washington
to general knox
to william seton
to philip hamilton1
to nicholas gouverneur2
to gulian verplanck and others
to william seton
to william duer1
to william seton (Private)
to william seton (Private.)
to william seton (Private.)
to the directors and company of the bank of new york
to william duer
to william seton
to william duer
to william seton
to colonel edward carrington1
to general otho h. williams
to gouverneur morris
senators
representatives
to colonel heth1 AND OTHERS
to william seton (Private.)
to rufus sing
tO elias boudinot
to washington
The Works of Alexander Hamilton: Volume 9
By
Alexander Hamilton
The Works of Alexander Hamilton: Volume 9
Published by Firework Press
New York City, NY
First published circa 1804
Copyright © Firework Press, 2015
All rights reserved
Except in the United States of America, this book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out, or otherwise circulated without the publisher’s prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser.
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INTRODUCTION
UNFORTUNATELY, ONE OF THE BEST known aspects of Alexander Hamilton’s (1755-1804) life is the manner in which he died, being shot and killed in a famous duel with Aaron Burr in 1804. But Hamilton became one of the most instrumental Founding Fathers of the United States in that time, not only in helping draft and gain support for the U.S. Constitution but in also leading the Federalist party and building the institutions of the young federal government as Washington’s Secretary of Treasury.
One of the biggest battles was over the chartering of a national bank, a topic that seems trivial today given the size and scope of the federal government. At the founding, however, the Southern states and Thomas Jefferson’s Democratic Party were skeptical of the necessity of a national bank, while Hamilton’s Federalists insisted that it would help the nation pay off its debts and manage its finances. Eventually Hamilton won out, but the First U.S. Bank, located in Philadelphia, was nonetheless run by a private company, ensuring limits on government control.
This edition of Hamilton’s Works: Volume 9 includes his Miscellaneous Papers and Private Letters to other Constitutional Convention delegates and Founding Fathers, discussing the politics of the day
THE WORKS OF ALEXANDER HAMILTON: VOLUME 9
MISCELLANEOUS PAPERS
DEFENCE OF THE FUNDING SYSTEM
II
THE ASSUMPTION OF THE STATE DEBTS (CONTINUED FROM VOL. VIII.)
THE THEORY OF OUR CONSTITUTIONS with respect to taxation is perhaps a new example in the world—that is to say, a concurrent and co-ordinate authority in one general head and in thirteen (now fifteen) distinct members of a confederacy united under that head to impose in detail upon individuals and upon all taxable objects.
Yet experience had demonstrated that a power in the general head to tax the States only in their collective capacities—that is, by the system of requisitions, was a system of imbecility and injustice: imbecility, because it did not produce to the common treasury the requisite supplies; injustice, because the separate efforts of the States under such a system, from the nature of things, would ever be unequal, and consequently their contributions disproportionate.
Hence, all those who agreed in the necessity of a union of the States under a common head, felt and acknowledged that a change in the plan was an essential feature in a new arrangement of the constitution of General Government.
But though agreed in this general principle, they were not equally agreed in the application of the rule. Some were for a general and paramount power of taxation in the National Government, and either a subordinate or a limited (by being confined to particular objects) power of taxation in the State Governments. Some were for a division of the power of taxation, giving certain branches of it exclusively to the General Government, and other branches of it exclusively to the State Government. Others were for a general concurrent power of taxation in the Federal and State Governments.
The two first opinions equally presupposed a great difficulty of execution and danger of collision in a concurrent power of taxation, and sought to avoid it by different means. The last seems to have considered that difficulty and danger as less formidable than the embarrassments which belonged to either of the other schemes. And this opinion was adopted by the Convention, except with regard to the duties of imports and tonnage, which for cogent and obvious reasons was incompatible and was exclusively vested in the Federal head.
This course was, relatively to the existing state of things, the wisest. The subordination of the State power of taxation to that of the General Government, or the confining it to particular objects, would probably have been an insuperable obstacle to the adoption of the Constitution. The division of the power between the Union and the States could not have been regulated upon any plan which would not either have left the General Government more restricted than was compatible with a due provision for the exigencies of the Union, or would have so confined the State Government as would have been equally an impediment to the success of the Constitution. Besides that, a truly eligible division, which consulted all the cases possible by the general principles of the Constitution, was intrinsically very difficult if not impracticable.
But though it is admitted that the course pursued by the Convention was the most expedient, yet it is not the less true that the plan involved inherent and great difficulties.
It may not unaptly be styled the Gordian-knot of our political situation.
