At the instance
of Hamilton, the previous question was carried; and four
days after, he laid before congress an address to that
state, prepared in answer to the speaker's letter.
of Hamilton, the previous question was carried; and four
days after, he laid before congress an address to that
state, prepared in answer to the speaker's letter.
Hamilton - 1834 - Life on Hamilton - v2
handle.
net/2027/uva.
x000275492 Public Domain, Google-digitized / http://www.
hathitrust.
org/access_use#pd-google
? 12 TITELTFEOF
the treasury forbade its adoption ; and notwithstanding the
exertions of the superintendent of finance, congress were
compelled to pass a resolution suspending the payment of
the interest on the loan-office certificates. --The only re-
maining vestige of public credit was effaced.
This session, so fruitless in results, at last closed with
another requisition of six millions of dollars for the cur-
rent service: again showing the impotence of what Ham-
ilton had long since pronounced it--" This futile and
senseless confederation. "
The community presented in its private relations a not
less disheartening scene. The waste of war had pro-
duced an increased demand for the products of agricul-
ture, which in some measure supplied the want of a
foreign market; and the expenditures of the government
had, during its earlier periods, created a fulness and
rapidity of circulation which bore the semblance of pros-
perity. The numbers employed in military service had
also induced an increased demand for labour, so as to
enhance its value. But when the currency depreciated,
and the wants of the government were reduced, when
trade began to be restored to its natural level, and the
enforcement of debts followed, the people awakened from
their illusions; the tranquillity of society was disturbed,
and it seemed as though a pestilence, as unforeseen as fatal,
was sweeping over the land. i
To these evils flowing from the obstruction of industry,
from vitiated unfunded paper emissions, from national
bankruptcy, were added the pernicious consequences of
legislative proscription. It was after a comprehensive
survey of these manifold evils that Hamilton remarked,
"The more I see, the more I find reason for those who
love this country to weep over its blindness. "
Various circumstances combined to render the session
of congress which had just commenced one of the deepest
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? HAMILTON. 13
interest--the period at which it assembled, the retire-
ment of many of the elder members who had previously
directed the public councils, the devolution of these upon
younger men, whose views had not been developed, and
the importance of the topics upon which they were called
to act.
The principal of these were--the restoration of the
public credit by the reduction of the expenditures of
the confederacy, and by the establishment of perma-
nent funds for its support, and for the redemption of
the debt; the adjustment of the terms of peace, and the
conclusion of a treaty with England; the organization
of a peace establishment; and the disbanding of the residue
of the army under circumstances of peculiar embarrass-
ment.
Of the proceedings on these questions, few other memo-
rials remain than those which are to be gleaned from the
journals of congress, and such occasional lights as may be
derived from the few letters which have been preserved
relating to this period. Unfortunately for the truth and
for our national fame, no authentic statement of the de-
bates exists; and instead of a sketch of the ardent discus-
sions which took place, and which so much enrich the
contemporaneous history of the British parliament, a bare
recital of a part of the naked results can only be made.
Yet these are fully deserving attention, as giving a pro-
gressive view of Hamilton's opinions and services in the
school which prepared him for his subsequent career, and
as indispensable to the study of American history.
The federal legislature was organized by the election
of Elias Boudinot as president, a delegate from New-Jer-
sey, who had rendered many important services, had made
many sacrifices, and deservedly enjoyed the largest confi-
dence.
The greatest number of members who attended during
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? 14
THE LIFE OF
this session did not exceed thirty; of these, Witherspoon,
Clymer, Elsworth, McKean, Floyd, and Clark, had been
delegates in seventeen hundred and seventy-six.
The first, a native of Edinburgh and a divine, had ac-
quired celebrity from the powerful talent he had evinced
in polemical controversy, had received a finished educa-
tion, and was chiefly distinguished for that penetrating
shrewdness and invincible constancy of purpose which
mark the national character of the country of his birth.
Clymer was a merchant of Philadelphia. His known
probity had given him a strong hold on the confidence of
that city. His eminent firmness had recommended him to
the convention of Pennsylvania as a delegate to congress,
when Dickinson refused to sign the Declaration of Inde-
pendence, and other members had withdrawn; and thus
his name is signally connected with that imperishable docu-
ment. At a later period of the session, Pennsylvania was
also represented by Wilson, a lawyer of a vigorous and
cultivated intellect.
Randolph having retired, was succeeded by Colonel
Bland, who had served with reputation in the army, was a
man of comprehensive and liberal views, and of a probity
unblemished, unsuspected, and unsuspicious. With him
were associated Jones and Lee, Mercer and Madison,
composing the delegation from Virginia. The intimate
connection of the latter with the incidents of this narra-
tive, places him so frequently in view, as to supersede the
necessity of delineating a character not easily analyzed.
John Rutledge, regarded by South Carolina as the great
pillar of the revolution in that state, had long presided
over her councils, and brought into this assembly all the
weight of an established reputation, the influence of in-
flexible determination, great experience, high eloquence.
Oliver Elsworth soon after took his seat, first among the
patriots whom Connecticut boasts. He had early acquired
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? HAMILTON. 15
much reputation at the bar for his accurate and extensive
professional attainments, and a practical sagacity, which,
after long service, was matured into a high civil prudence.
Relying on the justness of his own intellect, he did not
often seek the conflict of debate; but when an exertion
was least anticipated, by the union of strength with con-
summate skill, he rarely failed to triumph over the adverse
party.
With these able men Hamilton was now associated.
To prepare him for the high office to which he was des-
tined, no individual could have been placed in more aus-
picious circumstances. As the youthful champion of
popular rights against the advocates of arbitrary power,
his mind was early conversant with all the great funda-
mental principles of civil liberty. Mingling with the peo-
ple at the outbreak of the revolution, he entered intimately
into all their sympathies, and saw and measured the con-
flicting forces of reason and passion on masses of men,
and learned to give to each its due weight and value.
In the commission which he held during the campaign
of seventeen hundred and seventy-six, he was taught, in a
most active and arduous service with the untrained and
ill-supplied levies of an army little organized, the impor-
tant lessons of self-dependence and self-command, and
witnessed all the resource and elasticity, endurance and
confidence, of the American character.
As the confidential aid of the commander-in-chief, his
illustrious friend, every object was placed before him on
the largest scale. He looked upon the country as from an
eminence, and was enabled to survey it in all its bearings,
and to collect all the lights of the vast panorama.
Intimate with all the inmost councils of his chief, parti-
cipating in all his hopes and fears, he was there not only
to suggest, to concert, to compare, to arrange with him
the measures that were resolved, but was in their constant
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? 16 THE LIFE OF
administration. Hence, each day he was called to think
for the morrow, and each hour learned some lesson of
practical wisdom. Plans and results in their instructive
march passed before him in rapid succession. His salient
genius was forever in motion, and he was forever under
the pressure of responsibility.
The correspondence with the states and with congress
informed him of the complexity and defects of the several
systems, each asking and each denying aid to their mutual
infantile dependence.
His foreign birth was a public advantage. It left him
free from all the local prejudices which infect and are the
bane of a confederacy. His strong vision was obstructed
by nothing artificial; and when contending for the com-
mon cause of liberty, he felt that he was contending for a
Nation of freemen. The states were mere political ex-
istences, which might vanish in a moment. He allied all
his thoughts and directed all his acts to one great, and, as
he hoped, enduring entity--the whole people of the United
States.
