will be well to advert to the proportion between the objects that will
require a federal provision in respect to revenue, and those which will
require a State provision. We shall discover that the former are
altogether unlimited, and that the latter are circumscribed within very
moderate bounds. In pursuing this inquiry, we must bear in mind that we
are not to confine our view to the present period, but to look forward
to remote futurity. Constitutions of civil government are not to be
framed upon a calculation of existing exigencies, but upon a
combination of these with the probable exigencies of ages, according to
the natural and tried course of human affairs. Nothing, therefore, can
be more fallacious than to infer the extent of any power, proper to be
lodged in the national government, from an estimate of its immediate
necessities. There ought to be a CAPACITY to provide for future
contingencies as they may happen; and as these are illimitable in their
nature, it is impossible safely to limit that capacity. It is true,
perhaps, that a computation might be made with sufficient accuracy to
answer the purpose of the quantity of revenue requisite to discharge
the subsisting engagements of the Union, and to maintain those
establishments which, for some time to come, would suffice in time of
peace. But would it be wise, or would it not rather be the extreme of
folly, to stop at this point, and to leave the government intrusted
with the care of the national defense in a state of absolute incapacity
to provide for the protection of the community against future invasions
of the public peace, by foreign war or domestic convulsions? If, on the
contrary, we ought to exceed this point, where can we stop, short of an
indefinite power of providing for emergencies as they may arise? Though
it is easy to assert, in general terms, the possibility of forming a
rational judgment of a due provision against probable dangers, yet we
may safely challenge those who make the assertion to bring forward
their data, and may affirm that they would be found as vague and
uncertain as any that could be produced to establish the probable
duration of the world. Observations confined to the mere prospects of
internal attacks can deserve no weight; though even these will admit of
no satisfactory calculation: but if we mean to be a commercial people,
it must form a part of our policy to be able one day to defend that
commerce. The support of a navy and of naval wars would involve
contingencies that must baffle all the efforts of political arithmetic.
Admitting that we ought to try the novel and absurd experiment in
politics of tying up the hands of government from offensive war founded
upon reasons of state, yet certainly we ought not to disable it from
guarding the community against the ambition or enmity of other nations.
A cloud has been for some time hanging over the European world. If it
should break forth into a storm, who can insure us that in its progress
a part of its fury would not be spent upon us? No reasonable man would
hastily pronounce that we are entirely out of its reach. Or if the
combustible materials that now seem to be collecting should be
dissipated without coming to maturity, or if a flame should be kindled
without extending to us, what security can we have that our
tranquillity will long remain undisturbed from some other cause or from
some other quarter? Let us recollect that peace or war will not always
be left to our option; that however moderate or unambitious we may be,
we cannot count upon the moderation, or hope to extinguish the ambition
of others. Who could have imagined at the conclusion of the last war
that France and Britain, wearied and exhausted as they both were, would
so soon have looked with so hostile an aspect upon each other? To judge
from the history of mankind, we shall be compelled to conclude that the
fiery and destructive passions of war reign in the human breast with
much more powerful sway than the mild and beneficent sentiments of
peace; and that to model our political systems upon speculations of
lasting tranquillity, is to calculate on the weaker springs of the
human character.
What are the chief sources of expense in every government? What has
occasioned that enormous accumulation of debts with which several of
the European nations are oppressed? The answers plainly is, wars and
rebellions; the support of those institutions which are necessary to
guard the body politic against these two most mortal diseases of
society. The expenses arising from those institutions which are
relative to the mere domestic police of a state, to the support of its
legislative, executive, and judicial departments, with their different
appendages, and to the encouragement of agriculture and manufactures
(which will comprehend almost all the objects of state expenditure),
are insignificant in comparison with those which relate to the national
defense.
In the kingdom of Great Britain, where all the ostentatious apparatus
of monarchy is to be provided for, not above a fifteenth part of the
annual income of the nation is appropriated to the class of expenses
last mentioned; the other fourteen fifteenths are absorbed in the
payment of the interest of debts contracted for carrying on the wars in
which that country has been engaged, and in the maintenance of fleets
and armies. If, on the one hand, it should be observed that the
expenses incurred in the prosecution of the ambitious enterprises and
vainglorious pursuits of a monarchy are not a proper standard by which
to judge of those which might be necessary in a republic, it ought, on
the other hand, to be remarked that there should be as great a
disproportion between the profusion and extravagance of a wealthy
kingdom in its domestic administration, and the frugality and economy
which in that particular become the modest simplicity of republican
government. If we balance a proper deduction from one side against that
which it is supposed ought to be made from the other, the proportion
may still be considered as holding good.