To me there appeared but one way of untying or severing it, which was in practice to leave the States under as little necessity as possible of exercising the power of taxation. The narrowness of the limits of its exercise on one side left the field more free and unembarrassed to the other, and avoided essentially the interference and collisions to be apprehended from inherent difficulties on the plan of concurrent jurisdiction.
Thus, to give a clear field to the Government of the United States was so manifestly founded in good policy that the time must come when a man of sense would blush to dispute it.
It was essential to give effect to the objects of the Union. As to the past, the General Government was to provide for the debts which the war that accomplished our Revolution had left upon us. These were to the debts which the same events had left upon the States individually as five to two nearly.
For the future, the General Government, besides providing for the expenses of its civil administration, which from obvious causes would unavoidably exceed those of the State Governments, and for a variety of other objects tedious to enumerate or define, was charged with the care of the common defence.
Reason and experience teach that the great mass of expense in every country proceeds from war. Our experience has already belied the reveries of those dreamers or impostors who were wont to weaken the argument arising from this source by promising to this country a perpetual exemption from war.
In the few years of our existence our frontiers have exhibited a state of desolating and expensive hostility. How narrowly have we thus far escaped a war with a great European Power? Who can say how long we shall be before we may be compelled to defend our independence against some one of the great competitors still engaged on that theatre?
The violent passions which have agitated the apostles of perpetual peace, and which were so near forcing our political ship upon the rock of war, which at this moment still impel her to the same ruinous point, are the mirrors in which they may read the refutation of their silly predictions, and the certainty that our nation is enough exposed to the chances of war to render a clear stage for commanding all our resources of taxation indispensable. Besides actual war and danger of still greater, we have already experienced a domestic insurrection in which more than a million has been expended.
Without an assumption of the State debts which produced this effect, the first war with an European Power would have convinced us of the ineligibleness of our situation, of the weakness and embarrassment incident to fifteen or perhaps to fifty different systems of finance.
The foundation of the observation is obvious. Different States would have and actually have different predilections and prejudices on the subject of taxation. Some incline more to excises, or taxes on articles of consumption, than to taxes on real estate. Others favor the latter more than the former. In some stamp duties are not ill thought of; in others they are odious.
Suppose, what was the natural and probable effect of such a diversity of opinion, the States being left to make separate provisions for their particular debts had bottomed their provisions on different objects of revenue; that some had occupied the most productive objects of excise; that others had had recourse to taxes on real estate; that some had preferred to either duties on stamps; that a fourth class had sought the needed revenue from duties on the alienation of certain kinds of property; and that a fifth class had derived its provision from general assessments of real and personal estate. These, with duties on imports and exports, from which they are excluded, and poll taxes, which are the scourge of any society, comprise all the important branches of revenue. Suppose, as would have been the case if fair provisions had been made, that in each case the taxes had been carried as far as could be done without oppression or overburthening the object or the person, what would have been the situation of the General Government in case the breaking out of a war had called for great resources?
In all but direct taxes the Constitution enjoins uniformity. Reason and principle enjoin it with respect to all taxes laid by the same government upon the same society. What was to be done? Revenue could not be had from excises, because the principal objects were already burthened by certain States as much as they could conveniently bear and to lay additional burthens would be equally ruinous to industry and to persons. Indeed excessive accumulation prevents collection and defeats the end.
Similar reasons would be obstacles as to all the other great branches of revenue, because different States had previously occupied them all to the convenient extent. The hand of the General Government would thus have been arrested, and the greatest part of the resources of the community would have been tied up, incapable of being brought into action for the common exigencies of the nation.
Will it be said that the General Government might still have laid the taxes on such objects as appeared to it proper, leaving the States to change their ground and adopt others? Who would wish to have seen the necessity of so violent an expedient, or who could calculate the consequences of it?
Is it certain that a State would have thus complaisantly changed a ground to which it had been led by the coincidence of its predilections and prejudices? If it had mortgaged the particular revenues for its debt, is it certain that it would have been able to change its ground justly and satisfactorily? Is it not too probable that perseverance, complaint, controversy, between the general head and the members, dissatisfaction in the community, and weakness of measures would have been the effects of such an experiment?
No one can doubt the dangers and inconveniences of such a situation. No sound mind but must think it a great recommendation of a measure that it tended to obviate so perilous and so inauspicious a situation.
An inference has been drawn that without the assumption and with separate provisions for the State debts, the chief part of the resources of the community would have been tied up, incapable of being brought into action for the public necessities. Let this be still more particularly illustrated.