It was to forward this great purpose, to form " of many
one nation," that he accepted a place in the public councils;
and while his best efforts were exerted to meet present
exigencies, the mode in which he met them, shows that he
was ever intent upon the great purpose of securing to
them the blessings of liberty in the establishment, by them-
selves, of a balanced constitution of government.
Of the distinctive features of that commanding and
winning eloquence, the wonder and the delight of friend
and foe, but of which no perfect reports are preserved, a
delineation will not now be attempted.
It suffices here to observe how deeply his modes of
thinking imparted to the proceedings of this body a new
tone and character. And those who remark in these pages
the sentiments with which he regarded the demands of the
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? HAMILTON. 17
army, how solemn his respect for the requirements of jus-
tice, how incessant and undespairing his efforts to fulfil
them, can best image to themselves with what living touches
and thrilling appeals he called up before this senate their
accumulated wrongs, and with what deep emotions and
almost holy zeal he urged, he enforced, he implored, with
all the ardour of his bold and generous nature, an honest
fulfilment of the obligations to public faith.
Of the estimation in which he was early held, these facts
recently known give strong evidence. He was earnestly
recommended by Greene and La Fayette to the important
commission of adjutant-general; and when the station in
the country of highest trust and widest influences, next to
that of the commander-in-chief, the superintendence of
the finances, was first to be filled, he was in view.
General Sullivan, a delegate from New-Hampshire, was
answered by Washington in these terms:--" The measure
adopted by congress of appointing ministers of war, finance,
and for foreign affairs, I think a very wise one. To give
efficacy to it, proper characters will, no doubt, be chosen
to conduct the business of these departments. How far
Colonel Hamilton, of whom you ask my opinion as a finan-
cier, has turned his thoughts to that particular study, I am
unable to answer, because I never entered upon a discus-
sion upon this point with him. But this I can venture to
advance from a thorough knowledge of him, that there are
few men to be found, of his age, who have a more general
knowledge than he possesses; and none, whose soul is
more firmly engaged in the cause, or who exceeds him in
probity and sterling virtue. "*
Although the greater number of the members of con-
gress had assembled at the opening of the session on the
* Sullivan replied: " I am glad to find that you entertain the same senti.
menta of the virtues and abilities of Colonel Hamilton as I have ever done
myself. After I wrote, I found the eyes of congress turned upon Robert
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? 18
THE LIFE OF
fourth of November,* yet, with the exception of the discus-
sion of a proposition to quiet the long-pending controversy
between New-York and Vermont, no topic of permanent
interest occupied their deliberations until after the arrival
of Hamilton, who took his seat on the twenty-fifth of that
month.
During the following week, having in view an efficient
system of finance, he is seen uniting in a motion to post-
pone a proposed provision for certain temporary corps of
the army; recommending as chairman of the army commit-
tee, in order to reduce the expenditure, the substitution of
a specified allowance in money for the stipulated rations;
and reporting a resolution dissuading any relief to the
foreign officers then in the service, (a class of meritorious
individuals, whose situation he declared involved a pecu-
liar hardship, and required, if possible, some discrimination
in their favour,) lest, in the embarrassed state of the finan-
ces, it might derange the general plans of the superintendent
of finance, to whose discretion they were referred.
Memorials from the legislature of Pennsylvania, which
had been laid before congress, but had not been acted
upon, presented to them a subject of great delicacy and
magnitude.
That state had late in the preceding summerf complained,
as a serious grievance, of the inability of its citizens to
settle their accounts with the United States, of the non-
payment of the debts due to them by the public, and of
the suspension of the interest on certain classes of certifi-
cates. Expressing an apprehension that this suspension
would be extended farther, she represented that other
states were making provision for the liquidation and pay-
ment of the debts due to their citizens; that the collection
Morris as financier; I did not therefore nominate Colonel Hamilton, as I
foresaw it would be a vain attempt. "
* 1782. t August 28,1782.
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? HAMILTON.
19
of taxes was impeded; and urged that a general plan
should be devised for settling the unliquidated debts of the
United States, for paying them or a part of them, and
also for the regular and punctual discharge of the interest
on all the public debts, until the principal should be finally
discharged. These views were again enforced upon con-
gress in a recent memorial. *
The whole extent of the contributions of the confeder-
acy during the past year, to a requisition for eight millions
of dollars, had little exceeded four hundred thousand, while
the foreign loans had yielded less than a million; with
which sums the government had been carried on.
To satisfy the demands of the public creditors in this
state of the finances, was evidently impracticable; yet how
to refuse without offending this central state, conspicuous
for its liberal policy throughout the war, and which num-
bered among its claimants many of those who had most
largely contributed to the relief of the treasury, was a con-
sideration of the highest moment. To assuage its growing
irritation, and by a frank exposition of their true situation,
while congress showed its inability to fulfil their engage-
ments, to endeavour to inspire confidence in the ultimate
discharge of the debt, was a course dictated by integrity
and policy.
With this view, Hamilton, on the fourth of December,
moved the appointment of a committee of conference with
her legislature.
The demands of Pennsylvania had assumed a serious
character. The alternative was presented to congress,
either to make a substantial provision for her claims, or,
without the power of coercion, to behold her appropria-
ting all her own resources to discharge the debts due by
the confederation to her own citizens.
* November 12.
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? 20
THE LIFE OF
But still more cogent motives now arose to prompt effi-
cient measures of finance. The progress of the negotia-
tions had induced a general expectation of peace, which
was confirmed by the movement of the French auxiliaries
to Boston, to embark for the West Indies.
As the probability of a treaty being concluded increased,
the reduction of the army became a topic of universal
discussion.
After their great and long privations, the army under
any other circumstances would have looked to this event
with intense gratification; for, unlike the soldiers of more
populous regions, they had relinquished avocations which
yielded them an ample competence, with a full knowledge
of the sacrifices they were about to make.
But their return to private life was now clouded with
the most desolate and appalling prospects. Loaded with
debts incurred for their subsistence, their youth gone by,
many with families worn down by poverty--these vete-
rans saw in their expected disbandment, the moment when
they were to be turned in penury upon the world, deprived
of their just dues, and without any provision for their half-
pay, by the assurance of which the officers had been en-
couraged to continue in the service, and to which they
looked as their chief resource in the closing scenes of
life.
Influenced by a sense of their wrongs, their murmurs
increased, and in no bosom did they excite stronger sym-
pathy than in that of their fellow-soldier and friend.
With such urgent motives for an early action upon this
subject, Hamilton, two days after,* moved a resolution di-
recting the superintendent of finance to represent to the
states the indispensable necessity of their complying with
the requisition for raising a sum equal to a year's interest
* December 6.
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? HAMILTON.
21
of the domestic debt, and two millions for the current
service; and to point out the embarrassments which
resulted from appropriations by the states of the moneys
required by congress, " assuring them that they were deter-
mined to make the fullest justice to the public creditors an
invariable object of their counsels and exertions. "
His resolution embraced the appointment of a deputa-
tion to Rhode Island, to urge the grant of the impost " as -
a measure essential to the safety and reputation of these
states;" and with a view to carry it immediately into effect,*
he brought forward the draft of an ordinance for its col-
lection.
