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Letter from Robert Morris to Alexander Martin
Morris, Robert, 1734-1806
July 20, 1782
Volume 16, Pages 357-379

FROM HON. ROBT. MORRIS TO GOV. MARTIN.
[From Executive Letter Book.]


Office of Finance,
29th July, 1782.

Sir:

The reference which Congress were pleased to make of a remonstrance and petition from Blair McClenachan and others has induced me to pray their indulgence while I go somewhat at large into the Subject of that remonstrance. The Propriety and utility of public loans have been subjects of much controversy. Those who find themselves saddled with the debts of a preceding generation naturally exclaim against loans, and it must be confessed that when such debts are accumulated by negligence, folly or profusion, the complaint is well founded. But it would be equally so against Taxes when wasted in the same way. The difference is that the weight of Taxes being more sensible, the waste occasions greater clamor & is, therefore, more speedily remedied, but it will appear

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that the eventual evils which posterity must sustain from heavy Taxes are greater than from loans. Hence may be deduced this conclusion that in Government liable to a vicious administration it would be better to raise the current by Taxes; but where an honest and wise appropriation of money prevails it is highly advantageous to take the benefit of loans.

Taxation to a certain point is not only proper but useful, because by stimulating the industry of individuals it increases the wealth of the Community. But when Taxes go so far as to intrench on the subsistance of the people they become burthensome and oppressive. The expenditures of money ought in such case to be (if possible) avoided, and if unavoidable, it will be most wise to have recourse to loans. Loans may be of two kinds, either domestic or Foreign. The relative advantages and disadvantages of each, as well as those which are common to both, will deserve attention. Reasonings of this kind (as they depend on rules of Arithmetic) are best understood by numerical positions. For the purposes of elucidation, therefore, it may be supposed that the annual Tax of any particular husbandman were fifteen pounds during a ten year’s war, and that his net revenues were but fifteen pounds, so that (the whole being regularly consumed in payment of Taxes) he would be no richer at the end of the War than he was at the beginning. It is at the same time notorious that the profits made by husbandmen on funds which they borrowed were very considerable. In many instances their plantations, as well as the Cattle and farming utensils, have been purchased on credit, and the Bonds given for both have shortly been paid by sales of produce. It is, therefore, no exaggeration to state the profits at 12 per cent. The enormous usury which people in trade have been induced to pay, and which presently be noticed, demonstrates that the profits made by other professions are equal to those of the husbandman.

The instance, therefore, taken from that which is the most numerous class of Citizens will form no improper standard for the whole. Let it then be further supposed, in the case already stated, that the party should annually borrow the sum of Ten pounds at six per cent. to pay part of his Tax of Fifteen pounds. On this Sum he would make a profit of twenty-four shillings, and have to pay an interest of twelve shillings.

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The enclosed calculation will show that in ten years he would be indebted one hundred pounds, but his additional Improvements would be worth near one hundred and fifty, and his net revenue be increased near twelve, after deducting the Interest of his debt. Whereas, if he had not borrowed, his revenue (as has been already observed) would have continued the same. This mode of reasoning might be pursued further, but what has been said is sufficient to show that he would have made a considerable advantage from the yearly loan. If it be supposed that every person in the community made such loan a similar advantage would arise to the Community. And lastly, if it be supposed that the Government were to make a loan, and ask so much less in Taxes, the same advantage would be derived. Hence also may be deduced this position that in a Society where the average profits of stocks are double to the interest at which money can be obtained, every public loan for necessary expenditures provides a fund in the aggregate of National wealth, equal to the discharge of its own interest.

Were it possible that a Society should exist in which every member would, of his own accord, industriously pursue the increase of National property without waste or extravagance, the public Wealth would be impaired by every Species of Taxation, but there never was, and unless human nature should change, there never will be such a Society. In any given number of men there will always be some who are idle and some who are extravagant. In every Society also there must be some Taxes, because the necessity of supporting Government & defending the State always exist. To do these on the cheapest Terms is wise, and when it is considered how much men are disposed to indolence and profusion it will appear that (even if those demands did not require the whole of what could be raised) still it would be wise to carry Taxation to a certain amount, and expend what should remain after providing for the support of Government and the National defence in Works of public utility, such as opening of roads and Navigation. For Taxes, operate two ways towards the increase of National Wealth. First they stimulate industry to provide the means of payment, secondly they encourage economy so far as to avoid the purchase of unnecessary things and keep money in readiness for the Tax gatherer. Experience shows that those exertions of Industry and Economy grow by degrees

