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The doctrine advanced by Rhode Island would perhaps prove also that the federal governo ment ought to have the appointment of no internal officers whatever; a position that would defeat all the provisions of the confederation, and all the purposes of the union. The truth is, that no federal constitution can exist without powers that in their exercise affect the internal police of the component members. It is equally true, that no government can exist without a right to appoint officers for those purposes which proceed from, and concenter in itself; and therefore the confederation has expressly declared, that Congress shall have authority to appoint all such “civil officers as may be necessary for managing the general affairs of the United States under their direction." All that can be required is, that the federal government confine its appointments to such as it is empowered to make by the original act of union, or by the subsequent consent of the parties; unless there should be express words of exclusion in the constitution of a state, there can be no reason to doubt that it is within the compass of legislative discretion to communicate that authority.
The propriety of doing it upon the present occasion, is founded on substantial reasons.
The measure proposed is a measure of necessity. Repeated experiments have shewn, that the revenue to be raised within these states is altogether inadequate to the public wants. The deficiency can only be supplied by loans. Our applications to the foreign powers, on whose friendship we depend, have had a success far short of our necessities. The next resource is to borrow from individuals. These will neither be actuated by generosity nor reasons of state.
Tis to their interest alone we must appeal. To conciliate this, we must not only stipulate a proper compensation for what they lend, but we must give security for the performance. We must pledge an ascertained fund; simple and productive in its nature ; general in its principle, and at the disposal of a single will. There can be little confidence in a security under the constant, revisal of thirteen different deliberatives. It must, once for all, be detined and established on the faith of the states solemnly pledged to each other, and not revocable by any without a breach of the general compact.
'Tis by such expedients that nations, whose resources are understood, whose reputations and governments are erected on the foundation of ages, are enabled to obtain a solid and extensive credit. Would it be reasonable in us to hope for more easy terms, who have so recently assumed our rank among the nations? Is it not to be expected, that individuals will be cautious in lending their money to a people in our circumstances, and that they will at least require the best security we can give?
We have an enemy vigilant, intriguing, well acquainted with our defects and embarrassments. We may expect that he will make every effort to instil diffidences into individuals, and in the present posture of our internal affairs, he will have too plausible ground on which to tread. Our necessities have obliged us to embrace measures, with respect to our public credit, calculated to inspire distrust. The prepossessions on this article must naturally be against us, and it is therefore indispensable we should endeavor to removethem, by such means as will be the most obvious and striking.
It was with these views Congress determined on a general fund; and the one they have recommended must, upon a thorough examination, appear to have fewer inconveniences than any other.
It has been remarked as an essential part of the plan, that the fund should depend on a single will. This will not be the case, unless the collection, as well as the appropriation, is under the controul of the United States; for it is evident, that after the duty is agreed upon, it may, in a great measure, be defeated by an ineffectual mode of levying it. The United States have a common interest in an uniform and equally energetic collection; and not only policy, but justice to all the parts of the union, designates the utility of lodging the power of making it where the interest is common. Without this it might in reality operate as a very unequal tax.
Third objection. “That by granting to Congress a power to collect monies from the commerce of these states, indefinitely as to time and quantity, and for the expenditure of which they are not to be accountable to the states, they would become independent of their constituents, and so the proposed impost is repugnant to the liberty of the United States."
Admitting the principle of this objection to be true, still it ought to have no weight in the present case, because there is no analogy between the principle and the fact.
First. The fund proposed is suficiently definite as to time, because it is only co-extensive with the existence of the debt contracted and to be contracted in the course of the war. Congress are persuaded that it is as remote from the intention of their constituents to perpetuate that debt, as to extinguish it at once by a faithless neglect of providing the means to fulfil the public engagements. Their ability to discharge it in a moderate time, can as little be doubted as their inclination, and the moment that debt ceases, the duty, so far as respects the present provision, ceases with it.
The resolution recommending the duty, specifies the object of it to be the discharge of the principal and interest of the debts already contracted, or which may be contracted on the faith of the United States for supporting the present war.
