1787 Federalist 12 · Founding Made Plain

11787 Federalist No. 12

2The Utility of the Union In Respect to Revenue

3From the New York Packet.

4Tuesday, November 27, 1787.

5HAMILTON

6To the People of the State of New York:

7THE effects of Union

8 upon the commercial prosperity of the States

9 have been sufficiently delineated.

10Its tendency to promote the interests of revenue

11 will be the subject of our present inquiry.

12The prosperity of commerce

13 is now perceived and acknowledged

14 by all enlightened statesmen

15 to be the most useful

16 as well as the most productive source

17 of national wealth,

18 and has accordingly become a primary object

19 of their political cares.

20By multipying the means of gratification,

21 by promoting the introduction and circulation

22 of the precious metals,

23 those darling objects

24 of human avarice and enterprise,

25 it serves to vivify and invigorate

26 the channels of industry,

27 and to make them flow

28 with greater activity and copiousness.

29The assiduous merchant, the laborious husbandman,

30 the active mechanic,

31 and the industrious manufacturer,--

32 all orders of men,

33 look forward with eager expectation

34 and growing alacrity

35 to this pleasing reward of their toils.

36The often-agitated question

37 between agriculture and commerce

38 has, from indubitable experience, received a decision

39 which has silenced the rivalship

40 that once subsisted between them,

41 and has proved, to the satisfaction of their friends,

42 that their interests are intimately blended

43 and interwoven.

44It has been found in various countries

45 that, in proportion as commerce has flourished,

46 land has risen in value.

47And how could it have happened otherwise?

48Could that which procures a freer vent

49 for the products of the earth,

50 which furnishes new incitements

51 to the cultivation of land,

52 which is the most powerful instrument

53 in increasing the quantity of money in a state--

54 could that, in fine,

55 which is the faithful handmaid

56 of labor and industry,

57 in every shape,

58 fail to augment that article,

59 which is the prolific parent

60 of far the greatest part of the objects

61 upon which they are exerted?

62It is astonishing

63 that so simple a truth

64 should ever have had an adversary;

65 and it is one, among a multitude of proofs,

66 how apt a spirit of ill-informed jealousy,

67 or of too great abstraction and refinement,

68 is to lead men astray

69 from the plainest truths of reason and conviction.

70The ability of a country to pay taxes

71 must always be proportioned, in a great degree,

72 to the quantity of money in circulation,

73 and to the celerity with which it circulates.

74Commerce, contributing to both these objects,

75 must of necessity render the payment of taxes easier,

76 and facilitate the requisite supplies to the treasury.

77The hereditary dominions of the Emperor of Germany

78 contain a great extent

79 of fertile, cultivated, and populous territory,

80 a large proportion of which is situated

81 in mild and luxuriant climates.

82In some parts of this territory

83 are to be found the best gold and silver mines

84 in Europe.

85And yet, from the want of the fostering influence

86 of commerce,

87 that monarch can boast but slender revenues.

88He has several times been compelled

89 to owe obligations to the pecuniary succors

90 of other nations

91 for the preservation of his essential interests,

92 and is unable, upon the strength of his own resources,

93 to sustain a long or continued war.

94But it is not in this aspect of the subject alone

95 that Union will be seen to conduce

96 to the purpose of revenue.

97There are other points of view,

98 in which its influence will appear

99 more immediate and decisive.

100It is evident from the state of the country,

101 from the habits of the people,

102 from the experience we have had on the point itself,

103 that it is impracticable to raise

104 any very considerable sums

105 by direct taxation.

106Tax laws have in vain been multiplied;

107 new methods to enforce the collection

108 have in vain been tried;

109 the public expectation has been uniformly disappointed,

110 and the treasuries of the States have remained empty.

111The popular system of administration

112 inherent in the nature of popular government,

113 coinciding with the real scarcity of money

114 incident to a languid and mutilated state of trade,

115 has hitherto defeated every experiment

116 for extensive collections,

117 and has at length taught the different legislatures

118 the folly of attempting them.