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into habit. But in order that taxation may have these good effects the Sums which every man is to pay and the period of payment should be certain and unavoidable. This digression open the way to a comparison between Foreign and Domestic Loans. If the loan be domestic, money must be diverted from these channels in which it would otherwise have flowed, and, therefore, either the public must give better Terms than individuals or there must be money enough to supply the wants of both. In the latter case if the public did not borrow the quantity of money would exceed the demand, and the Interest would be lowered. Borrowing by the public would therefore keep up the rate of interest which brings the latter case within the reason of the former. If the Public outbid individuals, those individuals are deprived of the means of extending their industry. So that no case of a Domestic Loan can well be supposed where some public loss will not arise to counter-balance the public gain except where the creditor spares from his consumption to lend to the Government which operates a National economy. It is, however, an advantage peculiar to Domestic Loans that they give stability to Government by combining together the interests of monied men for its support, & consequently in this Country a Domestic Debt would greatly contribute to that Union which seems not to have been sufficiently attended to, or provided for in forming the National compact.

Domestic Loans are also useful from the further consideration that as taxes fall heavy on the lower orders of a community the relief obtained for them by such loans more than counter-balances the loss sustained by those who would have borrowed Money to extend their Commerce or tillage. Neither is it a refinement to observe that since a plenty of money & consequent ease of obtaining it induce Men to engage in Speculations which are often unprofitable, the check which these receive is not injurious, while the relief obtained for the Poor is highly beneficial. By making Foreign Loans the Community (as such) receive the same extensive benefits which one Individual does in borrowing of another.

This Country was always in the practice of making such Loans. The merchants in Europe trusted those in America. The American merchants trusted the Country Store-Keepers and they the people at large. This advance of credit may be stated at not less than 20

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million of dollars, and the want of credit is one principal reason of those usurious contracts mentioned above. These have been checked by the institution of the Bank, but the funds of that corporation not permitting the extensive advances which the views of different people require, the price given for particular accommodations of Money continues to be enormous, and that again shows that to make Domestic Loans would be difficult, if not impracticable. The Merchants not having now that extensive credit in Europe which they formerly had, the obtaining such credit by the Government becomes in some sort necessary. But there remains an objection with many against Foreign Loans which (though it arises from a superficial view of the subject) has no little influence. This is that the interest will form a balance of Trade against us, and drain the Country of the Specie, which is only saying in other words that it would be more convenient to receive Money as a present than as a Loan, for the advantages derived by the loan exist notwithstanding the payment of Interest. To show this more clearly, a case may be stated, which, in this city, is very familiar. An Island in the Delaware overflowed at high Water has, for a given sum, suppose a thousand pounds, been banked in, drained and made to produce by the hay sold from it at Philadelphia a considerable sum annually—for instance, two hundred pounds. If the owner of such an Island had borrowed (in Philadelphia) the thousand pounds to improve it, & given six per cent., he would have gained a nett revenue of one hundred and forty pounds. This certainly would not be a balance of trade against his Island nor the draining it of Specie. He would gain considerably and the City of Philadelphia would also gain by bringing to market an increased quantity of a necessary article.

In like manner, money lent by the City of Amsterdam to clear the forests of America would be beneficial to both. Draining marshes and bringing forests under culture are beneficial to the whole human race, but most so to the proprietor. But at any rate in a Country and in a situation like ours to lighten the weight of present burthens by Loans must be good policy. For as the Governments acquire more stability and the people more wealth, the former will be able to raise and the latter to pay much greater sums than can at present be expected.

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What has been said on the general nature and benefit of public Loans, as well as their particular utility to this Country, contains more of detail than is necessary for the United States in Congress, tho’ perhaps not enough for many of those to whose consideration this subject must be submitted. It may seem superfluous to add that credit is necessary to the obtaining of Loans. But among the many extraordinary conceptions which have been produced during the present Revolution it is neither the least prevalent nor the least pernicious that foreigners will trust us with millions while our own Citizens will not trust us with a shilling. Such an opinion must be unfounded, and will appear to be false at the first glance. Yet men are (on some occasions) so willing to deceive themselves that the most flattering expectations will be formed from the acknowledgement of American Independence by the States General. But surely no reasonable hope can be raised on that circumstance unless something more be done by ourselves. The Loans made to us hitherto have either been by the Court of France or on their credit. The Government of the United Netherlands are so far from being able to lend that they must borrow for themselves.