Secondly. The rate per cent. is fixed, and it is not at the option of the United States to increase it. Though the product will vary according to the variations in trade ; yet as there is this limitation of the rate, it cannot be properly sad to be indefinite as to quantity.
By the confederation, Congress have an absolute discretion in determining the quantum of revenue requisite for the national expenditure. When this is done, nothing remains for the states, separately, but the mode of raising. No state can dispute the obligation to pay the sum demanded without a breach of the confederation ; and when the money comes into the treasury the appropriation is the exclusive province of the federal government. This provi. sion of the confederation (without which it would be an empty form) comprehends in it the principle in its fullest latitude, which the objection under consideration treats as repugnant to the liberty of the United States, to wit, an indefinite power of prescribing the quantity of money to be raised, and of appropriating it when raised.
If it be said that the states individually, having the collection in their own hands, may refuse a compliance with exorbitant demands, the confederation will answer, that this is a point of which they have no constitutional liberty to judge. Such a refusal would be an exertion of power, not of right, and the same power which could disregard a requisition made on the authority of the confederation, might at any time arrest the collection of the duty.
The same kind of responsibility which exists with respect to the expenditure of the money furnished in the forms hitherto practised, would be equally applicable to the revenue from the imports.
The truth is, the security intended to the general liberty in the confederation, consists in the frequent election, and in the rotation of the members of Congress, by which there is a constant and an effectual check upon them. This is the security which the people in every state enjoy against the usurpations of their internal governments; and it is the true source of security in a representative republic. The government, so constituted, ought to have the means necessary to answer the end of its institution. By weakening its hands too much it may be rendered incapable of providing for the interior harmony, or the exterior defence of the state,
The measure in question, if not within the letter, is within the spirit of the confederation. Congress, by that, are empowered to borrow money for the use of the United States, and by implication, to concert the means necessary to accomplish the end. But without insisting upon this argument, if the confederation has not made proper provision for the exigencies of the states, it will be at all times the duty of Congress to suggest further provisions; and when their proposals are submitted to the unanimous consent of the states, they can never le charged with exceeding the bounds of their trust. Such a consent is the basis and sanction of the confederation, which expressly, in the 13th article, empowers Congress to agree to and propose such additional provision.
The remarks hitherto made, have had reference principally to the fixture prosecution of the war. There still remains an interesting light in which the subject ought to be viewed.
The United States have already contracted a debt in Europe, and in this country, for which their faith is pledged. The capital of this debt can only be discharged by degrees; but a fund for this purpose, and for paying the interest annually, on every principle of policy and justice, ought to be provided. The omission will be the deepest ingratitude and cruelty to a large number of meritorious individuals, who in the most critical periods of the war, have adventured their fortunes in support of our independence. It would stamp the national character with indelible disgrace.
An annual provision for the purpose will be too precarious. If its continuance and application were certain, it would not afford complete relief. With many, the regular payment of interest, by occasional grants, would suffice; but with many more it would not. These want the use of the principal itself, and they have a right to it; but since it is not in our power to pay off the principal, the next expedient is to fund the debt and render the evidences of it negotiable.
Besides the advantages to individuals from this arrangement, the active stock of the nation would be increased by the whole amount of the domestic debt, and of course the abilities of the community to contribute to the public wants; the national credit would revive and stand hereafter on a secure basis.
This was another object of the proposed duty.
If it be conceded that a similar fund is necessary, it can hardly be disputed that the one recommended is the most eligible. It has been already shown that it affects all parts of the community in proportion to their consumption, and has therefore the best pretensions to equality. It is the most agreeable tax to the people that can be imposed, because it is paid insensibly and seems to be voluntary.
It may perhaps be imagined that it is unfavourable to commerce, but the contrary can easily be demonstrated. It has been seen that it does not diminish the profit of the merchant, and of course can be no diminution of his inducements to trade. It is too moderate in its amount to discourage the consumption of imported goods, and cannot on that account abridge the extent of importations. If it even had this effect, it would be an advantage to commerce, by lessening the proportion of our imports to our exports, and inclining the balance in favour of this country.