But let us advert to the large debt which we have ourselves contracted
in a single war, and let us only calculate on a common share of the
events which disturb the peace of nations, and we shall instantly
perceive, without the aid of any elaborate illustration, that there
must always be an immense disproportion between the objects of federal
and state expenditures. It is true that several of the States,
separately, are encumbered with considerable debts, which are an
excrescence of the late war. But this cannot happen again, if the
proposed system be adopted; and when these debts are discharged, the
only call for revenue of any consequence, which the State governments
will continue to experience, will be for the mere support of their
respective civil list; to which, if we add all contingencies, the total
amount in every State ought to fall considerably short of two hundred
thousand pounds.
In framing a government for posterity as well as ourselves, we ought,
in those provisions which are designed to be permanent, to calculate,
not on temporary, but on permanent causes of expense. If this principle
be a just one our attention would be directed to a provision in favor
of the State governments for an annual sum of about two hundred
thousand pounds; while the exigencies of the Union could be susceptible
of no limits, even in imagination. In this view of the subject, by what
logic can it be maintained that the local governments ought to command,
in perpetuity, an EXCLUSIVE source of revenue for any sum beyond the
extent of two hundred thousand pounds? To extend its power further, in
EXCLUSION of the authority of the Union, would be to take the resources
of the community out of those hands which stood in need of them for the
public welfare, in order to put them into other hands which could have
no just or proper occasion for them.
Suppose, then, the convention had been inclined to proceed upon the
principle of a repartition of the objects of revenue, between the Union
and its members, in PROPORTION to their comparative necessities; what
particular fund could have been selected for the use of the States,
that would not either have been too much or too little too little for
their present, too much for their future wants? As to the line of
separation between external and internal taxes, this would leave to the
States, at a rough computation, the command of two thirds of the
resources of the community to defray from a tenth to a twentieth part
of its expenses; and to the Union, one third of the resources of the
community, to defray from nine tenths to nineteen twentieths of its
expenses. If we desert this boundary and content ourselves with leaving
to the States an exclusive power of taxing houses and lands, there
would still be a great disproportion between the MEANS and the END; the
possession of one third of the resources of the community to supply, at
most, one tenth of its wants. If any fund could have been selected and
appropriated, equal to and not greater than the object, it would have
been inadequate to the discharge of the existing debts of the
particular States, and would have left them dependent on the Union for
a provision for this purpose.
The preceding train of observation will justify the position which has
been elsewhere laid down, that “A CONCURRENT JURISDICTION in the
article of taxation was the only admissible substitute for an entire
subordination, in respect to this branch of power, of State authority
to that of the Union.” Any separation of the objects of revenue that
could have been fallen upon, would have amounted to a sacrifice of the
great INTERESTS of the Union to the POWER of the individual States. The
convention thought the concurrent jurisdiction preferable to that
subordination; and it is evident that it has at least the merit of
reconciling an indefinite constitutional power of taxation in the
Federal government with an adequate and independent power in the States
to provide for their own necessities. There remain a few other lights,
in which this important subject of taxation will claim a further
consideration.
PUBLIUS.
THE FEDERALIST.
No. XXXV.
The Same Subject Continued
(Concerning the General Power of Taxation)
For the Independent Journal.
HAMILTON
To the People of the State of New York:
Before we proceed to examine any other objections to an indefinite
power of taxation in the Union, I shall make one general remark; which
is, that if the jurisdiction of the national government, in the article
of revenue, should be restricted to particular objects, it would
naturally occasion an undue proportion of the public burdens to fall
upon those objects. Two evils would spring from this source: the
oppression of particular branches of industry; and an unequal
distribution of the taxes, as well among the several States as among
the citizens of the same State.
Suppose, as has been contended for, the federal power of taxation were
to be confined to duties on imports, it is evident that the government,
for want of being able to command other resources, would frequently be
tempted to extend these duties to an injurious excess. There are
persons who imagine that they can never be carried to too great a
length; since the higher they are, the more it is alleged they will
tend to discourage an extravagant consumption, to produce a favorable
balance of trade, and to promote domestic manufactures. But all
extremes are pernicious in various ways. Exorbitant duties on imported
articles would beget a general spirit of smuggling; which is always
prejudicial to the fair trader, and eventually to the revenue itself:
they tend to render other classes of the community tributary, in an
improper degree, to the manufacturing classes, to whom they give a
premature monopoly of the markets; they sometimes force industry out of
its more natural channels into others in which it flows with less
advantage; and in the last place, they oppress the merchant, who is
often obliged to pay them himself without any retribution from the
consumer. When the demand is equal to the quantity of goods at market,
the consumer generally pays the duty; but when the markets happen to be
overstocked, a great proportion falls upon the merchant, and sometimes
not only exhausts his profits, but breaks in upon his capital. I am apt
to think that a division of the duty, between the seller and the buyer,
more often happens than is commonly imagined. It is not always possible
to raise the price of a commodity in exact proportion to every
additional imposition laid upon it. The merchant, especially in a
country of small commercial capital, is often under a necessity of
keeping prices down in order to a more expeditious sale.