The most, therefore, that can be asked from them is to become Security for America to their own Subjects, but it cannot be expected that they will do this until they are assured & convinced that we will punctually pay. This follows necessarily from the nature of their Government, and must be clearly seen by the several States, as well as by Congress, if they only consider what conduct they would pursue on a similar occasion. Certainly Congress would not put themselves in a situation which might oblige them to call on the several States for Money to pay the debts of a Foreign Power. Since then no aid is to be looked for from the Dutch Government without giving them sufficient evidence of a Disposition & ability to pay both principal and Interest of what we borrow, and since the same evidence which would convince the Government must convince the Individuals who compose it, asking the aid of Government must either be unnecessary or ineffectual. Ineffectual before the measures are taken to establish our credit and unnecessary afterwards.

We are, therefore, brought back to the necessity of establishing public credit, and this must be done at home before it can be extended

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abroad. The only Question which can remain is with respect to the means, and here it must be remembered that a free Government, whose natural offspring is public credit, cannot have sustained a Loss of that Credit unless from particular causes, and, therefore, those causes must be investigated & removed before the effects will cease. When the Continental Money was issued a greater confidence was shown by America than any other people ever exhibited. The General promise of a Body not formed into nor claiming to be a Government was accepted as current Coin. And it was not until long after an excess of quantity had forced a depreciation that the validity of these promises was questioned. Even then the public Credit still existed in a degree, nor was it finally lost until March, 1780, when an idea was entertained, that Government had committed injustice. It was useless to enter into the reasons for and against the Resolutions of the Period, they were adopted and are now to be considered only in relation to their effects. These will not be altered by saying that the Resolutions were misunderstood, for in those things which depend on public opinion it is no matter (as far as consequences are concerned) how that opinion is influenced. Under present Circumstances, therefore, it may be considered as an uncontrovertible proposition that all Paper Money ought to be absorbed by Taxation (or otherwise) and destroyed before we can expect our public credit to be fully re-established. For so long as there be any in existence the holder will view it as a monument of National perfidy.

But this will be taking only a small step in the important business of establishing National Credit. There are a great number of individuals in the United States who trusted the Public in the hour of distress, and who are impoverished and even ruined by the confidence they reposed. There are others whose property has been wrested from them by force to support the War and to whom Certificates have been given in lieu of it which are entirely useless. It needed not inspiration to show that Justice establisheth a Nation, neither are the principles of Religion necessary to evince that Political Injustice will receive political chastisement. Religious men will cherish these Maxims in proportion to the additional force they derive from divine revelation. But our own experience will show that from a defect of Justice this Nation is not established, and that

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her want of honesty is severely punished by her want of credit. To this want of credit must be attributed the weight of taxation for support of the War, and the continuance of that weight by the continuance of War. It is, therefore, with the greatest propriety your Petitioners already mentioned have stated in their Memorial that both policy and Justice require a solid provision for funding the public debts.

It is with pleasure, Sir, I see this numerous, meritorious and oppressed Body of Men who are creditors of the Public beginning to exert themselves for the obtaining of Justice. I hope they may succeed, not only because I wish well to so righteous a pursuit, but because their success will be the great ground work of a Credit, which will carry us safely through the present just, important and necessary War, which will combine us closely together on conclusion of a Peace, which will always give to the Supreme Representative of America a means of acting for the General defence on sudden emergencies and which will of consequence procure the third of those great objects for which we contend—Peace, Liberty and Safety.

Such, Sir, are the cogent principles by which we are called on to provide solid funds for the National Debt. Already Congress have adopted a plan for liquidating all past accounts, and if the States shall make the necessary grants of Revenue what remains will be a simple executive operation which will presently be explained. But however powerful the reasons in favor of such grants, over and above those principles of Moral Justice which none, however exalted, can part from with Impunity, still there are men who (influenced by pernicious selfishness) will grumble at the Expence, and who will assert the impossibility of sustaining it. On this occasion the sensations, with respect to borrowing, are reversed. All would be content to relieve themselves by Loan from the weighty Taxes, but many are unwilling to take up as they ought the weight of Debt. Yet this must be done before the other can happen, and it is not so great but that we should find immediate relief by assuming it even if it were a Foreign Debt. I say if it were a Foreign Debt because I shall attempt to show first, that being a Domestic Debt will cost the Community nothing, and secondly, that it will produce (on the contrary) a considerable advantage, and as to the

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first point, one observation will suffice. The expenditure has been made and a part of the Community have sustained it. If the debt were to be paid by a single effort of Taxation, it would only create a transfer of property from one individual to another and the aggregate wealth of the whole community would be precisely the same. But since nothing more is attempted than merely to fund the Debt by providing for the Interest (at 6 per cent.,) the question of ability is resolved to this single point. Whether it is easier for a part of the people to pay one hundred Dollars than for the whole people to pay six Dollars? It is equally clear, though not equally evident, that a considerable advantage would be produced by funding our Debts over and above what has already been mentioned as the consequence of National Credit. This advantage is threefold.