The deputation to Rhode Island was appointed, its dele-
gates alone dissenting, and the following letter, prepared
by Hamilton, was addressed to the governor of that state. t
"SIR,
"Congress are equally affected and alarmed by the infor-
mation they have received, that the legislature of your
state at their last meeting have refused their concurrence
in establishing a duty on imports. They consider this
measure- as so indispensable to the prosecution of the war,
that a sense of duty and regard to the common safety,
compel them to renew their efforts to engage a compliance
with it; and in this view they have determined to send a
deputation of three of their members to your state, as ex-
pressed in the enclosed resolution. The gentlemen they
have appointed will be able to lay before you a full and
just representation of public affairs, from which they flat-
ter themselves will result a conviction of the propriety of
their solicitude upon the present occasion. Convinced by
past experience of the zeal and patriotism of the state of
Rhode Island, they cannot doubt that it will yield to those
* December 10.
t December 11.
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? 22 THE LIFE OF
urgent considerations which flow from a knowledge of our
true situation.
"They will only briefly observe, that the increasing dis-
contents of the army, the loud clamours of the public cred-
itors, and the extreme disproportion between the public
supplies and the demands of the public service, are so
many invincible arguments for the fund recommended by
congress. They feel themselves unable to devise any
other, that will be more efficacious, less exceptionable, or
more generally agreeable; and if this is refused, they an-
ticipate calamities of a most menacing nature--with this
consolation, however, that they have faithfully discharged
their trust, and that the mischiefs which may follow cannot
be attributed to them.
"A principal object of the proposed fund is to procure
loans abroad. If no security can be held out to lenders,
the success of these must necessarily be very limited.
The last accounts on the subject were not flattering; and
when intelligence shall arrive in Europe, that the state of
Rhode Island has disagreed to the only fund which has yet
been devised, there is every reason to apprehend it will
have a fatal influence upon their future progress.
"Deprived of this resource, our affairs must in all proba-
bility rapidly hasten to a dangerous crisis, and these states
be involved in greater embarrassments than they have yet
experienced, and from which it may be much more difficult
to emerge. Congress will only add a request to your excel-
lency, that if the legislature should not be sitting, it may
be called together as speedily as possible, to enable the
gentlemen whom they have deputed, to perform the pur-
pose of their mission. "
A similar appeal had been made the previous summer
to which formal objections were interposed.
The next day the delegates from that state laid before
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? HAMILTON.
23
congress a letter from the speaker of its lower house.
This letter stated that the recommendation of congress
nad been unanimously rejected, and gave the grounds of
that rejection. Upon the basis of this procedure, the
Rhode Island delegates moved that the resolve appointing
a deputation to it, should be rescinded.
At the instance
of Hamilton, the previous question was carried; and four
days after, he laid before congress an address to that
state, prepared in answer to the speaker's letter.
This paper is of great importance, as the earliest public
document in which the policy of a national revenue is dis-
cussed in the spirit of a statesman, and will be perused
with deep interest, as an exposition of the views Hamilton
had long entertained on some of the great questions upon
which he was subsequently called to act
The objections of Rhode Island were answered in suc-
cession. * The first of these alleged its inequality, as
"bearing hardest upon the commercial states. " It was
met by a statement of the general principle, that "every
duty on imports is incorporated in the price of the com-
modity, and ultimately paid by the consumer, with a profit
on the duty as a compensation" for the advance by the
merchant. An overstocked market, and competition
among the sellers, might prevent this; but in the general
course of trade, the demand for consumption preponder-
ates.
Every class of the community bears its share of the
duty in proportion to the consumption, which is regulated
by its comparative wealth. "A chief excellence," he ob-
served, " of this mode of revenue is, that it preserves a just
measure to the abilities of individuals, promotes frugality,
and taxes extravagance. " The same reasoning applies to
the intercourse between two states; either will only feel
4 J. C. 198.
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? 24
THE LIFE OF
the burden in the ratio to its consumption and wealth.
The impost, instead of bearing hardest on the most com-
mercial states, will rather have a contrary effect, though
not in a sufficient degree to justify an objection on the
part of the non-importing states. But "overnice and mi-
nute calculations in matters of this nature, are inconsistent
with national measures; and, in the imperfect state of hu-
man affairs, would stagnate all the operations of govern-
ment. Absolute equality is not to be attained; to aim at
it, is pursuing a shadow at the expense of the substance;
and in the event, we should find ourselves wider of the
mark, than if, in the first instance, we were content to ap-
proach it with moderation. "
The second objection, "that the impost would introduce
into the states officers unknown and unaccountable to them,
and was thus contrary to the constitution of the state," was
replied to at length.
"It is not to be presumed," Hamilton remarked, "that
the constitution of any state could mean to define and fix
the precise numbers and descriptions of all officers to be
permitted in the state, excluding the creation of any new
ones, whatever might be the necessity derived from that
variety of circumstances incident to all political institu-
tions. The legislature must always have a discretionary
power of appointing officers, not expressly known to the
constitution; and this power will include that of authori-
zing the federal government to make the appointments in
cases where the general welfare may require it. The de-
nial of this would prove too much; to wit, that the power
given by the confederation to congress, to appoint all
officers in the post-office, was illegal and unconstitutional.
"The doctrine advanced by Rhode Island would perhaps
prove also that the federal government ought to have the
appointment of no internal officers whatever; a position
that would defeat all the provisions of the confederation,
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? HAMILTON. 25
and all the purposes of the union. The truth is, that no
federal constitution can exist without powers that in their
exercise affect the internal police of the component mem-
bers. It is equally true, that no government can exist
without a right to appoint officers for those purposes which
proceed from, and concentre in, itself; and therefore the
confederation has expressly declared, that congress shall
have authority to appoint all such' civil officers as may be
necessary for managing the general affairs of the United
States under their direction. ' All that can be required is,
that the federal government confine its appointments to
such as it is empowered to make by the original act of
union or by the subsequent consent of the parties; unless
there should be express words of exclusion in the consti-
tution of a state, there can be no reason to doubt that it
is within the compass of legislative discretion to commu-
nicate that authority. The propriety of doing it upon the
present occasion is founded on substantial reasons.
"The measure proposed is a measure of necessity. Re-
peated experiments have shown, that the revenue to be
raised within these states is altogether inadequate to the
public wants. The deficiency can only be supplied by
loans. Our applications to the foreign powers on whose
friendship we depend, have had a success far short of our
necessities. The next resource is, to borrow from indivi-
duals. These will neither be actuated by generosity nor
reasons of state. 'Tis to their interest alone we must ap-
peal. To conciliate this, we must not only stipulate a
proper compensation for what they lend, but we must give
security for the performance. We must pledge an ascer-
tained fund, simple and productive in its nature, general
in its principle, and at the disposal of a single will. There
can be little confidence in a security under the constant
revisal of thirteen different deliberatives. It must, once
for all, be defined and established on the faith of the states,
4
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? 26
THE LIFE OF
solemnly pledged to each other, and not revocable by any
without a breach of the general compact. 'Tis by such
expedients that nations whose resources are understood,
whose reputations and governments are erected on the
foundation of ages, are enabled to obtain a solid and ex-
tensive credit. Would it be reasonable in us to hope for
more easy terms, who have so recently assumed our rank
among the nations? Is it not to be expected, that indivi-
duals will be cautious in lending their money to a people
in our circumstances, and that they will at least require
the best security we can give V
Having adverted to the peculiar motives to remove the
existing prepossessions unfavourable to the public credit,
by means the most obvious and striking, he observed :--
"It was with these views congress determined on a
general fund; and the one they have recommended must,
upon a thorough examination, appear to have fewer incon-
veniences than any other.
