Generated summaryHamilton argues that union directly strengthens the nation's finances: it grows the commerce that taxes draw on, lets one government police smuggling along a single coastline instead of many open borders, and costs less to run than several rival confederacies would.
Federalist 12
Generated summaryCommerce must be our chief source of revenue, since direct taxes can raise little here. Only one government over all the states can collect import duties well; separate states would lose the revenue to contraband.Key points
Union promotes national revenue, above all by making commerce flourish and enlarging the money a state can tax.
Import duties, not direct taxes or excises, must be America’s chief revenue; the people will not bear more.
Union widens the revenue drawn from commerce and simplifies collection, making the same duties more productive.
One national government leaves only the Atlantic coast to guard; disunion opens easy inland smuggling that even France’s twenty thousand patrols cannot stop.
One government could treble import duties (barely three percent now, against fifteen in France), with ardent spirits alone yielding much.
A nation without revenue sinks into a province; disunion would throw the whole burden oppressively onto the land.
Having shown union’s effect on commerce, I turn to revenue. Enlightened statesmen now see thriving commerce as the most useful and productive source of national wealth. Experience has settled the old quarrel between agriculture and commerce: their interests are blended. In country after country land has risen in value as commerce flourished. How could it be otherwise? Whatever opens a freer market for the earth’s products and increases a state’s money must raise the value of land itself.
OriginalTHE 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.
A country’s ability to pay taxes follows the money in circulation and how fast it moves. Commerce serves both, easing payment and filling the treasury. The Emperor of Germany holds fertile lands and Europe’s best mines, yet for want of commerce his revenues are slender. He cannot sustain a long war on his own resources. Union serves the revenue in more immediate ways. Our habits and experience show that direct taxation cannot raise great sums here. Popular government rules mildly, and a languid trade leaves money scarce; every attempt has failed and taught the legislatures its folly.
OriginalThe 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.
Even in Britain, where wealth makes direct taxes more tolerable, far the greatest part of revenue comes from imposts and excises. In America we must long depend chiefly on import duties. Excises must stay narrow: the people will not bear their prying spirit. Taxes on houses and lands yield only scanty supplies. Personal property is too invisible to reach except by taxes on consumption. Whatever best extends this resource best suits our welfare, and beyond serious doubt that is a general union. Union extends the revenue from commerce. Simpler collection makes the same duties more productive, and lets the government raise them without injuring trade.
OriginalNo 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 imperceptible 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.
Our rivers, bays, and common language and habits would make illicit trade between the states easy. Each state’s regulations would be evaded constantly, and mutual jealousy would force the separate states or confederacies to keep duties low. Nor would our governments long permit the rigorous precautions by which Europe guards its borders. France keeps above twenty thousand patrols against contraband dealers, by Mr. Neckar’s count. That shows how hard such traffic is to stop where states share inland routes. Disunion would lay that burden on our collections.
OriginalThe relative situation of these States; the number of rivers with which they are intersected, and of bays that wash their 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.
Under one government, the main part of our commerce has but one side to guard: the Atlantic coast. Vessels from abroad with rich cargoes would rarely risk unloading before port. A few armed vessels at our ports would serve cheaply as sentinels of the laws. Union also preserves an advantage nature gives us. We lie far from Europe, a prodigious security against direct contraband. But a circuitous contraband into one state through a neighbor, in small parcels, would be easy and safe.
OriginalIf, 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.
One national government could extend import duties far beyond the separate states, at much less expense. These duties, I believe, have nowhere averaged above three percent, against about fifteen in France and more in Britain. Nothing seems to hinder at least trebling them here. Ardent spirits alone, under federal regulation, could furnish a considerable revenue. Imports may be estimated at four million gallons, which at a shilling a gallon would yield two hundred thousand pounds. If the duty lessened consumption, so much the better for agriculture, economy, morals, and health.
OriginalIt 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. 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 if we cannot draw fully on this resource? A nation cannot long exist without revenue; lacking it, it must resign its independence and sink to the degraded condition of a province. Revenue must therefore be had at all events. If it is not drawn chiefly from commerce, it must fall with oppressive weight upon land. The whole burden would rest on the men who cultivate the soil, while the treasury stayed too empty for our security. Public and private distress would keep pace in gloomy concert, deploring the counsels that led to disunion.
OriginalWhat 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
Federalist 13
Generated summaryOne national government costs less than the two or three rival confederacies disunion would produce. Each piece would still need a full government of its own, plus officers to guard the inland routes against smuggling.Key points
Union is more economical than disunion: one government funds a single civil list, not several nearly as costly.
Whoever imagines dismemberment pictures three confederacies, each larger than Britain and needing a government no less full than the convention’s plan.
More likely, disunion would leave two leagues, Northern and Southern, with Pennsylvania a frontier risking becoming the Flanders of America.
Thirteen states support a national government better, and more cheaply, than any lesser number could.
Disunion multiplies civil lists, border officers, and armies, injuring economy as much as commerce, revenue, and liberty.