Suppose Massachusetts had provided for her particular debt by excises. It is certain from the magnitude of her debt that to make the provision adequate in this way would have required excises to be extended as far as was practicable. Suppose Connecticut to have provided for her debt by stamp duties and duties on alienations of property, which carried to any extent not oppressive would not have been more than an adequate fund for her debt. Suppose South Carolina to have rested her debt on taxes and assessments upon real and personal estate, which in any admissible extent would probably have been inadequate to her debt.1
It would follow that the United States could not touch either of those great branches of taxation, because they had been preoccupied in those three States as far as the subject in each case would permit, and therefore additions would be insupportable to the citizens and incapable of collection, and because Congress could not, by the Constitution or upon principle, touch those branches in some States without extending it to all.
The only palliative for this paralytic state of things was requisitions upon the States to be raised in their own way. No man conversant with the effects of this system during the war of our Revolution, who saw its impotent and unequal operation, who is a friend to vigor in the government of his country, who has an enlightened desire to see it in a state to vindicate efficaciously its honor and interests, who wishes the reign of equal justice by equal effort among the States and their citizens—no such man but would deplore that this system should ever be again the principal reliance of the National Government.
But it might be expected to be even more impotent under the present government than under the Confederation. There the system of requisitions had a constitutional basis. Requisitions were the mode indicated by the Articles of Confederation for supplying the general treasury, and it was natural that their obligations should be so much the more respected.
But under the present government there is no authority for obtaining revenue in that way. A contrary supposition has crept in from that provision of the Constitution which regulates that “direct taxes shall be apportioned among the States according to their respective numbers.” But the true meaning of this is, that when Congress are about to raise revenue by their own authority upon those objects which are contemplated as the objects of direct taxation, the proportional measure of the quantum of the tax to be levied in each State must be on the numbers of such State. It is a mere rule for the exercise of the general power of taxation vested in Congress as to the article of direct taxes.
It does not authorize the calling upon a State to raise such a quota of money by its own authority and in its own way. This would be to change taxation by Congress into taxation by the States—direct taxes into taxes of any other description which it might appear advisable to a State to substitute.
Requisitions are, then, unknown to our present Constitution. They would amount, therefore, to mere recommendations, a compliance with which would be purely gratuitous and voluntary in theory as well as in fact. What could be expected from such a system?
This position alone condemns any plan which would or might have left the United States dependent on the resource of requisitions for carrying on a war. It is against every principle of sound reasoning or constitutional or practical policy, to leave the administration in a condition to depend not on legal and obligatory provisions, but on such as are gratuitous and voluntary. This is to arbitrate, not to govern.
Perhaps the force of these reasonings may be thought to be diminished by the reflection that the debts of the States were temporary impediments which might be expected to cease within a certain period.
But who would say when they would cease? It was certain that if fairly provided for the evil would have lasted a very considerable time, and it was uncertain how soon a war might render it embarrassing to the finances and dangerous to the safety of the country.
The certain length of duration and the greatness of the probable mischief were sufficient reasons for removing the cause when it could so well be done.
It will be argued hereafter that the duration of all the debts, both general and particular, supposing a fair provision, was likely to have been much greater on the plan of separate than on that of joint provision.
It was observed by way of objection to the assumption of the State debts, that the division of the business would facilitate a provision for the whole debt of the country, general and particular; that the resource of imposts would alone enable Congress to provide for the general debt, while the States separately could more conveniently employ other resources for the particular debts, and that together they could not only better provide for the interest of the debt but for the speedy extinguishment of the principal. This was, in truth, the most plausible argument which was used against the assumption.
In some of its aspects it was not without foundation, and in contemplating the plan to be proposed did not escape very serious reflection and examination.
It appeared to me well founded in this important view: that leaving a provision for the general debt within the compass of duties on imports, and disembarrassing Congress from the necessity of resorting to other and less agreeable modes of taxation, it avoided exposing the government in its infancy, and before it had engaged in its favor habit and opinion to the clamor and unpopularity which was to be feared from the resort to other means. To avoid this inconvenience had many charms for the person who was to propose a plan; it seemed to have much less risk for his reputation and quiet.
But on full and mature reflection, I yielded without reserve to the conviction that the consideration just mentioned, though not without weight, was greatly outweighed by many other considerations, and that in a personal view it would have been pusillanimity and weakness to have stopped short of a provision for the aggregate debt of the country.
Some of the reasons which determined me have been anticipated:
1. The superior probability of justice among the States and among the individuals composing them, including a greater certainty of relief to the overburthened States and their citizens, and the advantage of equalizing the condition of the citizens of all the States as to contributions, which was incident to the plan of a joint provision.
