Antifederalist No. 12

HOW WILL THE NEW GOVERNMENT RAISE MONEY?


"CINCINNATUS" is an Antifederalist writer. In this essay, from an 
Address to a Meeting of the Citizens of Philadelphia, the writer 
responds to James Wilson's statements about Congress' powers to 
tax under the Constitution.  It appeared in the November 29 and 
December 6, 1787, New-York Journal, as reprinted from a 
Philadelphia newspaper. 



    On the subject of taxation, in which powers are to be given 
so largely by the new constitution, you [James Wilson of 
Pennsylvania] lull our fears of abuse by venturing to predict 
"that the great revenue of the United States must, and always 
will, be raised by impost"-and you elevate our hopes by holding 
out, "the reviving and supporting the national credit." If you 
have any other plan for this, than by raising money upon the 
people to pay the interest of the national debt, your ingenuity 
will deserve our thanks.  Supposing however, that raising money 
is necessary to payment of the interest, and such a payment [is] 
requisite to support the credit of the union-let us see how much 
will be necessary for that end, and how far the impost will 
supply what we want. The arrearages of French and Spanish 
interest amount now to--1,500,000 dollars; Interest and 
installments of do. for 1788--850,227; Support of government; and 
its departments, for 1788--500,000; Arrears and anticipations of 
1787--300,000; Interest of domestic debt--500,000 {total} 
4,650,227 [3,650,227] 
      The new Congress then, supposing it to get into operation 
towards October, 1788, will have to provide for this sum, and for 
the additional sum of 3,000,000 at least for the ensuing year; 
which together will make the sum of 7,650,227 [6,650,227]. 
     Now let us see how the impost will answer this.  Congress 
have furnished us with their estimate of the produce of the whole 
imports of America at five per cent and that is 800,000 dollars.  
There will remain to provide for, by other taxes, 6,850,227 
[5,850,227]. 
     We know too, that our imports diminish yearly, and from the 
nature of things must continue to diminish; and consequently that 
the above estimate of the produce of the impost, will in all 
probability fall much short of the supposed sum.  But even 
without this, it must appear that you [were] either intentionally 
misleading your hearers, or [were] very little acquainted with 
the subject when you ventured to predict that the great revenue 
of the United States would always flow from the impost.  The 
estimate above is from the publications of Congress, and I 
presume is right.  But the sum stated, necessary to be raised by 
the new government, in order to answer the expectations they have 
raised, is not all. The state debts, independent of what each 
owes to the United States, amount to about 30,000,000 dollars; 
the annual interest of this is 1,000,000. 
     It will be expected that the new government will provide for 
this also; and such expectation is founded, not only on the 
promise you hold forth, of its reviving and supporting public 
credit among us, but also on this unavoidable principle of 
justice-that is, the new government takes away the impost, and 
other substantial taxes, from the produce of which the several 
states paid the interest of their debt, or funded the paper with 
which they paid it.  The new government must find ways and means 
of supplying that deficiency, . . . in hard money, for . . . 
paper . . . cannot [be used] without a violation of the 
principles it boasts.  The sum then which it must annually raise 
in specie, after the first year, cannot be less than 4,800,000.  
At present there is not one half of this sum in specie raised in 
all the states.  And yet the complaints of intolerable taxes has 
produced one rebellion and will be mainly operative in the 
adoption of your constitution.  How you will get this sum is 
inconceivable and yet get it you must, or lose all credit. With 
magnificent promises you have bought golden opinions of all sorts 
of people, and with gold you must answer them, . . . 
     To satisfy [our fellow citizens] more fully on the subject 
of the revenue, that is to be raised upon them, in order to give 
enormous fortunes to the jobbers in public securities, I shall 
lay before them a proposition to Congress, from Mr. Robert 
Morris, when superintendent of finance.  It is dated, I think,' 
the 29th of June, 1782, and is in these words: 
    [I say, I think, because by accident the month is erased in 
the note I have, and I have not access to public papers which 
would enable me to supply the defect.] 
    "The requisition of a five per cent impost, made on the 3d of 
February, 1781, has not yet been complied with by the state of 