119No person acquainted with what happens in other countries

120 will be surprised at this circumstance.

121In so opulent a nation as that of Britain,

122 where direct taxes from superior wealth

123 must be much more tolerable,

124 and, from the vigor of the government,

125 much more practicable, than in America,

126 far the greatest part of the national revenue

127 is derived from taxes of the indirect kind,

128 from imposts, and from excises.

129Duties on imported articles

130 form a large branch of this latter description.

131In America, it is evident

132 that we must a long time depend

133 for the means of revenue chiefly on such duties.

134In most parts of it,

135 excises must be confined within a narrow compass.

136The genius of the people will ill brook

137 the inquisitive and peremptory spirit of excise laws.

138The pockets of the farmers, on the other hand,

139 will reluctantly yield but scanty supplies,

140 in the unwelcome shape of impositions

141 on their houses and lands;

142 and personal property is too precarious

143 and invisible a fund

144 to be laid hold of in any other way

145 than by the inperceptible agency

146 of taxes on consumption.

147If these remarks have any foundation,

148 that state of things which will best enable us

149 to improve and extend so valuable a resource

150 must be best adapted to our political welfare.

151And it cannot admit of a serious doubt,

152 that this state of things must rest

153 on the basis of a general Union.

154As far as this would be conducive

155 to the interests of commerce,

156 so far it must tend to the extension of the revenue

157 to be drawn from that source.

158As far as it would contribute

159 to rendering regulations

160 for the collection of the duties

161 more simple and efficacious,

162 so far it must serve to answer the purposes

163 of making the same rate of duties more productive,

164 and of putting it into the power of the government

165 to increase the rate without prejudice to trade.

166The relative situation of these States;

167 the number of rivers with which they are intersected,

168 and of bays that wash there shores;

169 the facility of communication in every direction;

170 the affinity of language and manners;

171 the familiar habits of intercourse;--

172 all these are circumstances that would conspire

173 to render an illicit trade between them

174 a matter of little difficulty,

175 and would insure frequent evasions

176 of the commercial regulations of each other.

177The separate States or confederacies

178 would be necessitated by mutual jealousy

179 to avoid the temptations to that kind of trade

180 by the lowness of their duties.

181The temper of our governments, for a long time to come,

182 would not permit those rigorous precautions

183 by which the European nations guard the avenues

184 into their respective countries,

185 as well by land as by water;

186 and which, even there, are found insufficient obstacles

187 to the adventurous stratagems of avarice.

188In France, there is an army of patrols

189 (as they are called)

190 constantly employed to secure their fiscal regulations

191 against the inroads of the dealers

192 in contraband trade.

193Mr. Neckar computes the number of these patrols

194 at upwards of twenty thousand.

195This shows the immense difficulty

196 in preventing that species of traffic,

197 where there is an inland communication,

198 and places in a strong light the disadvantages

199 with which the collection of duties in this country

200 would be encumbered,

201 if by disunion the States should be placed

202 in a situation,

203 with respect to each other,

204 resembling that of France

205 with respect to her neighbors.

206The arbitrary and vexatious powers

207 with which the patrols are necessarily armed,

208 would be intolerable in a free country.

209If, on the contrary,

210 there be but one government pervading all the States,

211 there will be, as to the principal part

212 of our commerce,

213 but ONE SIDE to guard--the ATLANTIC COAST.

214Vessels arriving directly from foreign countries,

215 laden with valuable cargoes,

216 would rarely choose to hazard themselves

217 to the complicated and critical perils

218 which would attend attempts to unlade

219 prior to their coming into port.

220They would have to dread both the dangers of the coast,

221 and of detection,

222 as well after as before their arrival

223 at the places of their final destination.

224An ordinary degree of vigilance would be competent

225 to the prevention of any material infractions

226 upon the rights of the revenue.

227A few armed vessels, judiciously stationed

228 at the entrances of our ports,

229 might at a small expense

230 be made useful sentinels of the laws.

231And the government having the same interest

232 to provide against violations everywhere,

233 the co-operation of its measures in each State

234 would have a powerful tendency

235 to render them effectual.