2. The avoiding of the collisions, heart-burnings, and bickerings to which fifteen different and comprehensive systems of finance connected with a separate provision for the State debts was subject.
3. To leave the field of revenue more open to the United States, and thus secure to their government and the general exigencies of the Union, including defence and safety, a more full and complete command of the resources of the nation.
These considerations were of themselves sufficient to outweigh that which has been stated by way of objection, but I proceed to add others which concurred in determining my judgment.
The assumption would tend to consolidate and secure public credit.
This would happen from various causes.
If it had not taken place, there would have been a conflict of interests and feelings among the public creditors.
The creditors of certain States, from the impracticality, admitting a disposition, of making for them a provision equal to that which was made for the creditors of the United States, would naturally have felt jealousy and dissatisfaction. They would have considered it as unjust that their claims, equally meritorious, should be worse treated, and the sensibility in certain cases would have been aggravated by the reflection that the most productive resources, before exclusively enjoyed by the State Government and applied to their benefit, had been devoted to the General Government, and applied by it to the sole benefit of the national creditors.
This jealousy and dissatisfaction would have augmented the mass of dissatisfaction from other causes which would exist against an adequate provision for the general debt. The sources of such dissatisfaction have been stated, and it was certain that enmity to the government in some and the spirit of faction in others would make them engines for agitating the public mind. Such dissatisfactions in a popular government especially tend to jeopardize the security of the public creditors, and, consequently, of the public credit.
The assumption, by uniting the interests of public creditors of all descriptions, was calculated to produce an opposite effect. It brought into the field an anxiety to fortify the public opinion in opposition to the efforts of faction and of the anti-proprietary spirit, in favor of a just and reasonable provision for the debt and for the support of credit.
These considerations, to a mind which has been attentive to the progress of things since, will have very particular weight.
The assumption would favor public credit in another sense, by promoting and enabling a more adequate provision for the entire debt of the country. This is in direct contradiction to one of the positions which the objection that was last stated contains. These are the reasons for a contrary opinion.
Some States—especially Massachusetts, Rhode Island, Connecticut, South Carolina, and Georgia—could not have made adequate provision for their respective debts. There is the ground of experience to assert that some States were not disposed to do it. From the co-operation of the two causes, the debts of a large majority of the States would have remained without an adequate provision, and would have been in danger of being frittered away by means inconsistent with the spirit of public credit; while the United States, by assuming the State debts, and by laying open all the resources of taxation to the command of the General Government upon a uniform plan, could, for reasons already detailed, make a more efficacious and complete provision for every part of the debt than could possibly have been done by separate provisions.
This may seem to have been a matter of no concern to the General Government. But the cause of credit and property is one and the same throughout the States. A blow to it, in whatever State or in whatever form, is a blow to it in every State and in every form. The intimacy of interest and connection between the States leads to an observance in one of what passes in another. Bad precedents influence as well as good. They are greedily looked up to and cited by men of loose principles who make them instruments of instilling doctrines and feelings hostile to morals, property, and credit. It may be averred as a maxim, without danger of material error, that there cannot be a violation of public principle in any State without spreading more or less an evil contagion in all.
It is known that the relaxed conduct of the State Governments in regard to property and credit was one of the most serious diseases under which the body politic labored prior to the adoption of our present Constitution, and was a material cause of that state of public opinion which led to its adoption.
The Constitution of the United States contained guards against this evil. Its provisions inhibit to the State Governments the power to make any thing but gold and silver coin a tender in payment of debts, or to pass any law impairing the obligation of contracts, which had been great engines of violating property, destroying confidence and credit, and propagating public dishonor and private distress.
In the practice of the Federal Government it was wise to second the spirit of those provisions: 1, by avoiding examples of those very practices which were meant to be guarded against in the States; 2, by removing, as far as it could be constitutionally done, out of the way of the States, whatever would oblige or tempt to further tampering with faith, credit, and property.
The assumption was calculated to do this, and it is not one of its least merits. It has served to prevent the reiteration of examples from necessity or choice which could not but have a malignant aspect towards the cause of public credit.
It might be added that the national character abroad has been rescued from stains by the same measure. It was not easy for foreigners to distinguish accurately between the infractions of credit by the State Governments and by the General. More or less it was natural that some confusion of ideas should prevail, and that the character of the country at large should suffer from the crookedness of parts.
Another beneficial effect of the assumption favorable to public credit was the placing of all the public funds of the country upon the same foundation. The price and steadiness or instability of the public funds are the barometers of public credit, and, with due allowance for temporary circumstances, they mark and establish the state of public credit.