Rhode Island, but as there is reason to believe, that their 
compliance is not far off, this revenue may be considered as 
already granted.  It will, however, be very inadequate to the 
purposes intended. If goods be imported, and prizes introduced to 
the amount of twelve millions annually, the five per cent would 
be six hundred thousand, from which at least one sixth must be 
deducted, as well for the cost of collection as for the various 
defalcations which will necessarily happen, and which it is 
unnecessary to enumerate.  It is not safe therefore, to estimate 
this revenue at more than half a million of dollars; for though 
it may produce more, yet probably it will not produce so much.  
It was in consequence of this, that on the 27th day of February 
last, I took the liberty to submit the propriety of asking the 
states for a land tax of one dollar for every hundred acres of 
land-a poll-tax of one dollar on all freemen, and all male 
slaves, between sixteen and sixty, excepting such as are in the 
federal army, or by wounds or otherwise rendered unfit for 
service-and an excise of one eighth of a dollar, on all distilled 
spiritous liquors.  Each of these may be estimated at half a 
million; and should the product be equal to the estimation, the 
sum total of revenues for funding the public debts, would be 
equal to two millions." 
     You will readily perceive, Mr. Wilson, that there is a vast 
difference between your prediction and your friend's proposition.  
Give me leave to say, sir, that it was not discreet, in you, to 
speak upon finance without instructions from this great 
financier.  Since, independent of its delusive effect upon your 
audience, it may excite his jealousy, lest you should have a 
secret design of rivalling him in the expected office of 
superintendent under the new constitution. It is true, there is 
no real foundation for it; but then you know jealousy makes the 
food it feeds on.  A quarrel between two such able and honest 
friends to the United States, would, I am persuaded, be felt as a 
public calamity.  I beseech you then to be very tender upon this 
point in your next harangue.  And if four months' study will not 
furnish you with sufficient discretion, we will indulge you with 
six. 
     It may be said, that let the government be what it may, the 
sums I have stated must be raised, and the same difficulties 
exist.  This is not altogether true.  For first, we are now in 
the way of paying the interest of the domestic debt, with paper, 
which under the new system is utterly reprobated.  This makes a 
difference between the specie to be raised of 1,800,000 dollars 
per annum. If the new government raises this sum in specie on the 
people, it will certainly support public credit, but it will 
overwhelm the people.  It will give immense fortunes to the 
speculators; but it will grind the poor to dust. Besides, the 
present government is now redeeming the principal of the domestic 
debt by the sale of western lands.  But let the full interest be 
paid in specie, and who will part with the principal for those 
lands?  A principal, which having been generally purchased for 
two shillings and six pence on the pound, will yield to the 
holders two hundred and forty per cent.  This paper system 
therefore, though in general an evil, is in this instance 
attended with the great benefit of enabling the public to cancel 
a debt upon easy terms, which has been swelled to its enormous 
size, by as enormous impositions. And the new government, by 
promising too much, will involve itself in a disreputable breach 
of faith. . . . 
     The present government promises nothing; the intended 
government, everything.  From the present government little is 
expected; from the intended one, much.  Because it is conceived 
that to the latter much is given; to the former, little.  And yet 
the inability of the people to pay what is required in specie, 
remaining the same, the funds of the one will not much exceed 
those of the other. The public creditors are easy with the 
present government from a conviction of its inability [to pay].  
They will be urgent with the new one from an opinion, that as is 
promised, so it can and will perform every thing.  Whether the 
change will be for our prosperity and honor, is yet to be tried.  
Perhaps it will be found, that the supposed want of power in 
Congress to levy taxes is, at present a veil happily thrown over 
the inability of the people; and that the large powers given to 
the new government will, to every one, expose the nakedness of 
our land. Certain it is, that if the expectations which are 
grafted on the gift of those plenary powers, are not answered, 
our credit will be irretrievably ruined. 
                                CINCINNATUS