The principal thing to be consulted for the advancement of commerce, is to promote exports. All impediments to thesc, cither by way of prohibition or by increasing the prices of mative commodities, decreasing by that means their sale and consumption at foreign markets, are injurious. Duties on exports have this operation. For the same reason, taxes on possessions and the articles of our own growth or manufacture, whether in the form of a land tax, excise or any other, are more butful to trade than impost duties. The tendency of all such taxes is to increase the prices of those articles which are the objects of exportation, and to enable others to undersell us abroad. The farmer, if he pays a heavy land tax, must endeavour to get more for the products of his farm: the mechanic and labourer, if they find the necessaries of life grow dearer by an excise, must endeavour to exact higher wages: and these causes will produce an increase of prices within, and operate against foreign commerce.
It is not, however, to be inferred that the whole revenue ought to be drawn from imports: all extremes are to be rejected. The chief thing to be attended to is, that the weight of the taxes fall not too heavily in the first instance upon particular parts of the community. A judicious distribution to all kinds of taxable property, is a first principle in taxation. The tendency of these observations is only to shew, that taxes on possessions, on articles of our own growth and manufacture, are more prejudicial to trade than duties on imports.
The observations which conclude the letter on which these remarks are made, naturally lead to reflections that deserve the serious attention of every member of the union. There is a happy mean between too much confidence and excessive jealousy, in which the health and prosperity of a state consist. Either extreme is a dangerous vice; the first is a temptation to men in power to arrogate more than they have a right to : the latter enervates govern. ment, prevents system in the administration, defeats the most salutary measures, breeds confusion in the state, disgusts and discontents among the people, and may eventually prove as fatal to liberty as the opposite temper.
It is certainly pernicious to leave any government in a situation of responsibility dispropor. tioned to its power.
The conduct of the war is intrusted to Congress, and the public expectation turned upon them without any competent means at their command to satisfy the important trust. After the most full and solemn deliberation, under a collective view of all the public difficulties, they recommend a measure which appears to them the corner stone of the public safety : they see this measure suspended for near two years ; partially complied with by some of the states, rejected by one of them, and in danger on that account to be frustrated; the public embar. rassments every day increasing, the dissatisfaction of the army growing more serious, the other creditors of the public clamouring for justice; both irritated by the delay of measures for their present relief or future security, the hopes of our enemies encouraged to protract the war, the zeal of our friends depressed by an appearance of remissness and want of exertion on our part, Congress harrassed, the national character suffering, and the national safety at the mer. cy of events."
This state of things cannot but be extremely painful to Congress, and appear to your com mittee to make it their duty to be urgent to obviate the evils with which it is pregnant,” Resolved, That Congress agree to the said report.
PAPER, No. III. An estimate of the produce of the impost on imported articles : Before the war the exports from Great-Britain to America were estimated at three and a half millions sterling, in which was included tea; but there were importations from Ireland and Scotland, as well as from Holland, not included in that estimate. It is now thought best, to estimate the imports of all goods from Europe, exclusive of tea, brandy and wine, at €3,500,000 sterling, at 4s. 6d. per dollar, is 15,555,554 dollars impost of five per cent. ad valorem,
777,773 On 2,000,000 gallons rum and other spirits, 3-90ths per gallon,
66,666 60-90 100,000 ditto Madeira wine, 12-90
13,333 30-90 600,000 ditto other wine,
40,000 300,000 lb. bohea tea,
46,666 200,000 lb.coffee and cocoa,
2,222 2,000,000 gallons molasses,
Deduct for collection, about 8 per cent.
Net revenue upon this estimate,
915,956 There are no precise data from which this computation could be made with any degree of certainty. The number of inhabitants has governed in part, and the imports of particular articles into the port of Philadelphia have been attended to.
The exactitude of the computation is of the less consequence, as the act of the 16th December, 1782, provides, that if the revenue shall at any time exceed the annual interest, the residue
shall form a sinking fund for the discharge of the principal; and if it shall be found insufficient, the states will be called upon to enlarge their grants of revenue.