It cannot be doubted by a man acquainted with the subject, that the fluctuations, instability, and precariousness of the value of property in funds in this country would have been very much in a ratio to the variety of kinds and of the foundations on which they rested; that it would have been incomparably greater upon the plan of fifteen different provisions at different rates by different authorities upon different principles, than upon that of one provision upon one principle by one authority. It is observable in the European markets that the principles of the different species of funds afloat influence each other, though perhaps the causes that affect some ought either not to affect others, or to affect them differently. Few of the many who deal habitually, or occasionally, in the funds are able to appreciate accurately the causes of fluctuations and what ought to have been the consequences. The knowing ones take advantage of the facts, and turn it to their own advantage, commonly to the disadvantage of the less knowing and to the injury of public credit.
A great mass of precarious funds in the shape of State debts could not have failed to injure and keep down the funds of the General Government by the influence of appearances, by the quick and sudden diversion of money from one channel to another, by the manœuvres of speculation, by the distraction of public opinion.
There are some who reason so much a travers as to regard a low state of the funds as desirable, because, say they, it enables the government to sink the debt more speedily by purchases.
But they forget that the lowness of the funds is an argument of a bad state of credit, and that the nation loses more by the greater purchases of foreigners at low prices than it gains by its own purchases at those prices, and the government loses infinitely more by the higher premiums and interests which it must in that case give for new loans than it can gain in purchases of the bonds given for old loans at low prices. Let it be remembered that a bond given last year is as good as a bond given-to-day; that borrowing by the government is in fact only sending its bonds to market, and if its old bonds are low its new bonds cannot be high. What would be thought of the policy of a merchant who should wish to see his notes at ten shillings in the pound?
Much clamor has been raised against the funding system on the score of speculation, how justly will be examined in the proper place, but what would have been the degree of it on the plan of so many different funds or stocks depending on so many different provisions? It is evident that it would have been multiplied tenfold. The legerdemain of speculation would have had full scope for its exertion. To give as quickly as possible elevation and stability to the funds was a most important means of raising and fixing public credit. The assumption, by equalizing the condition of every part of the public debt, and placing every part on good and on equal security, was one of the most effectual expedients for that purpose.
Another consequence of the assumption, contrary to what has been supposed, and favorable to public credit, is that it facilitated a speedy and honorable extinguishment of the debt.
This results from the superior efficacy of unity in the financial system; the superior and better command of the national resources, as well from the reason assigned as from the probability of greater skill and order in the arrangements of the General than the State Governments.
That plan which gave a more systematic and thorough command of every branch of national resources was evidently better adapted not only to the effectual payment of interest, but to the speedy honorable discharge of principal, for the very reason that greater resources could be brought into action.1
Certain States would have had to struggle endlessly with their debts—happy to be able to face even the interest. But the General Government was able to make and has already made a joint provision which would with due dispatch absorb the whole debt.
Besides the advantages to public safety and public credit, consequences very favorable to the ease and satisfaction of individuals were included in the assumption, of three kinds: 1. Lightening the burthens absolutely of all the citizens of the United States. 2. Equalizing their condition as to burthens of the citizens of one State with those of another. 3. Bringing certain relief in the first instance to the over-in-debted States, and facilitating settlement of accounts. These are the incidents of the same superiority of faculty in the General Government to make a convenient provision for the whole debt.
It is a curious fact which has not made its due impression, that in every State the people have found relief from assumption, while an incomparably better provision than before existed has been made for the State debts.
Let the citizens of Virginia be appealed to whether they have not, in consequence of being exonerated from the necessity of providing for their debt, been relieved in degree, or kind from burthens which before pressed heavily upon them. They must answer in the affirmative. The same inquiry will find the same answer in every State. Men wonder at the lightness of these burthens, and yet at the capacity of the government to pay the interest of the debt, to absorb a portion of the principal, and to find extensive resources for defence against Indian ravages.
The solution of the enigma is in the present financial system of the country, intrinsically more energetic, more orderly, better directed, and more uniform and comprehensive than could possibly have been the case with fifteen different systems to provide for as many different loads of debt.
The effect of energy and system is to vulgar and feeble minds a kind of magic which they do not comprehend, and thus they make false interpretation of the most obvious facts. The people of several parts of the State, relieved and happy by the effects of the assumption, execrate the measure and its authors, to which they owe the blessing.
The equalizing the condition of the individual citizens of the several States by the generalizing of the provision, is connected with this part of the subject. It has been already noticed in reference to the justice of procedures. It deserves particular attention in the view of policy.
It is impossible to imagine any thing more calculated to breed discontent, and, between the citizens of the United States, mutual jealousy and animosity, than the inequality of conditions, which, without the assumption, would have existed.