* It has been remarked, as an essential part of the plan,
that the fund should depend on a single will. This will
not be the case, unless the collection, as well as the appro-
priation, is under the control of the United States; for it
is evident that, after the duty is agreed upon, it may in a
great measure be defeated by an ineffectual mode of levy-
ing it. The United States have a common interest in a
uniform and equally energetic collection; and not only
policy, but justice to all the parts of the Union, designates
the utility of lodging the power of making it where the
interest is common. Without this, it might in reality ope-
rate as a very unequal tax. "
The third objection was, "That by granting to congress
a power to collect moneys from the commerce of these
states indefinitely as to time and quantity, and for the ex-
penditure of which they are not to be accountable to the
states, they would become independent of their constitu-
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? HAMILTON.
27
ents; and so the proposed impost is repugnant to the liberty
of the United States. "
"Admitting the principle of this objection to be true, still
it ought to have no weight in the present case, because
there is no analogy between the principle and the fact.
"First--The fund proposed is sufficiently definite as to
time, because it is only coextensive with the existence of
the debt contracted, and to be contracted in the course of
the war. Congress are persuaded that it is as remote from
the intention of their constituents to perpetuate that debt,
as to extinguish it at once by'a faithless neglect of pro-
viding the means to fulfil the public engagements. Their
ability to discharge it in a moderate time, can as little be
doubted as their inclination; and the moment that debt
ceases, the duty, so far as respects the present provision,
ceases with it.
"The resolution recommending the duty, specifies the
object of it to be the discharge of the principal and interest
of the debts already contracted on the faith of the United
States for supporting the present war.
"Secondly--The rate per cent. is fixed, and it is not at
the option of the United States to increase it. Though
the product will vary according to the variations in trade,
yet, as there is this limitation of the rate, it cannot be pro-
perly said to be indefinite as to quantity.
"By the confederation, congress have an absolute discre-
tion in determining the quantum of revenue requisite for
the national expenditure. When this is done, nothing re-
mains for the states separately but the mode of raising. No
state can dispute the obligation to pay the sum demanded,
without a breach of the confederation; and when the
money comes into the treasury, the appropriation is the
exclusive province of the foederal government. This pro-
vision of the confederation, (without which it would be an
empty form,) comprehends in it the principle in its fullest
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? 28
THE LIFE OF
latitude, which the objection under consideration treats as
repugnant to the liberty of the United States; to wit, an
indefinite power of prescribing the quantity of money to
be raised, and of appropriating it when raised.
"If it be said that the states, individually, having the col-
lection in their own hands, may refuse a compliance with
exorbitant demands, the confederation will answer, that
this is a point of which they have no constitutional liberty
to judge. Such a refusal would be an exertion of power,
not of right; and the same power which could disregard
a requisition made on the authority of the confederation,
might at any time arrest the collection of the duty.
"The same kind of responsibility which exists with re-
spect to the expenditure of the money furnished in the
forms hitherto practised, would be equally applicable to
the revenue from the imports.
"The truth is, the security intended to the general liberty
in the confederation, consists in the frequent election and
in the rotation of the members of congress, by which there
is a constant and an effectual check upon them. This is
the security which the people in every state enjoy against
the usurpations of their internal governments; and it is
the true source of security in a representative republic.
The government so constituted, ought to have the means
necessary to answer the end of its institution. By weak-
ening its hands too much, it may be rendered incapable of
providing for the interior harmony or the exterior defence
of the state.
"The measure in question, if not within the letter, is
within the spirit of the confederation. Congress by that
are empowered to borrow money for the use of the United
States, and, by implication, to concert the means necessary
to accomplish the end. But without insisting on this ar-
gument, if the confederation has not made proper provi-
sion for the exigencies of the states, it will be at all times
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? HAMILTON.
29
the duty of congress to suggest further provisions; and
when their proposals are submitted to the unanimous con-
sent of the states, they can never be charged with exceed-
ing the bounds of their trust. Such a consent is the basis
and sanction of the confederation, which expressly, in the
thirteenth article, empowers congress to agree to and pre-
pare such additional provision.
"The remarks hitherto made, have had reference princi-
pally to the future prosecution of the war. There still
remains an interesting light in which the subject ought to
be viewed.
"The United States have already contracted a debt in
Europe and in this country, for which their faith is pledged.
The capital of this debt can only be discharged by de-
grees; but a fund for this purpose, and for paying the
interest annually, on every principle of policy and justice,
ought to be provided. The omission will be the deepest
ingratitude and cruelty to a large number of meritorious
individuals, who, in the most critical periods of the war,
have adventured their fortunes in support of our indepen-
dence. It would stamp the national character with indeli-
ble disgrace.
"An annual provision for the purpose will be too preca-
rious. If its continuance and application were certain, it
would not afford complete relief. With many, the regular
payment of interest, by occasional grants, would suffice;
but with many more it would not. These want the use
of the principal itself, and they have a right to it; but
since it is not in our power to pay off the principal, the
next expedient is to fund the debt, and render the evidences
of it negotiable.
"Besides the advantage to individuals from this arrange-
ment, the active stock of the nation would be increased by
the whole amount of the domestic debt, and of course, the
abilities of the community to contribute to the public
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? 30 THE LIFE OF
wants; the national credit would receive and stand here-
after on a secure basis. "
This was another object of the proposed duty.
The eligibility of this fund was next shown. "The'
principal thing," he said, "to be consulted for the ad-
vancement of commerce, is to promote exports; all im-
pediments to these, either by way of prohibition or by
increasing the prices of native commodities, decreasing by
that means their sale and consumption at foreign markets,
are injurious. Duties on exports have this operation.
Tor the same reasons, taxes on possessions and the articles
of our own growth and manufacture, whether in the form
of a land tax, excise, or any other, are more hurtful to trade
than import duties. But it was not to be inferred that the
whole revenue ought to be drawn from imports; all ex-
tremes are to be rejected. The chief thing to be attended
to is, that the weight of the taxes fall not too heavily in the
first instance upon particular parts of the community: a
judicious distribution to all kinds of taxable property, is a
first principle in taxation. "
The report closed with these impressive reflections, sug-
gested by the language of Rhode Island:--
"There is a happy mean between too much confidence
and excessive jealousy, in which the health and prosperity
of a state consist. Either extreme is a dangerous vice:
the first is a temptation to men in power to arrogate more
than they have a right to; the latter enervates govern-
ment, prevents system in the administration, defeats the
most salutary measures, breeds confusion in the state, dis-
gusts and discontents among the people, and may event-
ually prove as fatal to liberty as the opposite temper.
"It is certainly pernicious to leave any government in a
situation of responsibility disproportionate to its power.
The conduct of the war is intrusted to congress, and the
public expectation turned upon them, without any compe-
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? HAMILTON. 31
M
tent means at their command to satisfy the important
trust. After the most full and solemn deliberation, under
a collective view of all the public difficulties, they recom-
mend a measure which appears to them the corner-stone
of the public safety; they see this measure suspended for
near two years--partially complied with by some of the
states, rejected by one of them, and in danger on that ac-
count to be frustrated; the public embarrassments every
day increasing; the dissatisfaction of the army growing
more serious, the other creditors of the public clamoring
for justice--both, irritated by the delay of measures for
their present relief or future security; the hopes of our
enemies encouraged to protract the war--the zeal of our
friends depressed by an appearance of remissness and want
of exertion on our part--congress harassed, the national
character suffering, and the national safety at the mercy
of events. "
Resolutions were appended to this report giving the
first public pledge of a determination to establish a sink-
ing FUND. *
On the following day, in pursuance of another report
from Hamilton, the deputation from Rhode Island was
directed to proceed as soon as possible.