The maxim that the consumer is the payer, is so much oftener true than
the reverse of the proposition, that it is far more equitable that the
duties on imports should go into a common stock, than that they should
redound to the exclusive benefit of the importing States. But it is not
so generally true as to render it equitable, that those duties should
form the only national fund. When they are paid by the merchant they
operate as an additional tax upon the importing State, whose citizens
pay their proportion of them in the character of consumers. In this
view they are productive of inequality among the States; which
inequality would be increased with the increased extent of the duties.
The confinement of the national revenues to this species of imposts
would be attended with inequality, from a different cause, between the
manufacturing and the non-manufacturing States. The States which can go
farthest towards the supply of their own wants, by their own
manufactures, will not, according to their numbers or wealth, consume
so great a proportion of imported articles as those States which are
not in the same favorable situation. They would not, therefore, in this
mode alone contribute to the public treasury in a ratio to their
abilities. To make them do this it is necessary that recourse be had to
excises, the proper objects of which are particular kinds of
manufactures. New York is more deeply interested in these
considerations than such of her citizens as contend for limiting the
power of the Union to external taxation may be aware of. New York is an
importing State, and is not likely speedily to be, to any great extent,
a manufacturing State. She would, of course, suffer in a double light
from restraining the jurisdiction of the Union to commercial imposts.
So far as these observations tend to inculcate a danger of the import
duties being extended to an injurious extreme it may be observed,
conformably to a remark made in another part of these papers, that the
interest of the revenue itself would be a sufficient guard against such
an extreme. I readily admit that this would be the case, as long as
other resources were open; but if the avenues to them were closed,
HOPE, stimulated by necessity, would beget experiments, fortified by
rigorous precautions and additional penalties, which, for a time, would
have the intended effect, till there had been leisure to contrive
expedients to elude these new precautions. The first success would be
apt to inspire false opinions, which it might require a long course of
subsequent experience to correct. Necessity, especially in politics,
often occasions false hopes, false reasonings, and a system of measures
correspondingly erroneous. But even if this supposed excess should not
be a consequence of the limitation of the federal power of taxation,
the inequalities spoken of would still ensue, though not in the same
degree, from the other causes that have been noticed. Let us now return
to the examination of objections.
One which, if we may judge from the frequency of its repetition, seems
most to be relied on, is, that the House of Representatives is not
sufficiently numerous for the reception of all the different classes of
citizens, in order to combine the interests and feelings of every part
of the community, and to produce a due sympathy between the
representative body and its constituents. This argument presents itself
under a very specious and seducing form; and is well calculated to lay
hold of the prejudices of those to whom it is addressed. But when we
come to dissect it with attention, it will appear to be made up of
nothing but fair-sounding words. The object it seems to aim at is, in
the first place, impracticable, and in the sense in which it is
contended for, is unnecessary. I reserve for another place the
discussion of the question which relates to the sufficiency of the
representative body in respect to numbers, and shall content myself
with examining here the particular use which has been made of a
contrary supposition, in reference to the immediate subject of our
inquiries.
The idea of an actual representation of all classes of the people, by
persons of each class, is altogether visionary. Unless it were
expressly provided in the Constitution, that each different occupation
should send one or more members, the thing would never take place in
practice. Mechanics and manufacturers will always be inclined, with few
exceptions, to give their votes to merchants, in preference to persons
of their own professions or trades. Those discerning citizens are well
aware that the mechanic and manufacturing arts furnish the materials of
mercantile enterprise and industry. Many of them, indeed, are
immediately connected with the operations of commerce. They know that
the merchant is their natural patron and friend; and they are aware,
that however great the confidence they may justly feel in their own
good sense, their interests can be more effectually promoted by the
merchant than by themselves. They are sensible that their habits in
life have not been such as to give them those acquired endowments,
without which, in a deliberative assembly, the greatest natural
abilities are for the most part useless; and that the influence and
weight, and superior acquirements of the merchants render them more
equal to a contest with any spirit which might happen to infuse itself
into the public councils, unfriendly to the manufacturing and trading
interests. These considerations, and many others that might be
mentioned prove, and experience confirms it, that artisans and
manufacturers will commonly be disposed to bestow their votes upon
merchants and those whom they recommend. We must therefore consider
merchants as the natural representatives of all these classes of the
community.
With regard to the learned professions, little need be observed; they
truly form no distinct interest in society, and according to their
situation and talents, will be indiscriminately the objects of the
confidence and choice of each other, and of other parts of the
community.