When the citizens of Massachusetts or Connecticut bordering on New York felt themselves burdened with heavy taxes, while their neighbors of New York paid scarcely any, what must have been their sensations? How must they have been stung by the sense of so unjust an inequality? How must their envy and dissatisfaction have been excited? How must this have tended to beget in them discontent with the government under which they lived, and, from discontent, to lead them to revolt?
Something of this actually took place. That spirit of dissatisfaction which produced the insurrection in Massachusetts was in all probability promoted by a comparison which exhibited the people of that State as in a condition far worse than their neighbors.
If it be said that this effect was likely to be temporary, destined to cease upon a settlement of accounts which would bring relief to the overburdened States, then the remark before made recurs. A settlement at all was precarious and uncertain; whether it would bring relief even where it ought to, was still more precarious and uncertain.
Let us conceive what would have been the effect under the inequality of conditions which has been stated, either if a settlement had been long procrastinated, or if, having been made, it did not bring relief to the much-indebted States.
What would then have been the situation of the public mind in those States? Who can calculate the mischiefs which would have attended the disappointment or despair of relief and the prospect of continuing indefinitely under such unequal loads?
It is a great recommendation of the assumption, not only that it anticipated a relief which was indispensable and which might not have come from a settlement, but that it facilitated a settlement and rendered a tolerable issue far more probable.
This position is thus explained:
The circumstances which have been enumerated rendered a settlement upon strict or systematic principles impracticable. Had the State debts remained unassumed, the nature of the settlement which might be made was proportionately important, and imposed on the commissioners the duty of greater rigor and exactness. The more this was the case, the more difficult it was to come to any admissible or satisfactory result. Adherence to principles was likely on one side or another to produce greater mischief. Compromise and management were essential.
The assumption of the State debts, by giving relief to the much indebted States, rendered the issue, and, consequently, the principles of the settlement, less important. It allowed greater latitude to the commissioners to deviate from rule, to consult expediency, to shape the result by a spirit of accommodation and concession to circumstances. Hence, a settlement became more practicable in proportion as it was less important.
I declare that I am not in the secret of the principles or maxims by which the commissioners were governed, but from what I do know of the state of things, with a full conviction of there being as much disposition on their part of doing as much justice as possible, I can entertain no doubt that the settlement which they made was essentially artificial and the result of a thousand compromises of principle. No other settlement was possible, and I believe none could ever have been made, had not things been put upon a footing to enfetter the commissioners.
Thus, then, it is one of the merits of the assumption, that it facilitated a settlement of accounts which all the States were desirous of, and so has contributed to establish their harmony. And it is fortunate that it has so issued as to have produced relief to those States which, notwithstanding the assumption, were still left with considerable debts upon them.
This circumstance of there having remained such balances1 may be urged as an objection to the reasonings in favor of the assumption. But, to this, two things are to be replied:
1. That my proposition to Congress embraced the entire debt of the State, which would have given in the first instance complete relief. The limitation by Congress is not chargeable on my plan. It was the effect of a compromise between the zealous friends of assumption and some who opposed or doubted, and was dictated in some degree by a spirit of caution.But though by this limitation the relief was less complete in the first instance than was intended by my plan, enough was done to obviate the principal mischiefs, and to ensure that a State could not be oppressed by the peculiar burthen remaining upon it.
2. Another advantage incident to the assumption was the preventing the depopulation of particular States.
Had the overburdened States remained so any considerable time while the citizens of other States were lightly taxed, it could not but have promoted extremely emigration from the more to the less burdened States. This dislocation of population from any violent cause or any extraordinary pressure on parts of the Union cannot but be regarded as a serious evil. It could not but disturb in some degree the general order, the due course of industry, the due circulation of public benefits.
One particular inconvenience would have been to have increased the inability and distress of the over-burdened States by lessening the population, from the labor of which the public resources were to be derived.
Another particular inconvenience might have been the transferring the population of the country from more to less beneficial situations in a national sense. No one has been more uniformly nor more entirely than myself in favor of the system of giving a free course to the population and settlement of our interior country, and of securing to it by the best efforts of the government the enjoyment of those collateral advantages on which its prosperity must depend. This, in my opinion, is preferable as the most natural policy, and as that which will best secure and cement the unity of the empire. But with this policy adopted in my most unqualified manner, I am far from regarding it as wise to give any extraordinary occasion or impulse to a transfer of people from the settled to the unsettled parts of the country. This is to retard the progress in general improvement, and to impair for a greater length of time the vigor of the nation, by scattering too widely and sparsely the elements of resource and strength. It is to weaken government by enlarging too rapidly the sphere of its action, and the Union by stretching out the links of connection between the different parts.
