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 is the main source of tax revenue, since Americans can pay little in direct taxes, and only a unified government can collect import duties efficiently, since separate states would leak revenue through smuggling across their shared borders.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.
We have traced the effects of union upon the commercial prosperity of the states fully enough. I turn now to its tendency to promote the interests of revenue.
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.
Enlightened statesmen everywhere now perceive that a flourishing commerce is the most useful and the most productive source of national wealth, and they have made it a primary object of their political care. By multiplying the means of gratification, and by circulating gold and silver, those darling objects of human avarice and enterprise, commerce quickens every channel of industry and makes it flow with greater activity. The merchant, the farmer, the mechanic, and the manufacturer all look to it with eager expectation as the reward of their labors. Experience has settled the old quarrel between agriculture and commerce and silenced their rivalry: their interests are intimately blended and interwoven.
In country after country, land has risen in value in proportion as commerce has flourished; and how could it be otherwise? Whatever opens a freer market for the products of the earth, gives new incentives to cultivate the land, and increases the quantity of money in a state must raise the value of the land itself. It is astonishing that so simple a truth ever had an adversary; only an ill-informed jealousy, or too much abstraction and refinement, leads men away from the plainest conclusions of reason.
OriginalThe 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 must always be proportioned to the quantity of money in circulation and to the speed with which it circulates. Commerce serves both objects; it makes taxes easier to pay and keeps the treasury supplied. The Emperor of Germany’s hereditary dominions hold wide stretches of fertile, cultivated, populous territory, and some of the best gold and silver mines in Europe. Yet for want of commerce, that monarch can boast only slender revenues. He has several times had to borrow from other nations to preserve his essential interests, and cannot sustain a long war on his own resources.
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.
Union will also serve the revenue in more immediate and decisive ways. The condition of the country, the habits of the people, and our own experience make it plain that no great sums can be raised here by direct taxation. Tax laws have been multiplied in vain; new methods of collection have been tried in vain; public expectation has been uniformly disappointed, and the treasuries of the states remain empty. The mild administration natural to popular government, joined with the scarcity of money that follows a languid trade, has defeated every attempt at extensive collection and taught the legislatures the folly of the effort.
OriginalBut 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 one acquainted with other countries will be surprised at this. In a nation as wealthy as Britain, where direct taxes are more tolerable and more practicable than here, far the greatest part of national revenue comes from indirect taxes, from imposts and from excises. In America we must plainly depend on import duties as our chief means of revenue for a long time. Excises must stay within a narrow compass, for the genius of the people will not bear the inquisitive and peremptory spirit of excise laws. The farmers will yield only scanty supplies through unwelcome taxes on their houses and lands, and personal property is too precarious and invisible a fund to reach except through taxes on consumption.
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, whatever best enables us to improve and extend so valuable a resource is best suited to our political welfare; and that, beyond serious doubt, is a general union. So far as union serves the interests of commerce, it extends the revenue to be drawn from that source. So far as it makes the collection of duties simpler and more effective, it makes the same rate of duties more productive and puts it in the government’s power to raise the rate without injury to trade.
OriginalIf 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 rivers that cut through these states, the bays that wash their shores, the ease of travel in every direction, and their common language, manners, and habits would all make illicit trade between them easy. Each state’s commercial regulations would be evaded constantly, and mutual jealousy would force the separate states or confederacies to remove the temptation by keeping duties low. Nor would the temper of our governments permit, for a long time to come, the rigorous precautions by which European nations guard their approaches by land and by water. Even there, those precautions fail against the stratagems of avarice.
France keeps an army of patrols to guard its fiscal regulations against the dealers in contraband; Mr. Neckar computes their number at upwards of twenty thousand. This shows the immense difficulty of stopping such traffic wherever there is inland communication, and the burden our duty collections would carry if disunion set the states toward one another as France stands toward her neighbors. And the arbitrary and vexatious powers with which such patrols must be armed would be intolerable in a free country.
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.
If one government pervades all the states, then for the principal part of our commerce there is only one side to guard: the Atlantic coast. Vessels arriving from abroad with valuable cargoes would rarely risk unloading before they reached port; they would dread the dangers of the coast and detection both before arrival and after it. Ordinary vigilance would prevent any material breach of the revenue laws, and a few armed vessels, judiciously stationed at the entrances of our ports, could serve at small expense as sentinels of the laws. And since the government would have the same interest everywhere, its measures in each state would reinforce one another.
Union also preserves an advantage nature holds out to us, one that separation would throw away. The United States lies far from Europe and from every other place it would trade with extensively. A crossing of a few hours or a single night, as between the coasts of France and Britain, is impracticable here; that is a prodigious security against direct foreign contraband. But a circuitous contraband into one state through a neighboring one, carried in small parcels as opportunity allowed and aided by inland communication, would be easy and safe, as any man of discernment can see.