While these efforts were made, a publication appeared
* Dec. 16th. --Whereas it is essential to justice and to the preservation of
public credit, that whenever a nation is obliged by the exigencies of public
affairs to contract a debt, proper funds should be established, not only for
paying the annual value or interest of the same, but for discharging the
principal within a reasonable period, by which a nation may avoid the evils
of an excessive accumulation of debt. Therefore resolved, That whenever
the nett produce of any funds recommended by congress and granted by the
states, for funding the debt already contracted, or for procuring further loans
for the support of the war, shall exceed the sum requisite for paying the in-
terest of the whole amount of the national debt which these states may owe
at the termination of the present war, the surplus of such grants shall form
a sinking fund, to be inviolably appropriated to the payment of the principal
of the said debt, and shall on no account be diverted to any other purpose. --
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? 32
THE LIFE OF
in a Boston gazette, which gave a false view of the state
of the negotiations for foreign loans, and intimated that
the danger to be apprehended was not embarrassment for
want of funds, but from contracting too large a debt.
This misrepresentation tended to impede all the exertions
to obtain a grant of permanent funds. After some in-
quiry, Howell, a member from Rhode Island, avowed
himself the author of it, and made a motion braving the
opinion of congress, which was entered upon the journal.
Aware of the importance of an official declaration of its
falsity, Hamilton offered a resolution, which was seconded
by Carroll, that congress having, in respect to the articles
of the confederation, admitted on its journals an entry of a
motion of Mr. Howell highly derogatory to the dignity
and honour of the United States, that a committee should
be appointed to report the measures respecting it. They
reported that a true state of the negotiations should be
transmitted to the governor of Rhode Island.
i The preceding address to that state, shows Hamilton's
purpose to endeavour to establish an adequate and compre-
hensive system of finance. This would have provided for
the state emissions, and state debts incurred for the com-
mon defence. An estimate which he had submitted to the
superintendent of finance, showed that the probable re-
ceipts from the impost would be insufficient. It was
necessary to increase the revenue; but before the assent
of the states could be obtained to this increase, discontents
And in order that the several states may have proper information of the state
of their finances, it is further resolved, That as soon as the public debt can
be liquidated, each state be annually furnished with the amount thereof, and
of the interest thereon; and also of the proceeds and disposition of the funds
provided for the redemption thereof. That the faith of the United States
be pledged for the observance of the foregoing resolution, and that if any
state shall think it necessary to make it a condition of their grants, the same
will be considered by congress as consistent with their resolution of the 3d
of February, seventeen hundred and eighty-one.
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? HAMILTON.
which existed as to late requisitions were to be removed.
With these views, he moved the appointment of a com-
mittee to report what further provision should be made
"for discharging the interest on the loan-office certificates
and other liquidated debts, and to revise the requisitions.
of the preceding and present year, and to report whether
the same ought to be continued or altered. "
The principal cause of the frequent collisions between
the states as to the apportionment of the public burdens,
proceeded from the failure to carry into effect the rule of
the confederation as to the ratio of contribution. That
rule contemplated an actual specific valuation of the lands
in each state granted and surveyed, with the buildings
and improvements. Objectionable as the rule was, the
federal articles had prescribed it. Feeling the obligation
of an effort to act upon it, Hamilton, on the sixth of
January, offered a resolution in " order to enable congress
to form an eventual plan towards carrying into execu-
tion" this article of the confederation. His view was, that
this valuation should be made by commissioners appointed
by and acting under the authority of the United States
upon uniform principles. This resolution, together with
those of the sixteenth of December, was referred to a
committee composed of a member from each state.
The following day the house took up another subject
connected with the fulfilment of the public faith. The
large amount of old continental bills held in the New-
England states, they having furnished the principal sup-
plies, created a strong interest in that part of the union
that some provision should be made for their redemption.
? 12 TITELTFEOF
the treasury forbade its adoption ; and notwithstanding the
exertions of the superintendent of finance, congress were
compelled to pass a resolution suspending the payment of
the interest on the loan-office certificates. --The only re-
maining vestige of public credit was effaced.
This session, so fruitless in results, at last closed with
another requisition of six millions of dollars for the cur-
rent service: again showing the impotence of what Ham-
ilton had long since pronounced it--" This futile and
senseless confederation. "
The community presented in its private relations a not
less disheartening scene. The waste of war had pro-
duced an increased demand for the products of agricul-
ture, which in some measure supplied the want of a
foreign market; and the expenditures of the government
had, during its earlier periods, created a fulness and
rapidity of circulation which bore the semblance of pros-
perity. The numbers employed in military service had
also induced an increased demand for labour, so as to
enhance its value. But when the currency depreciated,
and the wants of the government were reduced, when
trade began to be restored to its natural level, and the
enforcement of debts followed, the people awakened from
their illusions; the tranquillity of society was disturbed,
and it seemed as though a pestilence, as unforeseen as fatal,
was sweeping over the land. i
To these evils flowing from the obstruction of industry,
from vitiated unfunded paper emissions, from national
bankruptcy, were added the pernicious consequences of
legislative proscription. It was after a comprehensive
survey of these manifold evils that Hamilton remarked,
"The more I see, the more I find reason for those who
love this country to weep over its blindness. "
Various circumstances combined to render the session
of congress which had just commenced one of the deepest
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? HAMILTON. 13
interest--the period at which it assembled, the retire-
ment of many of the elder members who had previously
directed the public councils, the devolution of these upon
younger men, whose views had not been developed, and
the importance of the topics upon which they were called
to act.
The principal of these were--the restoration of the
public credit by the reduction of the expenditures of
the confederacy, and by the establishment of perma-
nent funds for its support, and for the redemption of
the debt; the adjustment of the terms of peace, and the
conclusion of a treaty with England; the organization
of a peace establishment; and the disbanding of the residue
of the army under circumstances of peculiar embarrass-
ment.
Of the proceedings on these questions, few other memo-
rials remain than those which are to be gleaned from the
journals of congress, and such occasional lights as may be
derived from the few letters which have been preserved
relating to this period. Unfortunately for the truth and
for our national fame, no authentic statement of the de-
bates exists; and instead of a sketch of the ardent discus-
sions which took place, and which so much enrich the
contemporaneous history of the British parliament, a bare
recital of a part of the naked results can only be made.
Yet these are fully deserving attention, as giving a pro-
gressive view of Hamilton's opinions and services in the
school which prepared him for his subsequent career, and
as indispensable to the study of American history.
The federal legislature was organized by the election
of Elias Boudinot as president, a delegate from New-Jer-
sey, who had rendered many important services, had made
many sacrifices, and deservedly enjoyed the largest confi-
dence.
The greatest number of members who attended during
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? 14
THE LIFE OF
this session did not exceed thirty; of these, Witherspoon,
Clymer, Elsworth, McKean, Floyd, and Clark, had been
delegates in seventeen hundred and seventy-six.
The first, a native of Edinburgh and a divine, had ac-
quired celebrity from the powerful talent he had evinced
in polemical controversy, had received a finished educa-
tion, and was chiefly distinguished for that penetrating
shrewdness and invincible constancy of purpose which
mark the national character of the country of his birth.
Clymer was a merchant of Philadelphia. His known
probity had given him a strong hold on the confidence of
that city. His eminent firmness had recommended him to
the convention of Pennsylvania as a delegate to congress,
when Dickinson refused to sign the Declaration of Inde-
pendence, and other members had withdrawn; and thus
his name is signally connected with that imperishable docu-
ment. At a later period of the session, Pennsylvania was
also represented by Wilson, a lawyer of a vigorous and
cultivated intellect.