236Here also we should preserve by Union,

237 an advantage which nature holds out to us,

238 and which would be relinquished by separation.

239The United States lie at a great distance from Europe,

240 and at a considerable distance from all other places

241 with which they would have extensive connections

242 of foreign trade.

243The passage from them to us, in a few hours,

244 or in a single night,

245 as between the coasts of France and Britain,

246 and of other neighboring nations,

247 would be impracticable.

248This is a prodigious security

249 against a direct contraband with foreign countries;

250 but a circuitous contraband to one State,

251 through the medium of another,

252 would be both easy and safe.

253The difference between a direct importation from abroad,

254 and an indirect importation

255 through the channel of a neighboring State,

256 in small parcels,

257 according to time and opportunity,

258 with the additional facilities

259 of inland communication,

260 must be palpable to every man of discernment.

261It is therefore evident,

262 that one national government would be able,

263 at much less expense,

264 to extend the duties on imports, beyond comparison,

265 further than would be practicable

266 to the States separately,

267 or to any partial confederacies.

268Hitherto, I believe, it may safely be asserted,

269 that these duties have not upon an average

270 exceeded in any State three per cent.

271In France they are estimated to be about fifteen per cent.,

272 and in Britain they exceed this proportion.[1]

273There seems to be nothing to hinder their being increased

274 in this country to at least treble

275 their present amount.

276The single article of ardent spirits,

277 under federal regulation,

278 might be made to furnish a considerable revenue.

279Upon a ratio to the importation into this State,

280 the whole quantity imported into the United States

281 may be estimated at four millions of gallons;

282 which, at a shilling per gallon,

283 would produce two hundred thousand pounds.

284That article would well bear this rate of duty;

285 and if it should tend to diminish

286 the consumption of it,

287 such an effect would be equally favorable

288 to the agriculture, to the economy,

289 to the morals, and to the health of the society.

290There is, perhaps, nothing so much a subject

291 of national extravagance as these spirits.

292What will be the consequence,

293 if we are not able to avail ourselves

294 of the resource in question in its full extent?

295A nation cannot long exist without revenues.

296Destitute of this essential support,

297 it must resign its independence,

298 and sink into the degraded condition of a province.

299This is an extremity

300 to which no government will of choice accede.

301Revenue, therefore, must be had at all events.

302In this country, if the principal part

303 be not drawn from commerce,

304 it must fall with oppressive weight upon land.

305It has been already intimated

306 that excises, in their true signification,

307 are too little in unison

308 with the feelings of the people,

309 to admit of great use being made

310 of that mode of taxation;

311 nor, indeed, in the States

312 where almost the sole employment is agriculture,

313 are the objects proper for excise sufficiently numerous

314 to permit very ample collections in that way.

315Personal estate

316 (as has been before remarked),

317 from the difficulty in tracing it,

318 cannot be subjected to large contributions,

319 by any other means than by taxes on consumption.

320In populous cities,

321 it may be enough the subject of conjecture,

322 to occasion the oppression of individuals,

323 without much aggregate benefit to the State;

324 but beyond these circles,

325 it must, in a great measure,

326 escape the eye and the hand of the tax-gatherer.

327As the necessities of the State, nevertheless,

328 must be satisfied in some mode or other,

329 the defect of other resources

330 must throw the principal weight of public burdens

331 on the possessors of land.

332And as, on the other hand,

333 the wants of the government

334 can never obtain an adequate supply,

335 unless all the sources of revenue

336 are open to its demands,

337 the finances of the community,

338 under such embarrassments,

339 cannot be put into a situation

340 consistent with its respectability or its security.

341Thus we shall not even have the consolations

342 of a full treasury,

343 to atone for the oppression of that valuable class

344 of the citizens

345 who are employed in the cultivation of the soil.

346But public and private distress

347 will keep pace with each other in gloomy concert;

348 and unite in deploring the infatuation

349 of those counsels

350 which led to disunion.

351PUBLIUS.

352[1] If my memory be right they amount to twenty per cent.