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A Century of Lawmaking for a New Nation: U.S. Congressional Documents and Debates, 1774-1875
Journals of the Continental Congress --MONDAY, DECEMBER 16, 1782
On motion of Mr. [Richard] Peters, seconded by Mr. [Thomas] McKean,
Resolved, That the honorable the executive of the State of Delaware be, and hereby are requested to give the necessary directions for providing quarters for the troops of his Most Christian Majesty, serving with the army of the United States, now on their march for Wilmington.
The committee, consisting of Mr. [Alexander] Hamilton, Mr. [James] Madison and Mr. [Thomas] Fitzsimmons, to whom was referred the letter, of 30 November, from the honble William Bradford, Speaker of the lower house of Assembly of the State of Rhode Island, containing under three heads the reasons of that State for refusing their compliance with the recommendation of Congress for a duty on imports and prize goods, report,
That they flatter themselves the State, on a reconsideration of the objections they have offered, with a candid attention to the arguments which stand in opposition to them,
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will be induced to retract their dissent, convinced that the measure is supported on the most solid grounds of equal justice, policy and general utility. The following observations, contrasted with each head of the objections successively will furnish a satisfactory answer to the whole.
First Objection, "That the proposed duty would be unequal in its operation, bearing hardest upon the most commercial states and so would press peculiarly hard upon that State, which draws its chief support from commerce"
The most common experience joined to the concurrent opinions of the ablest commercial and political observers have established beyond controversy this general principle, "that every duty on imports is incorporated with the price of the commodity, and ultimately paid by the consumer with a profit on the duty itself as a compensation to the merchant for the advance of his money."
The merchant considers the duty demanded by the State on the imported article in the same light with freight or any similar charge and adding it to the original cost calculates his profit on the aggregate sum. It may happen that at particular conjunctures where the markets are overstocked and there is a competition among the sellers, this may not be practicable; but in the general course of trade the demand for consumption preponderates and the merchant can with ease indemnify himself and even obtain a profit on the advance. As a consumer he pays his share of the duty, but it is no further a burthen upon him. The consequence of the principle laid down is, that every class of the community bears its share of the duty in proportion to its consumption, which last is regulated by the comparative wealth of the respective classes in conjunction with their habits of expence or frugality. The rich and luxurious pay in proportion to their riches and luxury, the poor and parsimonious in proportion to their poverty and parsimony. A chief excellence of this mode of revenue is that it preserves a just measure to
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the abilities of individuals, promotes frugality and taxes extravagance. The same reasoning in our situation applies to the intercourse between two states. If one imports and the other does not, the latter must be supplied by the former. The duty being transferred to the price of the commodity is no more a charge on the importing State for what is consumed in the other, than it is a charge on the merchant for what is consumed by the farmer or artificer. Either State will only feel the burthen in a ratio to its consumption, and this will be in a ratio to its population and wealth. What happens between the different classes of the same community internally happens between the two states; and as the merchant in the first case so far from losing the duty himself has a profit on the money he advances for that purpose, so the importing State which in the second case is the merchant with respect to the other is not only reimbursed by the non-importing State but has a like benefit on the duty advanced. It is therefore the reverse of a just position that the duty proposed will bear hardest on the most commercial states. It will, if anything, have a contrary effect, though not in a sufficient degree to justify an objection on the part of the non-importing states. For it is as reasonable they should allow an advance on the duty paid as on the first cost, freight or any incidental charge. They have also other advantages in the measure fully equivalent to this disadvantage. Overnice and minute calculations in matters of this nature are inconsistent with national measures and in the imperfect state of human affairs would stagnate all the operations of government. Absolute equality is not to be attained: To aim at it is pursuing a shadow at the expence of the substance and in the event we should find ourselves wider of the mark, than if in the first instance we were content to approach it with moderation.1
[Note 1: 1 From this point the entries in the Journal are by George Bond.]
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Second Objection, "That the recommendation proposes to introduce into that and the other states, Officers unknown and unaccountable to them, and so is against the constitution of the State."
It is not to be presumed that the constitution of any State could mean to define and fix the precise numbers and descriptions of all Officers to be permitted in the State, excluding the creation of any new ones, whatever might be the necessity derived from that variety of circumstances incident to all political institutions. The legislature must always have a discretionary power of appointing Officers, not expressly known to the constitution, and this power will include that of authorising the Federal Government to make the appointments in cases where the general welfare may require it. The denial of this would prove too much; to wit, that the power given by the Confederation to Congress to appoint all Officers in the Post Office, was illegal and unconstitutional.
The doctrine advanced by Rhode Island would perhaps prove also that the Federal Government 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
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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 defined 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 whose existence as a nation is a problem still to be solved by the sword who have so recent 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?
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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 indispensible we should endeavour to remove them 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.
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First, the fund proposed is sufficiently 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.
Independent of other provisions for discharging the public debt the revenue from this duty in the future progress of our trade will afford a surplus beyond the appropriations for interest, which from the express condition of the grant must be applied as a sinking fund to pay off the principal, and by which the supposition of perpetuity is destroyed.
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 encrease 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 said 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 provision of the Confederation (without which it would be an empty form) comprehends in it the principle in its fullest latitude which the
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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 practiced, 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
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are submitted to the unanimous consent of the states, they can never be 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 future 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 advantage to individuals from this arrangement, the active stock of the nation would be encreased 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
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eligible. It has been already shewn 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 unfavorable 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 favor of this country.1
[Note 1: 1 In the original report, by mistake, it reads "exports to our imports."]