First, many persons by being creditors of the public are deprived of those funds which are necessary to the full exercise of their skill and industry. Consequently the Community are deprived of the benefits which would result from that exercise. Whereas, if these Debts which are in a manner dead were brought back to existence monied men would purchase them up (tho’ perhaps at a considerable discount) and thereby restore to the public many useful members who are now entirely lost, and extend the operations of many more to considerable advantage. For although not one additional shilling would by this means be brought in, yet by distributing property into those hands which would render it most productive, the Revenue would be increased, while the original stock continued the same.

Secondly, many Foreigners who make speculations to this Country would, instead of ordering back remittances, direct much of the proceeds of their Cargoes to be invested in our public funds which, according to principles already established, would produce a clear advantage with this addition, (from perculiar circumstances) that it would supply the want of Credit to the Mercantile part of Society. The last, but not least, advantage is, that in restoring ease, harmony and confidence, not only the Government (being more respectable) would be more respected, and consequently better obeyed, but the mutual dealings among men on private credit would be facilitated. The horrors which agitate people’s minds from an apprehension of depreciating paper would be done away, the secret hoards would be

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unlocked. In the same moment the necessity of money would be lessened and the quantity increased. By these means the collection of Taxes would be facilitated, and thus instead of being obliged to give valuable produce for useless Minerals, that produce would purchase the things we stand in need of, and we should obtain a sufficient circulating medium by giving the people what they have already a right to demand—solid assurance in the integrity of their rulers.

The next consideration which offers is the amount of the public Debt, and every good American must lament that confusion in public Affairs which renders an accurate state of it unattainable. But it must continue to be so until all accounts, both at home and abroad, are finally adjusted. The enclosed is an estimate furnished by the Comptroller of the Treasury from which it appears that there is already an acknowledged debt, bearing interest to the amount of more than twelve million of Dollars. On part of this also there is a large arrearage of Interest, and there is a very considerable debt unsettled, the Evidence whereof exists in various Certificates given for property applied to the public service. This (including pay to the Army previous to the present year’s service) connot be estimated at less than between seven and eight millions. Our Debt to his most Christian Majesty is about five millions. The nearest guess, therefore, which can be made at the sum Total is from twenty-five to twenty-seven million of Dollars; and if to this we add what it may be necessary to borrow for the year 1783, the amount will be (with Interest) by the time proper Revenues are obtained considerably above thirty millions.

Of course the interest will be between eighteen hundred thousand and two million Dollars. And here previous to the consideration of proper Revenues it may not be amiss to make a few general observations, the first of which is, that it would be injurious to the United States to obtain money on loan without providing before hand the necessary funds. For if those who are now so deeply engaged to support the War will not grant such funds to procure immediate relief, certainly those who come after them will not do it to pay a former debt. Remote objects dependent on abstract reasoning never influence the mind like immediate sensibility. It is, therefore, the province of wisdom to direct to proper objects that sensibility which

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is the only motive to action among the mass of Mankind. Should we be able to get money from the Dutch without first providing funds, which is more than doubtful, and should the several States afterward neglect making provision to perform the engagements of Congress, which is more than probable, the Credit of the United States abroad would be ruined forever. Very serious Discussions also might be raised among Foreign Powers. Our Creditors might have recourse to Arms and we might dishonorably be compelled to do what we dishonestly had left undone.

Secondly, the idea which many entertain of soliciting Loans abroad to pay the Interest of Domestic Loans is a measure pregnant with its own destruction. If the States were to grant Revenues sufficient only to pay the Interest of present Debts, we might perhaps obtain new Credit upon a general opinion of our Justice, tho’ it is far from being certain. But when we omit paying by Taxes the Interest of Debts already contracted & ask to borrow for the purpose, making the same promises to obtain the Loans which had already been made to obtain the old, we shall surely be disappointed.

Thirdly, it will be necessary not only that Revenues be granted, but that those Revenues be amply sufficient for the purpose because (as will presently appear) a deficiency would be highly pernicious while an excess would be not only unprejudicial but advantageous. To perceive this with all necessary clearness, it must be remembered that the Revenues asked for on this occasion must be appropriated to the purpose for which they were asked. And in like manner the sums required for current expenditures must be appropriated to the Current Service. If then the former be deficient, the latter can not be brought in to supply the deficiencies, and of course the public credit would be impaired. But should there be an excess of Revenue it could be applied in payment of a part of the debt immediately. And in such case if the Credits should have depreciated, they would be raised to par, and if already at par, the offer of payment would induce the creditors to lower the Interest. Thus in either case the means of making new loans on good terms would be extended, and the necessity of asking more Revenues obviated. Lastly, the Revenues ought to be of such a nature as naturally and necessarily to increase, for Creditors will have a greater confidence

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when they have a clear prospect of being repaid, and the People will always be desirous to see a like prospect of relief from the Taxes. Besides which it will be necessary to incur some considerable expence after the War in making necessary establishments for a permanent naval force. And it will be least objectionable to borrow for that purpose on funds already established.

