The Utility of the Union In Respect to Revenue



From the New York Packet.



Tuesday, November 27, 1787.



HAMILTON





To the People of the State of New York:



The effects of Union upon the commercial prosperity of the States have

been sufficiently delineated. Its tendency to promote the interests of

revenue will be the subject of our present inquiry.



The prosperity of commerce is now perceived and acknowledged by all

enlightened statesmen to be the most useful as well as the most

productive source of national wealth, and has accordingly become a

primary object of their political cares. By multiplying the means of

gratification, by promoting the introduction and circulation of the

precious metals, those darling objects of human avarice and enterprise,

it serves to vivify and invigorate the channels of industry, and to

make them flow with greater activity and copiousness. The assiduous

merchant, the laborious husbandman, the active mechanic, and the

industrious manufacturer,—all orders of men, look forward with eager

expectation and growing alacrity to this pleasing reward of their

toils. The often-agitated question between agriculture and commerce

has, from indubitable experience, received a decision which has

silenced the rivalship that once subsisted between them, and has

proved, to the satisfaction of their friends, that their interests are

intimately blended and interwoven. It has been found in various

countries that, in proportion as commerce has flourished, land has

risen in value. And how could it have happened otherwise? Could that

which procures a freer vent for the products of the earth, which

furnishes new incitements to the cultivation of land, which is the most

powerful instrument in increasing the quantity of money in a

state—could that, in fine, which is the faithful handmaid of labor and

industry, in every shape, fail to augment that article, which is the

prolific parent of far the greatest part of the objects upon which they

are exerted? It is astonishing that so simple a truth should ever have

had an adversary; and it is one, among a multitude of proofs, how apt a

spirit of ill-informed jealousy, or of too great abstraction and

refinement, is to lead men astray from the plainest truths of reason

and conviction.



The ability of a country to pay taxes must always be proportioned, in a

great degree, to the quantity of money in circulation, and to the

celerity with which it circulates. Commerce, contributing to both these

objects, must of necessity render the payment of taxes easier, and

facilitate the requisite supplies to the treasury. The hereditary

dominions of the Emperor of Germany contain a great extent of fertile,

cultivated, and populous territory, a large proportion of which is

situated in mild and luxuriant climates. In some parts of this

territory are to be found the best gold and silver mines in Europe. And

yet, from the want of the fostering influence of commerce, that monarch

can boast but slender revenues. He has several times been compelled to

owe obligations to the pecuniary succors of other nations for the

preservation of his essential interests, and is unable, upon the

strength of his own resources, to sustain a long or continued war.



But it is not in this aspect of the subject alone that Union will be

seen to conduce to the purpose of revenue. There are other points of

view, in which its influence will appear more immediate and decisive.

It is evident from the state of the country, from the habits of the

people, from the experience we have had on the point itself, that it is

impracticable to raise any very considerable sums by direct taxation.

Tax laws have in vain been multiplied; new methods to enforce the

collection have in vain been tried; the public expectation has been

uniformly disappointed, and the treasuries of the States have remained

empty. The popular system of administration inherent in the nature of

popular government, coinciding with the real scarcity of money incident

to a languid and mutilated state of trade, has hitherto defeated every

experiment for extensive collections, and has at length taught the

different legislatures the folly of attempting them.



No person acquainted with what happens in other countries will be

surprised at this circumstance. In so opulent a nation as that of

Britain, where direct taxes from superior wealth must be much more

tolerable, and, from the vigor of the government, much more

practicable, than in America, far the greatest part of the national

revenue is derived from taxes of the indirect kind, from imposts, and

from excises. Duties on imported articles form a large branch of this

latter description.



In America, it is evident that we must a long time depend for the means

of revenue chiefly on such duties. In most parts of it, excises must be

confined within a narrow compass. The genius of the people will ill

brook the inquisitive and peremptory spirit of excise laws. The pockets

of the farmers, on the other hand, will reluctantly yield but scanty

supplies, in the unwelcome shape of impositions on their houses and

lands; and personal property is too precarious and invisible a fund to

be laid hold of in any other way than by the inperceptible agency of

taxes on consumption.



If these remarks have any foundation, that state of things which will

best enable us to improve and extend so valuable a resource must be

best adapted to our political welfare. And it cannot admit of a serious

doubt, that this state of things must rest on the basis of a general

Union. As far as this would be conducive to the interests of commerce,

so far it must tend to the extension of the revenue to be drawn from

that source. As far as it would contribute to rendering regulations for

the collection of the duties more simple and efficacious, so far it

must serve to answer the purposes of making the same rate of duties

more productive, and of putting it into the power of the government to

increase the rate without prejudice to trade.



The relative situation of these States; the number of rivers with which

they are intersected, and of bays that wash there shores; the facility

of communication in every direction; the affinity of language and

manners; the familiar habits of intercourse; —all these are

circumstances that would conspire to render an illicit trade between

them a matter of little difficulty, and would insure frequent evasions

of the commercial regulations of each other. The separate States or

confederacies would be necessitated by mutual jealousy to avoid the

temptations to that kind of trade by the lowness of their duties. The

temper of our governments, for a long time to come, would not permit

those rigorous precautions by which the European nations guard the

avenues into their respective countries, as well by land as by water;

and which, even there, are found insufficient obstacles to the

adventurous stratagems of avarice.