Randolph having retired, was succeeded by Colonel
Bland, who had served with reputation in the army, was a
man of comprehensive and liberal views, and of a probity
unblemished, unsuspected, and unsuspicious. With him
were associated Jones and Lee, Mercer and Madison,
composing the delegation from Virginia. The intimate
connection of the latter with the incidents of this narra-
tive, places him so frequently in view, as to supersede the
necessity of delineating a character not easily analyzed.
John Rutledge, regarded by South Carolina as the great
pillar of the revolution in that state, had long presided
over her councils, and brought into this assembly all the
weight of an established reputation, the influence of in-
flexible determination, great experience, high eloquence.
Oliver Elsworth soon after took his seat, first among the
patriots whom Connecticut boasts. He had early acquired
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? HAMILTON. 15
much reputation at the bar for his accurate and extensive
professional attainments, and a practical sagacity, which,
after long service, was matured into a high civil prudence.
Relying on the justness of his own intellect, he did not
often seek the conflict of debate; but when an exertion
was least anticipated, by the union of strength with con-
summate skill, he rarely failed to triumph over the adverse
party.
With these able men Hamilton was now associated.
To prepare him for the high office to which he was des-
tined, no individual could have been placed in more aus-
picious circumstances. As the youthful champion of
popular rights against the advocates of arbitrary power,
his mind was early conversant with all the great funda-
mental principles of civil liberty. Mingling with the peo-
ple at the outbreak of the revolution, he entered intimately
into all their sympathies, and saw and measured the con-
flicting forces of reason and passion on masses of men,
and learned to give to each its due weight and value.
In the commission which he held during the campaign
of seventeen hundred and seventy-six, he was taught, in a
most active and arduous service with the untrained and
ill-supplied levies of an army little organized, the impor-
tant lessons of self-dependence and self-command, and
witnessed all the resource and elasticity, endurance and
confidence, of the American character.
As the confidential aid of the commander-in-chief, his
illustrious friend, every object was placed before him on
the largest scale. He looked upon the country as from an
eminence, and was enabled to survey it in all its bearings,
and to collect all the lights of the vast panorama.
Intimate with all the inmost councils of his chief, parti-
cipating in all his hopes and fears, he was there not only
to suggest, to concert, to compare, to arrange with him
the measures that were resolved, but was in their constant
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? 16 THE LIFE OF
administration. Hence, each day he was called to think
for the morrow, and each hour learned some lesson of
practical wisdom. Plans and results in their instructive
march passed before him in rapid succession. His salient
genius was forever in motion, and he was forever under
the pressure of responsibility.
The correspondence with the states and with congress
informed him of the complexity and defects of the several
systems, each asking and each denying aid to their mutual
infantile dependence.
His foreign birth was a public advantage. It left him
free from all the local prejudices which infect and are the
bane of a confederacy. His strong vision was obstructed
by nothing artificial; and when contending for the com-
mon cause of liberty, he felt that he was contending for a
Nation of freemen. The states were mere political ex-
istences, which might vanish in a moment. He allied all
his thoughts and directed all his acts to one great, and, as
he hoped, enduring entity--the whole people of the United
States.
It was to forward this great purpose, to form " of many
one nation," that he accepted a place in the public councils;
and while his best efforts were exerted to meet present
exigencies, the mode in which he met them, shows that he
was ever intent upon the great purpose of securing to
them the blessings of liberty in the establishment, by them-
selves, of a balanced constitution of government.
Of the distinctive features of that commanding and
winning eloquence, the wonder and the delight of friend
and foe, but of which no perfect reports are preserved, a
delineation will not now be attempted.
It suffices here to observe how deeply his modes of
thinking imparted to the proceedings of this body a new
tone and character. And those who remark in these pages
the sentiments with which he regarded the demands of the
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? HAMILTON. 17
army, how solemn his respect for the requirements of jus-
tice, how incessant and undespairing his efforts to fulfil
them, can best image to themselves with what living touches
and thrilling appeals he called up before this senate their
accumulated wrongs, and with what deep emotions and
almost holy zeal he urged, he enforced, he implored, with
all the ardour of his bold and generous nature, an honest
fulfilment of the obligations to public faith.
Of the estimation in which he was early held, these facts
recently known give strong evidence. He was earnestly
recommended by Greene and La Fayette to the important
commission of adjutant-general; and when the station in
the country of highest trust and widest influences, next to
that of the commander-in-chief, the superintendence of
the finances, was first to be filled, he was in view.
General Sullivan, a delegate from New-Hampshire, was
answered by Washington in these terms:--" The measure
adopted by congress of appointing ministers of war, finance,
and for foreign affairs, I think a very wise one. To give
efficacy to it, proper characters will, no doubt, be chosen
to conduct the business of these departments. How far
Colonel Hamilton, of whom you ask my opinion as a finan-
cier, has turned his thoughts to that particular study, I am
unable to answer, because I never entered upon a discus-
sion upon this point with him. But this I can venture to
advance from a thorough knowledge of him, that there are
few men to be found, of his age, who have a more general
knowledge than he possesses; and none, whose soul is
more firmly engaged in the cause, or who exceeds him in
probity and sterling virtue. "*
Although the greater number of the members of con-
gress had assembled at the opening of the session on the
* Sullivan replied: " I am glad to find that you entertain the same senti.
menta of the virtues and abilities of Colonel Hamilton as I have ever done
myself. After I wrote, I found the eyes of congress turned upon Robert
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? 18
THE LIFE OF
fourth of November,* yet, with the exception of the discus-
sion of a proposition to quiet the long-pending controversy
between New-York and Vermont, no topic of permanent
interest occupied their deliberations until after the arrival
of Hamilton, who took his seat on the twenty-fifth of that
month.
During the following week, having in view an efficient
system of finance, he is seen uniting in a motion to post-
pone a proposed provision for certain temporary corps of
the army; recommending as chairman of the army commit-
tee, in order to reduce the expenditure, the substitution of
a specified allowance in money for the stipulated rations;
and reporting a resolution dissuading any relief to the
foreign officers then in the service, (a class of meritorious
individuals, whose situation he declared involved a pecu-
liar hardship, and required, if possible, some discrimination
in their favour,) lest, in the embarrassed state of the finan-
ces, it might derange the general plans of the superintendent
of finance, to whose discretion they were referred.
Memorials from the legislature of Pennsylvania, which
had been laid before congress, but had not been acted
upon, presented to them a subject of great delicacy and
magnitude.
That state had late in the preceding summerf complained,
as a serious grievance, of the inability of its citizens to
settle their accounts with the United States, of the non-
payment of the debts due to them by the public, and of
the suspension of the interest on certain classes of certifi-
cates. Expressing an apprehension that this suspension
would be extended farther, she represented that other
states were making provision for the liquidation and pay-
ment of the debts due to their citizens; that the collection
Morris as financier; I did not therefore nominate Colonel Hamilton, as I
foresaw it would be a vain attempt. "
* 1782. t August 28,1782.
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? HAMILTON.
19
of taxes was impeded; and urged that a general plan
should be devised for settling the unliquidated debts of the
United States, for paying them or a part of them, and
also for the regular and punctual discharge of the interest
on all the public debts, until the principal should be finally
discharged. These views were again enforced upon con-
gress in a recent memorial. *
The whole extent of the contributions of the confeder-
acy during the past year, to a requisition for eight millions
of dollars, had little exceeded four hundred thousand, while
the foreign loans had yielded less than a million; with
which sums the government had been carried on.