The true politician will content himself by seeing new settlements formed by the current of a redundant population; he will submit, because it is unnatural, and would be fruitless and unwise, to oppose even a greater transfer than the mere surplus, by the attractions to emigration which new countries hold out; he will seek to tie the emigrants to the friends and brethren they leave, by a kind and liberal conduct of the government towards them, by efficacious protection, and by sincere, persevering, and energetic endeavors to obtain for them the free and full enjoyment of those rights and advantages which local situation requires. But he will not accelerate this transfer by accumulating artificial disadvantages on the already settled parts of the country; he will even endeavor to avoid this by removing such disadvantages if casual causes have produced them.
Such without reserve is my sincere view of this subject, and I deem it no small recommendation of the assumption that it was a mild and equitable expedient for preventing a violent dislocation of the population of particular States.
It remains to mention one consideration which naturally occurred in the reflections upon the expediency of assuming the State debts.
This is its tendency to strengthen our infant government by increasing the number of ligaments between the government and the interests of individuals.
I frankly acknowledge that this tendency as far as it appeared to be founded was not excluded from the calculation, for my opinion has been and is that the true danger to our prosperity is not the overbearing strength of the Federal head but its weakness and imbecility for preserving the union of the States and controlling the eccentricities of State ambition and the explosion of factious passions. And a measure which consistently with the Constitution was likely to have the effect of strengthening the fabric would have recommended itself to me on that account.
But though this was the case; though I thought, too, that the assumption would have in several senses a temporary tendency of the kind alluded to, and so far might serve as a prop to the government in the infancy of its authority, while there was yet a numerous party alive whose vanity and envy pledged them to opposition, and before it had acquired the confirmations of habit and age, and though weight was given to the argument where it was thought most likely to have effect, yet upon the whole it was the consideration upon which I relied least of all.
It appeared to me in a considerable degree counter-balanced by the suggestion of an objection which has been stated, the necessity which it imposed on the government of resorting early to unpalatable modes of taxation which jeopardized its popularity and gave a handle to its enemies to attack it. It appeared to me also entitled to the less weight, because, on the supposition that the debt was to be extinguished within a moderate term of years, its influence must then be terminated, and it had not pretensions to be considered as a permanent or lasting prop to the government.
Besides that, it was to be foreseen that successive transfers of considerable portions of the debt to foreigners and accumulations at home would rapidly enough lessen the number of ligaments, diminish the influence upon individuals, and, the taxes continuing, perhaps invert the effect.
Had this, then, been the weightiest motive to the measure, it would never have received my patronage. The great inducements with me were those which have been previously enumerated, and chiefly the growing simplicity and energy to the national finances, the avoiding the collisions of multifarious and conflicting systems, the securing to the government for national exigencies the complete command of the national resources, the consolidation of public credit. These were the commanding motives, and it is believed they were solid.
It is understood that a contrary course has been a principal cause of embarrassment in the United Netherlands. The separate debts of the different provinces have been an endless source of perplexity and financial imbecility.
But for the same reason that the effect of the assumption to strengthen the government was a feeble or ambiguous motive, its importance as an objection, in the views of those who fear the over-bearing power of the General Government, has been much exaggerated. What solid ground was there for all the declamation which has represented this measure as a premeditated plan for overthrowing the State Governments and consolidating the States into one? What room was there, in a matter of so temporary and partial an operation, for the dreadful alarms which were felt or affected?
The inconvenience of an early resort to modes of taxation which run counter to public prejudices, has been mentioned. Its force was felt; but then, in addition to the reasons immediately connected with the measure,—which led to it, there were collateral ones which united to meet it.
The current of popularity immediately after the adoption of the government ran strongly in its favor. The immediate Chief Magistrate justly united in his person the full confidence and cordial regard of the nation.
It was not to be doubted that intrigues to un-popularize the government would go on—that the passions incident to faction, the natural disease of popular governments, would grow and multiply—that the rivalships of power would increase. And it was to be feared that greater difficulties might exist at a future day to introduce the most difficult species of revenues, however necessary they might be in the then stage of our affairs. The delay in establishing them might even be construed into an implied condemnation of them, and might be rendered an argument against their future introduction. Even negative precedents in such cases are not without force. While the advantages of present situation facilitated the introduction of these revenues at the time, the obstacles that might be afterwards created rendered it advisable to occupy the ground, and to avoid, by anticipating, difficulties. The presidency of the actual Chief Magistrate was a more favorable period than was likely in a short time to recur to establish points favorable to the just and necessary efficiency of the government.