Nothing remains but the landed interest; and this, in a political view,
and particularly in relation to taxes, I take to be perfectly united,
from the wealthiest landlord down to the poorest tenant. No tax can be
laid on land which will not affect the proprietor of millions of acres
as well as the proprietor of a single acre. Every landholder will
therefore have a common interest to keep the taxes on land as low as
possible; and common interest may always be reckoned upon as the surest
bond of sympathy. But if we even could suppose a distinction of
interest between the opulent landholder and the middling farmer, what
reason is there to conclude, that the first would stand a better chance
of being deputed to the national legislature than the last? If we take
fact as our guide, and look into our own senate and assembly, we shall
find that moderate proprietors of land prevail in both; nor is this
less the case in the senate, which consists of a smaller number, than
in the assembly, which is composed of a greater number. Where the
qualifications of the electors are the same, whether they have to
choose a small or a large number, their votes will fall upon those in
whom they have most confidence; whether these happen to be men of large
fortunes, or of moderate property, or of no property at all.
It is said to be necessary, that all classes of citizens should have
some of their own number in the representative body, in order that
their feelings and interests may be the better understood and attended
to. But we have seen that this will never happen under any arrangement
that leaves the votes of the people free. Where this is the case, the
representative body, with too few exceptions to have any influence on
the spirit of the government, will be composed of landholders,
merchants, and men of the learned professions. But where is the danger
that the interests and feelings of the different classes of citizens
will not be understood or attended to by these three descriptions of
men? Will not the landholder know and feel whatever will promote or
insure the interest of landed property? And will he not, from his own
interest in that species of property, be sufficiently prone to resist
every attempt to prejudice or encumber it? Will not the merchant
understand and be disposed to cultivate, as far as may be proper, the
interests of the mechanic and manufacturing arts, to which his commerce
is so nearly allied? Will not the man of the learned profession, who
will feel a neutrality to the rivalships between the different branches
of industry, be likely to prove an impartial arbiter between them,
ready to promote either, so far as it shall appear to him conducive to
the general interests of the society?
If we take into the account the momentary humors or dispositions which
may happen to prevail in particular parts of the society, and to which
a wise administration will never be inattentive, is the man whose
situation leads to extensive inquiry and information less likely to be
a competent judge of their nature, extent, and foundation than one
whose observation does not travel beyond the circle of his neighbors
and acquaintances? Is it not natural that a man who is a candidate for
the favor of the people, and who is dependent on the suffrages of his
fellow-citizens for the continuance of his public honors, should take
care to inform himself of their dispositions and inclinations, and
should be willing to allow them their proper degree of influence upon
his conduct? This dependence, and the necessity of being bound himself,
and his posterity, by the laws to which he gives his assent, are the
true, and they are the strong chords of sympathy between the
representative and the constituent.
There is no part of the administration of government that requires
extensive information and a thorough knowledge of the principles of
political economy, so much as the business of taxation. The man who
understands those principles best will be least likely to resort to
oppressive expedients, or sacrifice any particular class of citizens to
the procurement of revenue. It might be demonstrated that the most
productive system of finance will always be the least burdensome. There
can be no doubt that in order to a judicious exercise of the power of
taxation, it is necessary that the person in whose hands it should be
acquainted with the general genius, habits, and modes of thinking of
the people at large, and with the resources of the country. And this is
all that can be reasonably meant by a knowledge of the interests and
feelings of the people. In any other sense the proposition has either
no meaning, or an absurd one. And in that sense let every considerate
citizen judge for himself where the requisite qualification is most
likely to be found.
PUBLIUS.
THE FEDERALIST.
No. XXXVI.
The Same Subject Continued
(Concerning the General Power of Taxation)
From the New York Packet.
Tuesday January 8, 1788.
HAMILTON
To the People of the State of New York:
We have seen that the result of the observations, to which the
foregoing number has been principally devoted, is, that from the
natural operation of the different interests and views of the various
classes of the community, whether the representation of the people be
more or less numerous, it will consist almost entirely of proprietors
of land, of merchants, and of members of the learned professions, who
will truly represent all those different interests and views. If it
should be objected that we have seen other descriptions of men in the
local legislatures, I answer that it is admitted there are exceptions
to the rule, but not in sufficient number to influence the general
complexion or character of the government. There are strong minds in
every walk of life that will rise superior to the disadvantages of
situation, and will command the tribute due to their merit, not only
from the classes to which they particularly belong, but from the
society in general. The door ought to be equally open to all; and I
trust, for the credit of human nature, that we shall see examples of
such vigorous plants flourishing in the soil of federal as well as of
State legislation; but occasional instances of this sort will not
render the reasoning founded upon the general course of things, less
conclusive.