The requisition of a five per cent. Impost made in the 3rd of February, 1781, has not yet been complied with by the State of Rhode Island, but 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. will 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 tho’ it may produce more, yet probably it will not produce so much.

It was in consequence of this that on the 27th 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 free men and on all male slaves between sixteen and sixty (excepting such as are in the Federal Army, and such as are by wounds or otherwise rendered unfit for service) and an excise of one-eighth of a Dollar per Gallon on all distilled Spirituous 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.

What has been the fate of these propositions I know not, but I will beg leave on this occasion not only to review them, but also to state some reasons in their favor and answer some objections against them. And first as to a Land Tax the advantages of it are, that it can be reduced to a certainty as to the amount and time, that no extraordinary means are necessary to ascertain it, and that land being the ultimate object of human averice, and that particular Species of permanent property, which so peculiarly be to a long

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Country as neither to be removed or concealed, it stands foremost for the object of taxation and ought most particularly to be burthened with those Debts which have been incurred by defending the freedom of its inhabitants.

But besides these general reasons there are some which are in a manner peculiar to this Country. The Lands of America may as to the proprietors be divided into two kinds. That which belongs to the great Land-holders, and that which is owned and occupied by the industrious cultivators. This latter class of Citizens is generally speaking the most numerous, and most valuable part of a community. The artisan may under any Government minister to the luxuries of the rich, and the rich may under Government obtain the luxuries they covet. But the free husbandman is the natural Guardian of his Country’s Freedom. A Land Tax will probably at the first mention startle this order of men, but it can only be from the want of reflection or the delusion must be kept up by the artifice of others. To him who cultivates from one to five hundred Acres a dollar per hundred is a trifling object, but to him who owns a hundred thousand it is important.

Yet a large proportion of America is the property of great land-holders. They monopolize it without cultivation, they are (for the most part) at no expence either for money or personal service to defend it, and keeping the price higher by monopoly than otherwise it would be, they impede the settlement and culture of the Country.

A Land Tax, therefore, would have the salutary Operation of an Agrarian Law without iniquity. It would relieve the indigent and aggrandize the State by bringing property into the hands of those who would use it for the benefit of Society. The objections against such a Tax are two-fold; first, that it is unequal, and secondly, that it is too high.

To obviate the inequality, some have proposed an estimate of the value of different kinds of Lands. But this would be improper, because first, it would be attended with great delay, expence and inconvenience; secondly, it would be uncertain, and, therefore, improper, particularly when considered as a fund for public debts; thirdly, there is no reason to believe that any estimate would be just, and even if it were it must be annually varied or else come

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within the force of the objection as strongly as ever. The former would cost more than the latter and the latter would not afford the remedy asked for. Lastly, such valuations would operate as a Tax upon Industry, and promote that Land monopoly which every wise Government will study to repress.

But farther, the true remedy for the inequality will be obtained in the apportioning other Taxes, of which there will always be enough to equalize this. Besides, the Tax being fixed and permanent, it is considered in the price of Land on every transfer of Property, and that produces a degree of equality which no valuation could possibly arrive at. In a word, if exact numerical proportion be sought after in Taxes, there would be no end to the search. Not only might a Poll Tax be objected to as too heavy on the Poor and too light on the Rich, but when that objection was obviated the Physical differences in the human frame would alone be as endless a source of contention as the different qualities of Land.

The second objection that the Tax is too high is equally futile with the former. Land which is so little worth that the owner will not pay annually one penny per Acre for the defence of it, ought to belong to the Society by whom the expence of defending it is defrayed.

But the truth is that this objection arises from, and is enforced by those men who can very well bear the expence, but who wish to shift it from themselves to others. I shall close this subject by adding that as such a Tax would, besides the benefits to be derived from the object of it, have the farther advantage of encouraging settlements and population, this would rebound, not only to the National good, but even to the particular good of Land-holders.

With respect to the Poll Tax, there are many objections against it, but in some of the States a more considerable Poll Tax already exists without inconvenience.