PAPER No. IV. Extract of a letter from the hon. B, Franklin to the superintendent of finance, dated 230 December,
1782, and a letter of 15th of March, 1783, to the same, from the hon, the minister plenipotentiary of France, as follow :
Passy, December 23, 1782. “Friday last order was given to furnish me with 600,000 livres immediately, and I was answered by M. de Vergennes, “ that the rest of the 6,000,000 should be paid us quarterly in the course of the year 1783.”
"I pressed hard for the whole sum demanded, but was told “it was impossible."
“Our people certainly ought to do more for themselves. It is absurd the pretending to be lovers of liberty while they grudge paying for the defence of it. It is said here, that an impost of five per cent. on all goods imported, though a most reasonable proposition, had not been agreed to by all the states, and was therefore frustrated ; and that your newspapers acquaint the world with this, with the non-payment of taxes by the people, and with the non-payment of interest to the creditors of the public.
" The knowledge of these things have hurt our credit and the loan in Holland, and would prevent our getting any thing here but from government. The foundation for credit abroad should be laid at home; and certain funds should be prepared and established beforehand, for the regular payment at least of the interest.”
PHILADELPHIA, March 15, 1783. SIR, I have the satisfaction to inform you that his majesty procures for the United States a loan of 6,000,000, to be employed in the war department during the course of the current year. While I announce to you this new mark of the king's friendship for the United States, I must go into some details which relate to your operations, and which will inform you of the motives which have induced his majesty to make a new effort in favor of his allies.
During the last year, sir, I rendered an account to his majesty's ministers of the order which appeared to me to be introduced into your department, of the re-establishment of public credit, and of the economy which accompanied your operations. I added, that I considered the establishment of a general revenue for paying the interest and gradual redemption of the principal of the public debt, as extremely probable. The delays and difficulties of communication would not permit me to wait until that operation was completed by the different legislatures, before I declared the wants of the United States; and therefore I undertook to write to the count de Vergennes, that the disposition of the people to fulfil the engagements taken and to be taken by Congress, seemed to me sufficiently favorable to determine his majesty to lend for the year, new succour to the United States if the situation of his finances would permit. These assurances obtained the loan of 6,000,000; but the event has proved that I was deceived in the hopes which I thought myself enabled to give my court; and the affairs of your finances, far from being bettered since the month of September, the period at which my letters on this subject were written, have on the contrary gone backward ; so that I perceive no certainty of the reimburse'ment of the sums formerly lent, or of those which now are so. Thus, sir, my hasty assurances have induced his majesty to make that advance, and in the moment when I am informed of it, I ann under the disagreeable necessity of informing his minister that the hopes I had given are vanished, and that my assurances were without foundation. I will say nothing of the personal embarrassment which I am reduced to by these circumstances; but I will take the liberty to observe, that the best remedy in the present conjuncture is, to take as soon as possible those measures which were not taken when I announced them.
The count de Vergennes informs me, sir, that the 6,000,000 are lent to the United States in the same manner and under the same conditions with the sum which was lent last year. That is to say, that it shall be paid monthly, at the rate of 500,000 livres per month. But as it appears from what you did me the honor to write on a former occasion, that you had anticipated a part of this subsidy, I must pray you to consider, that the first months of this year will have been employed in payment of those anticipations, and that it will be proper so to combine your drafts, as that they shall not be presented but at the monthly periods in which the funds are to be provided.
I have had the honor to inform you, sir, that this money is lent to the United States to enable them to carry on the war. The wisdom of Congress will determine according to circumstances, on the manner of effecting that important object, and of compelling the enemy by joint efforts to conclude a solid and permanent peace.
It remains for me to inform you, sir, that the king was unable to make this last effort without extreme difficulty. I have had the honor to communicate those which oppose considerable loans. They are so great, that I am commanded to inform you, in the most positive terms, that it will be impossible for the king, in any case whatever, to obtain new advances for Congress for the next year. As to the resources which you may seek elsewhere than in France, the details contained in those letters which I had the honor to read to you, will not permit a hope of success until the United States shall have established a permanent public revenue; and the delay and mpugnancy with which they proceed in that business being known in Europe, the disposition to lend money to Congress ceases. Lenders place their money elsewhere : those speculations which would have been directed towards the United States take a different turn, and it will be extremely difficult to bring them back.
