Antifederalist No. 12 How Will The New Government Raise Money? |
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On the subject of taxation, in which powers are to be given so largely by the new
constitution, you [James Wilson of Pennsylvania] lull our fears of abuse by venturing to
predict "that the great revenue of the United States must, and always will, be raised
by impost" -- and you elevate our hopes by holding out, "the reviving and
supporting the national credit." If you have any other plan for this, than by raising
money upon the people to pay the interest of the national debt, your ingenuity will
deserve our thanks. Supposing however, that raising money is necessary to payment of the
interest, and such a payment [is] requisite to support the credit of the union -- let us
see how much will be necessary for that end, and how far the impost will supply what we
want. The arrearages of French and Spanish interest amount now to -- 1,500,000 dollars;
Interest and installments of do. for 1788 -- 850,227; Support of government; and its
departments, for 1788 -- 500,000; Arrears and anticipations of 1787 -- 300,000; Interest
of domestic debt -- 500,000 {total} 4,650,227 [3,650,227]
The new Congress then, supposing it to get into operation towards October, 1788, will have
to provide for this sum, and for the additional sum of 3,000,000 at least for the ensuing
year; which together will make the sum of 7,650,227 [6,650,227].
Now let us see how the impost will answer this. Congress have furnished us with their
estimate of the produce of the whole imports of America at five per cent and that is
800,000 dollars. There will remain to provide for, by other taxes, 6,850,227 [5,850,227].
We know too, that our imports diminish yearly, and from the nature of things must continue
to diminish; and consequently that the above estimate of the produce of the impost, will
in all probability fall much short of the supposed sum. But even without this, it must
appear that you [were] either intentionally misleading your hearers, or [were] very little
acquainted with the subject when you ventured to predict that the great revenue of the
United States would always flow from the impost. The estimate above is from the
publications of Congress, and I presume is right. But the sum stated, necessary to be
raised by the new government, in order to answer the expectations they have raised, is not
all. The state debts, independent of what each owes to the United States, amount to about
30,000,000 dollars; the annual interest of this is 1,000,000.
It will be expected that the new government will provide for this also; and such
expectation is founded, not only on the promise you hold forth, of its reviving and
supporting public credit among us, but also on this unavoidable principle of justice --
that is, the new government takes away the impost, and other substantial taxes, from the
produce of which the several states paid the interest of their debt, or funded the paper
with which they paid it. The new government must find ways and means of supplying that
deficiency, . . . in hard money, for . . . paper . . . cannot [be used] without a
violation of the principles it boasts. The sum then which it must annually raise in
specie, after the first year, cannot be less than 4,800,000. At present there is not one
half of this sum in specie raised in all the states. And yet the complaints of intolerable
taxes has produced one rebellion and will be mainly operative in the adoption of your
constitution. How you will get this sum is inconceivable and yet get it you must, or lose
all credit. With magnificent promises you have bought golden opinions of all sorts of
people, and with gold you must answer them, . . .
To satisfy [our fellow citizens] more fully on the subject of the revenue, that is to be
raised upon them, in order to give enormous fortunes to the jobbers in public securities,
I shall lay before them a proposition to Congress, from Mr. Robert Morris, when
superintendent of finance. It is dated, I think,' the 29th of June, 1782, and is in these
words:
[1 say, I think, because by accident the month is erased in the note I have, and I have
not access to public papers which would enable me to supply the defect.]
"The requisition of a five per cent impost, made on the 3d of February, 1781, has not yet been complied with by the state of Rhode Island, but as there is reason to believe, that their compliance is not far off, this revenue may be considered as already granted. It will, however, be very inadequate to the purposes intended. If goods be imported, and prizes introduced to the amount of twelve millions annually, the five per cent would be six hundred thousand, from which at least one sixth must be deducted, as well for the cost of collection as for the various defalcations which will necessarily happen, and which it is unnecessary to enumerate. It is not safe therefore, to estimate this revenue at more than half a million of dollars; for though it may produce more, yet probably it will not produce so much. It was in consequence of this, that on the 27th day of February last, I took the liberty to submit the propriety of asking the states for a land tax of one dollar for every hundred acres of land -- a poll-tax of one dollar on all freemen, and all male slaves, between sixteen and sixty, excepting such as are in the federal army, or by wounds or otherwise rendered unfit for service -- and an excise of one eighth of a dollar, on all distilled spiritous liquors. Each of these may be estimated a half a million; and should the product be equal to the estimation, the sum total of revenues for funding the public debts, would be equal to two millions."
You will readily perceive, Mr. Wilson, that there is a vast difference between your
prediction and your friend's proposition. Give me leave to say, sir, that it was not
discreet, in you, to speak upon finance without instructions from this great financier.
Since, independent of its delusive effect upon your audience, it may excite his jealousy,
lest you should have a secret design of rivaling him in the expected office of
superintendent under the new constitution. It is true, there is no real foundation for it;
but then you know jealousy makes the food it feeds on. A quarrel between two such able and
honest friends to the United States, would, I am persuaded, be felt as a public calamity.
I beseech you then to be very tender upon this point in your next harangue. And if four
months' study will not furnish you with sufficient discretion, we will indulge you with
six.
It may be said, that let the government be what it may, the sums I have stated must be
raised, and the same difficulties exist. This is not altogether true. For first, we are
now in the way of paying the interest of the domestic debt, with paper, which under the
new system is utterly reprobated. This makes a difference between the specie to be raised
of 1,800,000 dollars per annum. If the new government raises this sum in specie on the
people, it will certainly support public credit, but it will overwhelm the people. It will
give immense fortunes to the speculators; but it will grind the poor to dust. Besides, the
present government is now redeeming the principal of the domestic debt by the sale of
western lands. But let the full interest be paid in specie, and who will part with the
principal for those lands? A principal, which having been generally purchased for two
shillings and six pence on the pound, will yield to the holders two hundred and forty per
cent. This paper system therefore, though in general an evil, is in this instance attended
with the great benefit of enabling the public to cancel a debt upon easy terms, which has
been swelled to its enormous size, by as enormous impositions. And the new government, by
promising too much, will involve itself in a disreputable breach of faith. . . .
The present government promises nothing; the intended government, everything. From the
present government little is expected; from the intended one, much. Because it is
conceived that to the latter much is given; to the former, little. And yet the inability
of the people to pay what is required in specie, remaining the same, the funds of the one
will not much exceed those of the other. The public creditors are easy with the present
government from a conviction of its inability [to pay]. They will be urgent with the new
one from an opinion, that as is promised, so it can and will perform every thing. Whether
the change will be for our prosperity and honor, is yet to be tried. Perhaps it will be
found, that the supposed want of power in Congress to levy taxes is, at present a veil
happily thrown over the inability of the people; and that the large powers given to the
new government will, to every one, expose the nakedness of our land. Certain it is, that
if the expectations which are grafted on the gift of those plenary powers, are not
answered, our credit will be irretrievably ruined.
CINCINNATUS
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