The objections are principally drawn from Europe by men who do not consider that a difference of circumstances make a material difference in the nature of political operations. In some part of Europe where nine-tenths of the people are exhausted by continual labor to procure bad cloathing and worse food, this Tax would be extremely oppressive, but in America where three days of Labor produce sustenance for a week, it is not unreasonable to ask two

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days out of a year as a Contribution to the payment of public debts. Such a Tax would, on the Rich, be next to nothing, on the middling rank it will be of little consequence and it cannot affect the Poor because such of them as are unable to Labor will fall within the exception proposed.

In fact, the situation of America differs so widely from that of Europe as to the matter now under consideration that hardly any maxim which applies to one will be alike applicable to the other. Labor is in such demand among us that the Tax will fall on the consumer.

An able bodied man who demands one hundred dollars bounty to go into a Military Service for three years cannot be oppressed by the annual payment of one Dollar while not in that service. This Tax will also have good effect of placing before the eyes of Congress the number of men in the several States an information always important to Government.

The excise proposed is liable to no other objection than what may be made against the mode of collection, but it is conceived that this may be such as can produce no ill consequences. Excise Laws exist and have long existed in the several States. Of all Taxes those on the consumption of articles are most agreeable, because being mingled with the price they are less sensible to the people, and without entering into a discussion with which speculative Men have amused themselves on the advantages and disadvantages of this Species of Taxation, it may be boldly affirmed that no inconvenience can arise from laying a heavy Tax on the use of Ardent Spirits. These have been always equally prejudicial to the Constitution and Morals of the People.

The Tax will be a means of compelling Vice to support the cause of Virtue, and like the Poll Tax will draw from the idle and dissolute that contribution to the public Service which they will not otherwise make.

Having said this much on the propriety of these Taxes, I shall pray leave to assure you of my ready acquiescence in the choice of any others which may be more agreeable to the United States in Congress, praying them nevertheless that as the situation of the respective States is widely different, it will be wise to adopt a variety of Taxes, because by this means the consent of all will be more

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readily obtained than if such are chosen as will fall heavy only on particular States.

The next object is the collection which, for the most obvious reasons ought to be by authority derived from the United States. The collection of a Land Tax as has been observed above will be very simple, that of the Poll Tax may be equally so, because Certificates of the payments may be annually issued to the Collectors, and they be bound to return the Certificates or the Money and empowered to compel a payment by every man not possessed of a Certificate.

If, in addition to this, those who travel from one State to another be obliged to take out and pay for a new Certificate in each State that would operate an useful regulation of Police, and a slight distinction between those and the Common Certificates would still preserve their Utility in numbering the people.

It is not necessary to dwell on the mode of Collecting these Branches of Revenue, because (in reason) a determination on the propriety of the Taxes should precede it. I will only take the Liberty to drop one Idea, with respect to the Impost already required.

It is conceived that Laws should be so framed as to leave little or nothing to the discretion of those by whom they are executed. That Revenue Laws in particular should be guarded in this respect from Odium being (as they are) sufficiently odious in themselves, and, therefore, that it would have been well to have stipulated the precise sum, payable on different Species of Commodities. The objection is that the List (to be accurate) must be numerous. But this accuracy is unnecessary, the description ought to be very short and general so as to comprize many commodities under one head, and the duty ought to be fixed according to their average value. The objection against this regulation is, that the Tax on fine commodities would be trivial, and on coarse commodities great.

This, indeed, is true, but it is desirable for two reasons. First, that coarse and bulky commodities could not be smuggled to evade the heavy duty, and that fine commodities would not be smuggled to evade the light duty.

Secondly, that coarse commodities (generally speaking) minister to the demands of necessity or convenience, and fine commodities

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to those of Luxury. The heavy duty on the former would operate as encouragement to produce them at home, and by that means a stoppage of our Commerce in time of War would be most felt by the wealthy who have always the most abundant means of procuring relief.

I shall now, Sir, take the Liberty to suppose that the Revenues I have mentioned or some others to the amount of at least two millions net annual produce were asked for and obtained as a pledge to the Public Creditors, to continue until the Principal and Interest of the Debts contracted, or to be contracted should be finally paid. This supposition is made that I may have an opportunity (thus early) to express my sentiments on the mode of appropriation. It would be as follows: Any one of the Revenues being estimated, a Loan should be opened on the Credit of it by subscription to a certain amount, and Public Debts of a particular description (or Specie) be received in payment of the subscriptions. This Funded Debt should be transferable under particular forms, calculated for the prevention of fraudulent and facilitating of honest negotiations.

In like manner on each of these Revenues should subscriptions be opened, proceeding by degrees so as to prevent any sudden revolution in money matters, such revolutions being always more or less injurious.