I abstain from repeating here the other parts of the count de Vergennes's despatches, which I had the honor to communicate, because the truths they contain are well known to you, and because they may all be reduced to this single position, that without a speedy establishment of solid general revenue, and an exact performance of the engagements which Congress have made, you must renounce the expectation of loans in Europe.
I am ordered also, sir, to inform Congress, that my court expect they will have taken final and satisfactory measures to secure payment of the interest of the debt contracted with his majesty by the United States; but I content myself with communicating this circumstance to you, and before announcing it directly to Congress, I will wait till their present embarrassments shall be diminished.
From these details, sir, you will be able to judge of the impossibility of negotiating bills upon your plenipotentiaries beyond the funds which remain free from the 6,000,000 lent this year. It is very clear, that such bills will not be paid by us; and it is from perfect confidence in your regularity upon that subject, that I shall assure the count de Vergennes, he may be certain no demand will be made on him beyond the sums already granted. I have the honor to be, &c.
PAPER No. V. The contract between his most Christian majesty and the United States of America, entered into by the count de Vergennes and Mr. Franklin the 16th of July, 1782, and ratified by Congress the 22d day of January, 1783.
The king having been pleased to attend to the requests made to him in the name, and on behalf of the United Provinces of North America, for assistance in the war and invasion under which they had for several years groaned; and his majesty, after entering into a treaty of amity and commerce with the said confederated provinces, on the 6th of February, 1778, having had the goodness to support them, not only with his forces by land and sea, but also with advances of money, as abundant as they were effectual, in the critical situation to which their affairs were reduced. It has been judged proper and necessary to state exactly the amount of those advances, the conditions on which the king made them, the periods at which the Congress of the United States have engaged to re-pay them to his majesty's royal treasury, and in fine, to state this matter in such a way as for the future to prevent all difficulties capable of interrupting the good harmony which his majesty is resolved to maintain and preserve between him and the said United States. For executing so laudable a purpose, and with a view to strengthen the bands of amity and commerce which subsist between his majesty and the said United States : Fe, Charles Gravier de Vergennes, &c. counsellor of the king in all his councils, commander of his orders, minister and secretary of state, and of his commands and finances, vested with full powers of his majesty to us given for this purpose: and we, Benjamin Franklin, minister plenipotentiary of the United States of North-America, in like manner vested with full powers of the Congress of the said states for the present purpose; after duly communicating our respective powers, have agreed to the following articles:
ARTICLE I. It is agreed and certified, that the sums advanced by his majesty to the Congress of the United States, under the title of a loan in the years 1778, 1779, 1780, 1781, and the present, 1782, amount to the sum of 18,000,000 of livres, money of France, according to the following 21 receipts of the above-mentioned under written minister of Congress, given in virta- of his full powers, to wit: 1 28 February, 1778, 750,000 . [1327 November, ditto 1,000,000 2 19 May, ditto, 750,000
-4,000,000 3 3 August, ditto, 750,000
14 15 February, 1781, 750,000 4 November, ditto, 750,000
15 15 May, ditto, 750,000 -3,000,000 16 15 August,
750,000 5 10 June, 1779, 250,000 J17 1 August, ditto, 1,000,000 6 16 September, ditto, 250,000
118 15 November, ditto, 750,000 7 4 October, ditto, 250,000
4,000,000 8 21 December, ditto, 250,000 119 10 April, 1782, 1,500,000
- -1,000,000 20 1 July, ditto 1,500,000 9 29 February, 1780, 750,000 121 5 of the same month, 3,000,000 10 23 May, ditto, 750,000
-6,000,000 11 21 June, ditto, 750,000
Amounting in the whole 12 5 October, ditto, 750,000 Ito 18,000,000, viz.
18,000,000 By which receipts the said minister has promised in the name of Congress, and in behalf of the thirteen United States, to cause to be paid and reimbursed to the royal treasury of his majesty, on the 1st of January, 1788, at the house of his grand banker at Paris, the said sum of 18,000,000 millions, money of France, with interest at five per cent per annum.