Besides that, it would probably have been in the long run an unwise calculation, even of popularity, for the government to have omitted the measure of assumption. A weak and embarrassed government never fails to be unpopular. It attaches to itself the disrespect incident to weakness, and, unable to promote the public happiness, its impotencies are its crimes. Without the assumption, the government would have been for a long time at least under all the entanglements and imbecilities of a complicated clashing and disordered system of finance.
The foregoing considerations appeared to me decisive for proposing an assumption of the State debts. Experience has not led me to repent the measure, and I believe it will more and more recommend itself even to its enemies.
In the course of the remarks which have been made, the considerations which combated the mode of proceeding with regard to assumption—namely, an entire assumption of the State debts and a dereliction of the settlement of accounts, have been anticipated. The state of public opinion was an insuperable obstacle. Almost every State flattered itself with being a creditor, and imagined a particular interest in a settlement. The renunciation of it would consequently have destroyed the confidence and disturbed the harmony of the States, else it would undoubtedly have been the best policy and as good justice to have renounced it. There was no ground of procedure more likely to promote mutual justice and convenience, than to assume as a principle that each State in the war had exerted itself to the extent of its faculties, that the subsisting debts were to be paid out of a common treasury, and that all retrospection and reliquidation between the States were to be abandoned. But this great and liberal measure was impossible. All parties accordingly concurred in demanding a settlement.
The course of the argument has stated and replied to all the objections to the assumption except one. This is that it has tended to increase the mass of the debt.
This observation has frequently been so managed as to infuse into the minds of many, a vague, confused conception that the PUBLIC debt of the country has been augmented in mass to the extent of the aggregate sum of State debts assumed. But it were absurd to attempt a refutation of this idea. It is self-evident that the assumption in this respect did nothing more than transfer the particular debts to the Union. It united fourteen sums in one, and charged them upon one responsibility, that of the Union, instead of leaving them to exist separately, chargeable on the separate responsibilities of the Union and the individual States. The debt of the Union was increased, but the debts of the several members of it were proportionably decreased. The MASS OF PUBLIC DEBT consequently remained the same, on the infallible evidence of a mathematical axiom that a WHOLE cannot be greater than its parts.
But the objection has had a more particular signification. It has amounted to this, that the debts of the States have been twice provided for, once to the individual creditors who held evidences of State debts, and once to the States in whose favor balances were found at the settlement. This objection, like most others from the same quarter, has been presented in a shape so general, inexplicit, and naked of explanation, that it is not easy even to comprehend, much less to answer it. It probably turns on a sophism or error which supposes the same item of service or supply twice represented, once in the evidence or voucher given by the State to the person who served or supplied, and once in the account of the State as a charge against the United States.
But this supposition of double representation overlooks the material fact that by the plan of settlement according to the assumption the sums assumed by the United States to individuals are charged to the State which incurred them, and so balance and extinguish the correlative charge for the service or supply which was the origin of the debt.
Moreover, it is manifest in point of result that the objection can have little if any foundation.1
[1]It may be said that the occupation of the several branches of revenue in the way which has been stated is merely suppositious! It might not have happened—a more partial and at the same time a more various distribution might have left a freer stage to the United States. The possibility of what has been stated in theory is a conclusive argument for preferring a plan which avoided it. But more than this, it is probable, and from circumstances was in a great degree unavoidable that what has been supposed should have been substantially realized in practice. The modes of taxation in particular States and the magnitude of their debts would have naturally led to it. And as far as the States, in their provisions, had recourse to different objects, though not to the full extent, so far the evil would have existed and would have been an obstacle to a due provision for the public necessities. But besides this, it would be impossible to the State Governments to command efficaciously one principal source of taxation, that of excises, because of the competition of industry where they were not laid.
[1]I have annexed the epithet honorable to that of speedy, because certainly a more speedy extinguishment could have been found in bankruptcy and fraud. There is too much cause to believe that those who favored the intricate speckled system of State provisions secretly had an eye to this happy resource. Its evils in every sense have been delineated, and no one who values his character will avow it. No sound politician will look with complacency toward it. It was of the justice and policy of the United States to expel this corruption from the body politic.
[1]When the Assumption Act was carried out by the commissioners considerable balances remained, owing to Congress having allowed a State term which could not be overstepped.
[1]The conclusion of this paper is lacking. All that remains unprinted is an imperfect outline of a proof, by figures, of the proposition that no part of the debt was paid twice.
PRIVATE CORRESPONDENCE
NOTE.—A FEW WORDS OF EXPLANATION