I should further propose that the surplus of each of these Revenues (and care should be taken that there would be a surplus) should be carried to a Sinking Fund, on the Credit of which, and the general promises of Government, new Loans should be opened when necessary. The interest should be paid half yearly, which would be convenient to the Creditors and to the Government, as well as useful to the people at large, because by this means if four different Loans were opened at different times the Interest would be payable eight times in the year, and thus the money would be paid out of the Treasury as fast as it comes in, which would require fewer Officers to manage the business, keep them in more constant and regular employment, dispence the Interest so as to command the confidence and facilitate the views of the Creditors and return speedily the Wealth obtained by Taxes into the common stock. I know it will be objected that such a mode of Administration would

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enable speculators to perform their operations. A general answer to this would be that any other mode would be more favorable to them

But further, I conceive:

First, that it is much beneath the dignity of Government to intermeddle in such considerations.

Secondly, that speculators always do least mischief where they are left most at liberty.

Thirdly, that it is not inhuman prudence to counteract their operations by Laws, whereas, when left alone they invariably counteract each other.

And fourthly, that even were it possible to prevent speculation it is precisely the thing which ought not to be prevented, because he who wants money to commence, pursue or extend his business, is more benefitted by selling stock of any kind (even at a considerble discount) than he would be by the rise of it at a future period, every man being able to judge better of his own business and situation than the Government can for him. So much would not perhaps have been said on the head of this objection if it did not naturally lead to a position which has hitherto been ruinous and might prove fatal.

There are many men (and some of them honest men) whose zeal against speculation leads them to be some times not only unmindful of sound policy, but even of moral Justice. It is not uncommon to hear that those who have bought the public Debts for small sums ought only to be paid their purchase money. The reasons given are, that they have taken advantage of the distressed Creditor and shown a diffidence in the public faith.

As to the first, it must be remembered that in giving the creditor money for his debt, they have at least afforded him some relief which he could not obtain elsewhere, and if they are deprived of the expected benefit they will never afford such relief again.

As to the second, those who buy up the public Debts show at least as much confidence in the public faith as those who sell them. But allowing (for argument’s sake) that they have exhibited the diffidence complained of, it would certainly be wiser to remove than to justify it.

The one mode tends to create, establish and secure public Credit, and the other to sap, overturn and destroy it. Policy is, therefore, on this (as I believe it to be on every other occasion) upon

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the same side of the question with honesty. Honesty tells us that the duty of the public to pay is like the same duty in an individual, having benefitted by the advances they are bound to replace them to the party or to his Representatives. The Debt is a Species of property, and whether disposed of for whole nominal value or the half, for something or for nothing is totally immaterial. The right of receiving and the duty of paying must always continue the same.

In a word that Government which can (through the intervention of its Courts) compel payment of private Debts and performance of private contracts, on the principles of distributive Justice, but refuse to be guided by those principles as to their own contracts and debts merely because they are not amenable to human Laws, show a flagitious contempt of moral obligations which must necessarily weaken as it ought to do their authority over the people.

Before I conclude this long letter it will be unpardonable not to mention a fund which has long since been suggested, and dwells still in the minds of many.

You, doubtless, Sir, anticipate my naming of what are called the Back Lands. The question as to the property of those Lands, I confess myself utterly incompetent to decide, and shall not for that reason presume to enter on it. But it is my duty to mention that the offer of a pledge, the right to which is contested would have ill consequences, and could have no good ones. It could not strengthen our Credit because no one would rely on such a pledge, and the recurrence to it would give unfavorable impressions of our Political Sagacity. But admitting that the right of Congress is clear, we must remember also that it is disputed by some considerable members of the Confederacy. Dissentions might arise from hasty decisions on the subject, and a Government torn by intestine commotions is not likely to acquire and maintain Credit at home or abroad.

I am not, however, the less clear in my opinion that it would be alike useful to the whole Nation and those very constituent parts of it, that the entire disposition of these Lands should be in Congress. Without entering, therefore, into the ligitated points, I am induced to believe, and for that reason to suggest, the proposing this matter to the States as an amicable arrangement. I hope