To satisfy the demands of the public creditors in this
state of the finances, was evidently impracticable; yet how
to refuse without offending this central state, conspicuous
for its liberal policy throughout the war, and which num-
bered among its claimants many of those who had most
largely contributed to the relief of the treasury, was a con-
sideration of the highest moment. To assuage its growing
irritation, and by a frank exposition of their true situation,
while congress showed its inability to fulfil their engage-
ments, to endeavour to inspire confidence in the ultimate
discharge of the debt, was a course dictated by integrity
and policy.
With this view, Hamilton, on the fourth of December,
moved the appointment of a committee of conference with
her legislature.
The demands of Pennsylvania had assumed a serious
character. The alternative was presented to congress,
either to make a substantial provision for her claims, or,
without the power of coercion, to behold her appropria-
ting all her own resources to discharge the debts due by
the confederation to her own citizens.
* November 12.
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THE LIFE OF
But still more cogent motives now arose to prompt effi-
cient measures of finance. The progress of the negotia-
tions had induced a general expectation of peace, which
was confirmed by the movement of the French auxiliaries
to Boston, to embark for the West Indies.
As the probability of a treaty being concluded increased,
the reduction of the army became a topic of universal
discussion.
After their great and long privations, the army under
any other circumstances would have looked to this event
with intense gratification; for, unlike the soldiers of more
populous regions, they had relinquished avocations which
yielded them an ample competence, with a full knowledge
of the sacrifices they were about to make.
But their return to private life was now clouded with
the most desolate and appalling prospects. Loaded with
debts incurred for their subsistence, their youth gone by,
many with families worn down by poverty--these vete-
rans saw in their expected disbandment, the moment when
they were to be turned in penury upon the world, deprived
of their just dues, and without any provision for their half-
pay, by the assurance of which the officers had been en-
couraged to continue in the service, and to which they
looked as their chief resource in the closing scenes of
life.
Influenced by a sense of their wrongs, their murmurs
increased, and in no bosom did they excite stronger sym-
pathy than in that of their fellow-soldier and friend.
With such urgent motives for an early action upon this
subject, Hamilton, two days after,* moved a resolution di-
recting the superintendent of finance to represent to the
states the indispensable necessity of their complying with
the requisition for raising a sum equal to a year's interest
* December 6.
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? HAMILTON.
21
of the domestic debt, and two millions for the current
service; and to point out the embarrassments which
resulted from appropriations by the states of the moneys
required by congress, " assuring them that they were deter-
mined to make the fullest justice to the public creditors an
invariable object of their counsels and exertions. "
His resolution embraced the appointment of a deputa-
tion to Rhode Island, to urge the grant of the impost " as -
a measure essential to the safety and reputation of these
states;" and with a view to carry it immediately into effect,*
he brought forward the draft of an ordinance for its col-
lection.
The deputation to Rhode Island was appointed, its dele-
gates alone dissenting, and the following letter, prepared
by Hamilton, was addressed to the governor of that state. t
"SIR,
"Congress are equally affected and alarmed by the infor-
mation they have received, that the legislature of your
state at their last meeting have refused their concurrence
in establishing a duty on imports. They consider this
measure- as so indispensable to the prosecution of the war,
that a sense of duty and regard to the common safety,
compel them to renew their efforts to engage a compliance
with it; and in this view they have determined to send a
deputation of three of their members to your state, as ex-
pressed in the enclosed resolution. The gentlemen they
have appointed will be able to lay before you a full and
just representation of public affairs, from which they flat-
ter themselves will result a conviction of the propriety of
their solicitude upon the present occasion. Convinced by
past experience of the zeal and patriotism of the state of
Rhode Island, they cannot doubt that it will yield to those
* December 10.
t December 11.
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? 22 THE LIFE OF
urgent considerations which flow from a knowledge of our
true situation.
"They will only briefly observe, that the increasing dis-
contents of the army, the loud clamours of the public cred-
itors, and the extreme disproportion between the public
supplies and the demands of the public service, are so
many invincible arguments for the fund recommended by
congress. They feel themselves unable to devise any
other, that will be more efficacious, less exceptionable, or
more generally agreeable; and if this is refused, they an-
ticipate calamities of a most menacing nature--with this
consolation, however, that they have faithfully discharged
their trust, and that the mischiefs which may follow cannot
be attributed to them.
"A principal object of the proposed fund is to procure
loans abroad. If no security can be held out to lenders,
the success of these must necessarily be very limited.
The last accounts on the subject were not flattering; and
when intelligence shall arrive in Europe, that the state of
Rhode Island has disagreed to the only fund which has yet
been devised, there is every reason to apprehend it will
have a fatal influence upon their future progress.
"Deprived of this resource, our affairs must in all proba-
bility rapidly hasten to a dangerous crisis, and these states
be involved in greater embarrassments than they have yet
experienced, and from which it may be much more difficult
to emerge. Congress will only add a request to your excel-
lency, that if the legislature should not be sitting, it may
be called together as speedily as possible, to enable the
gentlemen whom they have deputed, to perform the pur-
pose of their mission. "
A similar appeal had been made the previous summer
to which formal objections were interposed.
The next day the delegates from that state laid before
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? HAMILTON.
23
congress a letter from the speaker of its lower house.
This letter stated that the recommendation of congress
nad been unanimously rejected, and gave the grounds of
that rejection. Upon the basis of this procedure, the
Rhode Island delegates moved that the resolve appointing
a deputation to it, should be rescinded.
At the instance
of Hamilton, the previous question was carried; and four
days after, he laid before congress an address to that
state, prepared in answer to the speaker's letter.
This paper is of great importance, as the earliest public
document in which the policy of a national revenue is dis-
cussed in the spirit of a statesman, and will be perused
with deep interest, as an exposition of the views Hamilton
had long entertained on some of the great questions upon
which he was subsequently called to act
The objections of Rhode Island were answered in suc-
cession. * The first of these alleged its inequality, as
"bearing hardest upon the commercial states. " It was
met by a statement of the general principle, that "every
duty on imports is incorporated in the price of the com-
modity, and ultimately paid by the consumer, with a profit
on the duty as a compensation" for the advance by the
merchant. An overstocked market, and competition
among the sellers, might prevent this; but in the general
course of trade, the demand for consumption preponder-
ates.
Every class of the community bears its share of the
duty in proportion to the consumption, which is regulated
by its comparative wealth. "A chief excellence," he ob-
served, " of this mode of revenue is, that it preserves a just
measure to the abilities of individuals, promotes frugality,
and taxes extravagance. " The same reasoning applies to
the intercourse between two states; either will only feel
4 J. C. 198.
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THE LIFE OF
the burden in the ratio to its consumption and wealth.
The impost, instead of bearing hardest on the most com-
mercial states, will rather have a contrary effect, though
not in a sufficient degree to justify an objection on the
part of the non-importing states. But "overnice and mi-
nute calculations in matters of this nature, are inconsistent
with national measures; and, in the imperfect state of hu-
man affairs, would stagnate all the operations of govern-
ment. Absolute equality is not to be attained; to aim at
it, is pursuing a shadow at the expense of the substance;
and in the event, we should find ourselves wider of the
mark, than if, in the first instance, we were content to ap-
proach it with moderation. "
The second objection, "that the impost would introduce
into the states officers unknown and unaccountable to them,
and was thus contrary to the constitution of the state," was
replied to at length.