The principal thing to be consulted for the advancement of commerce is to promote exports. All impediments to these either by way of prohibition or by encreasing the prices of native 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 hurtful to trade than import duties. The tendency of all such taxes is to encrease 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 encrease of prices within and operate against foreign commerce.
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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 show 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 government, prevents system in the administration, defeats the most salutary measures, breeds confusion in the State and 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 disproportioned to its power.
The conduct of the war is entrusted 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 cornerstone 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 embarrassments every day encreasing, the dissatisfaction of the army growing more serious, the other creditors
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of the public clamoring 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 harassed, the national character suffering and the national safety at the mercy of events.
This state of things cannot but be extremely painful to Congress and appear to your committee 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.
Your Committee observing that the apprehension of perpetuity in the duration of the fund recommended has great share in the opposition with which it meets, take the liberty to propose the following resolutions as tending effectually to remove all apprehension on that head.
Whereas it is essential to justice and to the preservation of public credit, that whenever a nation is obliged by the exigencies of public affairs to contract a debt, proper funds should be established, not only for paying the annual value or interest of the same, but for discharging the principal within a reasonable period, by which a nation may avoid the evils of an excessive accumulation of debt; therefore,
Resolved, That whenever the neat produce of any funds recommended by Congress and granted by the states, for funding the debt already contracted, or for procuring future loans for the support of the war, shall exceed the sum requisite for paying the interest of the whole amount of the national debt, which these states may owe at the termination of the present war, the surplus of such grants shall form a sinking fund, to be inviolably appropriated to the payment of the principal of the said debt, and shall on no account be diverted to any other purpose.
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[And in order that the several states may have proper information of the state of their finances, it is further
Resolved, That as soon as the public debt can be liquidated, each State be annually furnished with the amount thereof and the interest thereon, and also of the proceeds and disposition of the funds provided for the redemption thereof.]
Resolved, That the faith of the United States be pledged for the observance of the foregoing resolution; and that if any State shall think it necessary to make it a condition of their grants, the same will be agreeable to Congress considered by Congress as consistent with their resolution of the 3d of February, 1781.1
[Note 1: 1 This report is in the writing of Alexander Hamilton, except the part in brackets, which is in the writing of Thomas Fitzsimmons. It is in the Papers of the Continental Congress, No. 20, I, folios 213--229.
At this point Charles Thomson resumes the entries in the Journal.]
Office of Finance, 12th Decembr 1782.
Sir,
On the seventh of January last, Congress were pleased to resolve that it be an Instruction to the Superintendant of Finance to prepare and report to Congress a Table of Rates at which the different species of foreign coins most likely to circulate within the United States shall be received at the Treasury thereof. In Consequence of this Resolution I took the liberty to recommend the establishment of a mint which was agreed to. I have take many steps to carry that Resolution into effect, and hoped by this time to have laid a satisfactory state of it before Congress. Delays, the Causes of which need not be enumerated, have hitherto procrastinated the matter beyond my expectations, but there are many reasons why an immediate regulation of foreign coins should now be made. It is not the least among them that all our dollars are rapidly going to the enemy in exchange for light gold, which must eventually cause a considerable loss, and a scarcity of silver which will be severely felt. I take the liberty therefore to suggest the following Act.
Whereas by the Articles of Confederation and perpetual union the United States in Congress assembled are vested with the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority or by that of the respective States; And whereas the several requisitions on the States and the public
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accounts of these United States are made and kept in dollars; And whereas it is of Importance that until money be coined by authority of the United States some fixed proportion be established between the different foreign coins most likely to circulate: Be it therefore ordained by the United States in Congress assembled, and it is ordained by authority of the same that from and after the first day of January in the year of our Lord one thousand seven hundred and eighty three, English silver coin be received at the rate of one Dollar and sixteen Ninetieths of a dollar by the ounce, Dutch silver coin at the rate of one dollar and fifteen ninetieths by the ounce, French silver coin at the rate of one dollar and fourteen ninetieths by the ounce, Portuguese silver coin at the rate of one dollar and thirteen ninetieths by the ounce, English, Spanish and Portuguese gold coin at the rate of seventeen dollars by the ounce, and French gold coin at the rate of sixteen dollars and sixty eight ninetieths by the ounce.
I take the liberty to observe, Sir, that this estimation of coins is founded upon the quantity of alloy which they respectively contain, the weight of each particular piece current among us is so indeterminate that the value by tale cannot be fixed; but whenever the rates at which they go as bullion are known a table may be formed in each State for the tale according to the customary weights which prevail.1
[Note 1: 1 This report is in the Papers of the Continental Congress, No. 137, II, folio 91. Committee Book No. 186 shows that it was referred, on December 16, to Mr. [Thomas] Fitzsimmons Mr. [Samuel] Osgood and Mr. [Samuel] Wharton. On December 19, Osgood was dropped from the committee and Mr. [John] Rutledge, Mr. [Alexander] Hamilton and Mr. [Nathaniel] Gorham added. On April 23, 1783, the committee was "discharged and the business referred to a committee of five on a letter of this day from the Superintendent of Finance." A copy of the report is on folio 95.
On this day, according to the indorsement, a letter of the same date, from George Bond was read and referred to Mr. [Daniel] Carroll, Mr. [Hugh] Williamson, Mr. [Samuel] Wharton. It is in No. 78, IV, folio 361.]
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