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to be pardoned when I add, that considering the situation of South Carolina and Georgia it might be proper to ask their consent to matters of clearest right. But that supposing the right to be doubtful urging a decision in the present moment might have a harsh and ungenerous appearance. But if we suppose this matter to be arranged either in the one mode or in the other so that the right of Congress be rendered indisputable (for that is a previous point of indispensable necessity) the remaining question will be as to the appropriation of that fund. And I confess it does not appear to me that the benefits resulting from it are such as many are led to believe. When the imagination is heated in pursuit of an object, it is generally over-rated. If these lands were now in the hands of Congress and they were willing to mortgage them to their present Creditors, unless this was accompanied with due provision for the Interest, it would bring no relief. If these lands were to be sold for the public Debt they would go for almost nothing. Those who want money could not afford to buy the land. Their Certificates would be bought up for a trifle. Very few Monied men would become possessed of them, because very little money would be vested in so remote a speculation. The small number of purchasers would easily and readily combine. In consequence they would acquire the land for almost nothing, and effectually defeat the Intentions of Government, leaving it still under the necessity of making farther provision after having needlessly squandered an immense property. This reasoning is not new, it has been advanced on similar occasions before, and the experience which all America has had of the sales of Confiscated estates and the like, will now show that it was well founded. The Back Lands then will not answer our purpose without the necessary Revenues. But those Revenues will alone produce the desired effect. The Back Lands may afterwards be formed into a Fund for opening new Loans in Europe on a low Interest, redeemable at a future period (for instance twenty years) with a right reserved to the Creditors of taking portions of those Lands on the non-payment of their Debts at the expiration of that term. Two modes would offer for liquidation of those Debts. First to tender payments during the Term to those who would not consent to alter the nature of the Debt which (if our Credit be well established) would place it on the general footing
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of National faith. And Secondly, to sell portions of the Land (during the Term) sufficient to discharge the mortgage. I persuade myself that the consent of the reluctant States might be obtained, and that this fund might hereafter be converted to useful purposes. But I hope that in a moment when the joint efforts of all is indispensable no cause of altercation may be mingled unnecessarily in a Question of such infinite Magnitude as the restoration of public Credit. Let me add, Sir, that unless the money of Foreigners be brought in for the purpose, sales of public Lands would only absorb that surplus wealth which might have been exhaled by Taxes. So that in fact no new recourse is produced, and that while (as at present) the demand for money is so great as to raise Interest to five per cent. per month, Public Lands must sell extremely low, were the title ever so clear. What then can be expected when the validity of that title, is one object of the War?

ROBT. MORRIS.

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CALCULATIONS TO SHOW THE EFFECTS OF A YEARLY LOAN OF £10 FOR TEN YEARS ON THE SUPPOSITION THAT THE INTEREST OF MONEY BE £6 AND PROFITS £12 PER CENT.
[From Executive Letter Book.]
Dr.
First year borrowed
£10
First year borrowed
£10
10
10
2nd year interest at 6 per ct.
6
Second year profits at 12 per ct.
1.
2
10.
6
11.
2
Paid interest
6
Paid
6
10
10.
6
Borrowed
10
Borrowed
10
20
20.
6
Third year interest
1.
2
Third year profits
2
472
21.
2
23.
072
Paid interest
1.
2
Paid
1.
2
20
21.
872
Borrowed
10
Borrowed
10
30
31.
872
Fourth year interest
1.
8
Fourth year profits
3.
824
31.
8
35.
696
Paid interest
1.
8
Paid
1.
8
30.
0
33.
896
Borrowed
10
Borrowed
10
40
43.
896
Fifth year interest
2.
4
Fifth year profits
5.
267
42.
4
49.
163
Paid interest
2.
4
Paid
2
4
40
46
763
Borrowed
10
Borrowed
10
50
56.
763
Sixth year interest
3
Sixth year profits
6.
811
53
63.
574
Paid interest
3
Paid
3
50
60
574
Borrowed
10
Borrowed
10
60
70.
574
Seventh year interest
3.
6
Seventh year profits
8.
468
63.
6
79.
042
Paid interest
3.
6
Paid
3.
6
60
75.
442
Borrowed
10
Borrowed
10
-------------------- page 379 --------------------
Dr.
£70
£85.
442
Eighth year interest
4.
2
Eighth year profits
10.
253
74.
2
95.
695
Paid interest
4.
2
Paid
4.
2
70
91.
495
Borrowed
10
Borrowed
10
80
101.
495
Ninth year interest
4.
8
Ninth year profits
12.
178
84.
8
113.
673
Paid interest
4.
8
Paid
4.
8
80
108.
873
Borrowed
10
Borrowed
10
90
118.
873
Tenth year interest
5.
4
Tenth year profits
14.
264
95.
4
113.
137
Paid interest
5.
4
Paid
5.
4
90
127.
737
Borrowed
10
Borrowed
10
100
137.
737
End of tenth year interest
6
End of tenth profits
16.
528
106
154.
265
Paid interest
6
Paid
6
100
148.
265
Yearly interest
6
Yearly profits
17.
791
Deduct interest
6
11.
791