With revenue we should weigh economy: money saved on one object serves another, and less is drawn from the people. One government needs one civil list. Several confederacies need as many, each with departments as large as a government of the whole. A full split into thirteen sovereignties is too dangerous to win many advocates. Those who imagine disunion mostly picture three confederacies: the four Northern states, the four Middle, the five Southern. Each would cover more land than Great Britain. None could be run well by a government less comprehensive than the convention proposes.
OriginalAs CONNECTED with the subject of revenue, we may with propriety consider that of economy. The money saved from one object may be usefully applied to another, and there will be so much the less to be drawn from the pockets of the people. If the States are united under one government, there will be but one national civil list to support; if they are divided into several confederacies, there will be as many different national civil lists to be provided for--and each of them, as to the principal departments, coextensive with that which would be necessary for a government of the whole. The entire separation of the States into thirteen unconnected sovereignties is a project too extravagant and too replete with danger to have many advocates. The ideas of men who speculate upon the dismemberment of the empire seem generally turned toward three confederacies--one consisting of the four Northern, another of the four Middle, and a third of the five Southern States. There is little probability that there would be a greater number. According to this distribution, each confederacy would comprise an extent of territory larger than that of the kingdom of Great Britain. No well-informed man will suppose that the affairs of such a confederacy can be properly regulated by a government less comprehensive in its organs or institutions than that which has been proposed by the convention. When the dimensions of a State attain to a certain magnitude, it requires the same energy of government and the same forms of administration which are requisite in one of much greater extent. This idea admits not of precise demonstration, because there is no rule by which we can measure the momentum of civil power necessary to the government of any given number of individuals; but when we consider that the island of Britain, nearly commensurate with each of the supposed confederacies, contains about eight millions of people, and when we reflect upon the degree of authority required to direct the passions of so large a society to the public good, we shall see no reason to doubt that the like portion of power would be sufficient to perform the same task in a society far more numerous. Civil power, properly organized and exerted, is capable of diffusing its force to a very great extent; and can, in a manner, reproduce itself in every part of a great empire by a judicious arrangement of subordinate institutions.
The point holds more strongly if we suppose, as is likelier, that disunion leaves two confederacies, not three. Geography, trade, and the habits and prejudices of the states point that way. The four Eastern states would surely unite. New York and New Jersey, too exposed or too small to stand as frontiers against them, would join. Even Pennsylvania has strong reason to join, since foreign trade in her own ships is her true policy. Yet the more Southern states may care little for shipping, and she, a frontier either way, may prefer facing the weaker Southern power. If the Northern confederacy includes New Jersey, only one lies to its south.
OriginalThe supposition that each confederacy into which the States would be likely to be divided would require a government not less comprehensive than the one proposed, will be strengthened by another supposition, more probable than that which presents us with three confederacies as the alternative to a general Union. If we attend carefully to geographical and commercial considerations, in conjunction with the habits and prejudices of the different States, we shall be led to conclude that in case of disunion they will most naturally league themselves under two governments. The four Eastern States, from all the causes that form the links of national sympathy and connection, may with certainty be expected to unite. New York, situated as she is, would never be unwise enough to oppose a feeble and unsupported flank to the weight of that confederacy. There are other obvious reasons that would facilitate her accession to it. New Jersey is too small a State to think of being a frontier, in opposition to this still more powerful combination; nor do there appear to be any obstacles to her admission into it. Even Pennsylvania would have strong inducements to join the Northern league. An active foreign commerce, on the basis of her own navigation, is her true policy, and coincides with the opinions and dispositions of her citizens. The more Southern States, from various circumstances, may not think themselves much interested in the encouragement of navigation. They may prefer a system which would give unlimited scope to all nations to be the carriers as well as the purchasers of their commodities. Pennsylvania may not choose to confound her interests in a connection so adverse to her policy. As she must at all events be a frontier, she may deem it most consistent with her safety to have her exposed side turned towards the weaker power of the Southern, rather than towards the stronger power of the Northern, Confederacy. This would give her the fairest chance to avoid being the Flanders of America. Whatever may be the determination of Pennsylvania, if the Northern Confederacy includes New Jersey, there is no likelihood of more than one confederacy to the south of that State.
Thirteen states can support a national government better than one half, one third, or any lesser number. That answers the objection of expense, which stands on mistaken ground. Disunion means more civil lists, and officers to guard the inland routes against smuggling. It also brings the military establishments that, as I have shown, follow from the jealousies of separate nations. Separation would injure economy no less than the tranquility, commerce, revenue, and liberty of every part.
OriginalNothing can be more evident than that the thirteen States will be able to support a national government better than one half, or one third, or any number less than the whole. This reflection must have great weight in obviating that objection to the proposed plan, which is founded on the principle of expense; an objection, however, which, when we come to take a nearer view of it, will appear in every light to stand on mistaken ground. If, in addition to the consideration of a plurality of civil lists, we take into view the number of persons who must necessarily be employed to guard the inland communication between the different confederacies against illicit trade, and who in time will infallibly spring up out of the necessities of revenue; and if we also take into view the military establishments which it has been shown would unavoidably result from the jealousies and conflicts of the several nations into which the States would be divided, we shall clearly discover that a separation would be not less injurious to the economy, than to the tranquillity, commerce, revenue, and liberty of every part. PUBLIUS