In France, there is an army of patrols (as they are called) constantly

employed to secure their fiscal regulations against the inroads of the

dealers in contraband trade. Mr. Neckar computes the number of these

patrols at upwards of twenty thousand. This shows the immense

difficulty in preventing that species of traffic, where there is an

inland communication, and places in a strong light the disadvantages

with which the collection of duties in this country would be

encumbered, if by disunion the States should be placed in a situation,

with respect to each other, resembling that of France with respect to

her neighbors. The arbitrary and vexatious powers with which the

patrols are necessarily armed, would be intolerable in a free country.



If, on the contrary, there be but one government pervading all the

States, there will be, as to the principal part of our commerce, but

ONE SIDE to guard—the ATLANTIC COAST. Vessels arriving directly from

foreign countries, laden with valuable cargoes, would rarely choose to

hazard themselves to the complicated and critical perils which would

attend attempts to unlade prior to their coming into port. They would

have to dread both the dangers of the coast, and of detection, as well

after as before their arrival at the places of their final destination.

An ordinary degree of vigilance would be competent to the prevention of

any material infractions upon the rights of the revenue. A few armed

vessels, judiciously stationed at the entrances of our ports, might at

a small expense be made useful sentinels of the laws. And the

government having the same interest to provide against violations

everywhere, the co-operation of its measures in each State would have a

powerful tendency to render them effectual. Here also we should

preserve by Union, an advantage which nature holds out to us, and which

would be relinquished by separation. The United States lie at a great

distance from Europe, and at a considerable distance from all other

places with which they would have extensive connections of foreign

trade. The passage from them to us, in a few hours, or in a single

night, as between the coasts of France and Britain, and of other

neighboring nations, would be impracticable. This is a prodigious

security against a direct contraband with foreign countries; but a

circuitous contraband to one State, through the medium of another,

would be both easy and safe. The difference between a direct

importation from abroad, and an indirect importation through the

channel of a neighboring State, in small parcels, according to time and

opportunity, with the additional facilities of inland communication,

must be palpable to every man of discernment.



It is therefore evident, that one national government would be able, at

much less expense, to extend the duties on imports, beyond comparison,

further than would be practicable to the States separately, or to any

partial confederacies. Hitherto, I believe, it may safely be asserted,

that these duties have not upon an average exceeded in any State three

per cent. In France they are estimated to be about fifteen per cent.,

and in Britain they exceed this proportion.[1] There seems to be

nothing to hinder their being increased in this country to at least

treble their present amount. The single article of ardent spirits,

under federal regulation, might be made to furnish a considerable

revenue. Upon a ratio to the importation into this State, the whole

quantity imported into the United States may be estimated at four

millions of gallons; which, at a shilling per gallon, would produce two

hundred thousand pounds. That article would well bear this rate of

duty; and if it should tend to diminish the consumption of it, such an

effect would be equally favorable to the agriculture, to the economy,

to the morals, and to the health of the society. There is, perhaps,

nothing so much a subject of national extravagance as these spirits.



What will be the consequence, if we are not able to avail ourselves of

the resource in question in its full extent? A nation cannot long exist

without revenues. Destitute of this essential support, it must resign

its independence, and sink into the degraded condition of a province.

This is an extremity to which no government will of choice accede.

Revenue, therefore, must be had at all events. In this country, if the

principal part be not drawn from commerce, it must fall with oppressive

weight upon land. It has been already intimated that excises, in their

true signification, are too little in unison with the feelings of the

people, to admit of great use being made of that mode of taxation; nor,

indeed, in the States where almost the sole employment is agriculture,

are the objects proper for excise sufficiently numerous to permit very

ample collections in that way. Personal estate (as has been before

remarked), from the difficulty in tracing it, cannot be subjected to

large contributions, by any other means than by taxes on consumption.

In populous cities, it may be enough the subject of conjecture, to

occasion the oppression of individuals, without much aggregate benefit

to the State; but beyond these circles, it must, in a great measure,

escape the eye and the hand of the tax-gatherer. As the necessities of

the State, nevertheless, must be satisfied in some mode or other, the

defect of other resources must throw the principal weight of public

burdens on the possessors of land. And as, on the other hand, the wants

of the government can never obtain an adequate supply, unless all the

sources of revenue are open to its demands, the finances of the

community, under such embarrassments, cannot be put into a situation

consistent with its respectability or its security. Thus we shall not

even have the consolations of a full treasury, to atone for the

oppression of that valuable class of the citizens who are employed in

the cultivation of the soil. But public and private distress will keep

pace with each other in gloomy concert; and unite in deploring the

infatuation of those counsels which led to disunion.



PUBLIUS.



 [1] If my memory be right they amount to twenty per cent.









THE FEDERALIST.