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, at far less expense, well beyond anything the separate states or partial confederacies could manage. These duties have, I believe, averaged no more than three percent in any state; France collects about fifteen percent, and Britain more. Nothing seems to prevent raising them here to at least treble their present amount.
The single article of ardent spirits, under federal regulation, could furnish a considerable revenue. The whole quantity imported into the United States may be estimated at four million gallons, which at a shilling per gallon would yield two hundred thousand pounds. The article would bear that duty well; and if the duty reduced consumption, the effect would be equally favorable to the agriculture, the economy, the morals, and the health of society. Perhaps nothing is so great a subject of national extravagance as these spirits.
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 on this resource in its full extent? A nation cannot long exist without revenues; without that support it must resign its independence and sink into the degraded condition of a province, an extremity no government accepts by choice. Revenue must be had no matter what; if the principal part is not drawn from commerce here, the weight must fall oppressively upon land. Excises sit too poorly with the feelings of the people to be much used, and farming states offer few objects fit for excise. Personal property is too hard to trace to be reached except by taxes on consumption. In the cities it can be guessed at enough to oppress individuals without much gain to the state; elsewhere it escapes the tax-gatherer.
Since the necessities of the state must still be met, the failure of every other resource would throw the principal weight of public burdens on the owners of land. And since the government’s wants can never be met unless every source of revenue lies open to it, finances so embarrassed cannot uphold the community’s respectability or its security. We would not even have the consolation of a full treasury to atone for oppressing the valuable class of citizens who cultivate the soil. Public and private distress would keep pace with each other in gloomy concert, and unite in deploring the infatuation of 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 summaryA single national government costs less to run than the two or three rival confederacies disunion would likely produce, since each fragment would still need a full government of its own plus new officers to police smuggling between them.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.
Economy is closely connected with revenue: money saved on one object can serve another, leaving so much the less to be drawn from the pockets of the people. One government means one national civil list, a single establishment of officers, to support; several confederacies mean as many, each with principal departments as large as a government of the whole would need. A complete separation into thirteen unconnected sovereignties is too extravagant and too dangerous a project to attract many advocates.
Men who speculate about dismembering the union generally imagine three confederacies: the four Northern, the four Middle, and the five Southern states. A greater number is improbable, and each confederacy would cover more territory than Great Britain. No well-informed man will suppose such a confederacy could be properly regulated by a government less comprehensive than the one the convention proposes. Once a state reaches a certain size, it needs the same energy of government and the same forms of administration as one of much greater extent.
I cannot prove this with precision, because no rule measures how much civil power a given number of people requires. But the island of Britain, nearly the size of each supposed confederacy, contains about eight million people. Considering the authority needed to direct the passions of so large a society to the public good, we have no reason to doubt the same power would suffice for one far more numerous. Civil power, properly organized, can spread its force over a great extent and, through a wise arrangement of subordinate institutions, reproduce itself in every part of a great empire.
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 supposition that each confederacy would need a government as comprehensive as the one proposed gains strength from a second, still more probable supposition: that disunion would leave the states leagued under two governments. Geography and commerce, joined with the habits and prejudices of the different states, lead us naturally to that conclusion. The four Eastern states, bound by every tie of national sympathy and connection, would certainly unite. Given her position, New York would never be unwise enough to expose a feeble, unsupported flank to the weight of that confederacy. New Jersey is too small to stand as a frontier against so powerful a combination, and nothing bars her admission.
Even Pennsylvania would have strong inducements to join the Northern league: foreign commerce in her own ships is her true policy and suits her citizens’ dispositions. The more Southern states may care little about encouraging navigation; they may prefer leaving all nations free to carry and buy their commodities. Pennsylvania may not choose to tie her interests to a connection so adverse to her policy. She must be a frontier either way, and may think it safest to turn her exposed side toward the weaker Southern rather than the stronger Northern power. That is her fairest chance of not becoming the Flanders of America, a battlefield for stronger neighbors. Whatever she decides, if the Northern confederacy includes New Jersey, no more than one confederacy is likely to form south of that state.
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.
Nothing is more evident than that the thirteen states will support a national government better than one half, one third, or any number less than the whole. This weighs heavily against the objection that the proposed plan is expensive, an objection that stands, on a nearer view, on mistaken ground in every light. To the plurality of civil lists, add the officers who must guard the inland routes between confederacies against illicit trade, and who will inevitably multiply as the demands of revenue grow. Add the military establishments that, as I have shown, would follow from the jealousies and conflicts of the separate nations. Separation would then prove no less injurious to economy than to 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