"It is not to be presumed," Hamilton remarked, "that
the constitution of any state could mean to define and fix
the precise numbers and descriptions of all officers to be
permitted in the state, excluding the creation of any new
ones, whatever might be the necessity derived from that
variety of circumstances incident to all political institu-
tions. The legislature must always have a discretionary
power of appointing officers, not expressly known to the
constitution; and this power will include that of authori-
zing the federal government to make the appointments in
cases where the general welfare may require it. The de-
nial of this would prove too much; to wit, that the power
given by the confederation to congress, to appoint all
officers in the post-office, was illegal and unconstitutional.
"The doctrine advanced by Rhode Island would perhaps
prove also that the federal government ought to have the
appointment of no internal officers whatever; a position
that would defeat all the provisions of the confederation,
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? HAMILTON. 25
and all the purposes of the union. The truth is, that no
federal constitution can exist without powers that in their
exercise affect the internal police of the component mem-
bers. It is equally true, that no government can exist
without a right to appoint officers for those purposes which
proceed from, and concentre in, itself; and therefore the
confederation has expressly declared, that congress shall
have authority to appoint all such' civil officers as may be
necessary for managing the general affairs of the United
States under their direction. ' All that can be required is,
that the federal government confine its appointments to
such as it is empowered to make by the original act of
union or by the subsequent consent of the parties; unless
there should be express words of exclusion in the consti-
tution of a state, there can be no reason to doubt that it
is within the compass of legislative discretion to commu-
nicate that authority. The propriety of doing it upon the
present occasion is founded on substantial reasons.
"The measure proposed is a measure of necessity. Re-
peated experiments have shown, that the revenue to be
raised within these states is altogether inadequate to the
public wants. The deficiency can only be supplied by
loans. Our applications to the foreign powers on whose
friendship we depend, have had a success far short of our
necessities. The next resource is, to borrow from indivi-
duals. These will neither be actuated by generosity nor
reasons of state. 'Tis to their interest alone we must ap-
peal. To conciliate this, we must not only stipulate a
proper compensation for what they lend, but we must give
security for the performance. We must pledge an ascer-
tained fund, simple and productive in its nature, general
in its principle, and at the disposal of a single will. There
can be little confidence in a security under the constant
revisal of thirteen different deliberatives. It must, once
for all, be defined and established on the faith of the states,
4
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? 26
THE LIFE OF
solemnly pledged to each other, and not revocable by any
without a breach of the general compact. 'Tis by such
expedients that nations whose resources are understood,
whose reputations and governments are erected on the
foundation of ages, are enabled to obtain a solid and ex-
tensive credit. Would it be reasonable in us to hope for
more easy terms, who have so recently assumed our rank
among the nations? Is it not to be expected, that indivi-
duals will be cautious in lending their money to a people
in our circumstances, and that they will at least require
the best security we can give V
Having adverted to the peculiar motives to remove the
existing prepossessions unfavourable to the public credit,
by means the most obvious and striking, he observed :--
"It was with these views congress determined on a
general fund; and the one they have recommended must,
upon a thorough examination, appear to have fewer incon-
veniences than any other.
* It has been remarked, as an essential part of the plan,
that the fund should depend on a single will. This will
not be the case, unless the collection, as well as the appro-
priation, is under the control of the United States; for it
is evident that, after the duty is agreed upon, it may in a
great measure be defeated by an ineffectual mode of levy-
ing it. The United States have a common interest in a
uniform and equally energetic collection; and not only
policy, but justice to all the parts of the Union, designates
the utility of lodging the power of making it where the
interest is common. Without this, it might in reality ope-
rate as a very unequal tax. "
The third objection was, "That by granting to congress
a power to collect moneys from the commerce of these
states indefinitely as to time and quantity, and for the ex-
penditure of which they are not to be accountable to the
states, they would become independent of their constitu-
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? HAMILTON.
27
ents; and so the proposed impost is repugnant to the liberty
of the United States. "
"Admitting the principle of this objection to be true, still
it ought to have no weight in the present case, because
there is no analogy between the principle and the fact.
"First--The fund proposed is sufficiently definite as to
time, because it is only coextensive with the existence of
the debt contracted, and to be contracted in the course of
the war. Congress are persuaded that it is as remote from
the intention of their constituents to perpetuate that debt,
as to extinguish it at once by'a faithless neglect of pro-
viding the means to fulfil the public engagements. Their
ability to discharge it in a moderate time, can as little be
doubted as their inclination; and the moment that debt
ceases, the duty, so far as respects the present provision,
ceases with it.
"The resolution recommending the duty, specifies the
object of it to be the discharge of the principal and interest
of the debts already contracted on the faith of the United
States for supporting the present war.
"Secondly--The rate per cent. is fixed, and it is not at
the option of the United States to increase it. Though
the product will vary according to the variations in trade,
yet, as there is this limitation of the rate, it cannot be pro-
perly said to be indefinite as to quantity.
"By the confederation, congress have an absolute discre-
tion in determining the quantum of revenue requisite for
the national expenditure. When this is done, nothing re-
mains for the states separately but the mode of raising. No
state can dispute the obligation to pay the sum demanded,
without a breach of the confederation; and when the
money comes into the treasury, the appropriation is the
exclusive province of the foederal government. This pro-
vision of the confederation, (without which it would be an
empty form,) comprehends in it the principle in its fullest
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latitude, which the objection under consideration treats as
repugnant to the liberty of the United States; to wit, an
indefinite power of prescribing the quantity of money to
be raised, and of appropriating it when raised.
"If it be said that the states, individually, having the col-
lection in their own hands, may refuse a compliance with
exorbitant demands, the confederation will answer, that
this is a point of which they have no constitutional liberty
to judge. Such a refusal would be an exertion of power,
not of right; and the same power which could disregard
a requisition made on the authority of the confederation,
might at any time arrest the collection of the duty.
"The same kind of responsibility which exists with re-
spect to the expenditure of the money furnished in the
forms hitherto practised, would be equally applicable to
the revenue from the imports.
"The truth is, the security intended to the general liberty
in the confederation, consists in the frequent election and
in the rotation of the members of congress, by which there
is a constant and an effectual check upon them. This is
the security which the people in every state enjoy against
the usurpations of their internal governments; and it is
the true source of security in a representative republic.
The government so constituted, ought to have the means
necessary to answer the end of its institution. By weak-
ening its hands too much, it may be rendered incapable of
providing for the interior harmony or the exterior defence
of the state.
"The measure in question, if not within the letter, is
within the spirit of the confederation. Congress by that
are empowered to borrow money for the use of the United
States, and, by implication, to concert the means necessary
to accomplish the end. But without insisting on this ar-
gument, if the confederation has not made proper provi-
sion for the exigencies of the states, it will be at all times
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? HAMILTON.
29
the duty of congress to suggest further provisions; and
when their proposals are submitted to the unanimous con-
sent of the states, they can never be charged with exceed-
ing the bounds of their trust. Such a consent is the basis
and sanction of the confederation, which expressly, in the
thirteenth article, empowers congress to agree to and pre-
pare such additional provision.
"The remarks hitherto made, have had reference princi-
pally to the future prosecution of the war. There still
remains an interesting light in which the subject ought to
be viewed.
"The United States have already contracted a debt in
Europe and in this country, for which their faith is pledged.
The capital of this debt can only be discharged by de-
grees; but a fund for this purpose, and for paying the
interest annually, on every principle of policy and justice,
ought to be provided. The omission will be the deepest
ingratitude and cruelty to a large number of meritorious
individuals, who, in the most critical periods of the war,
have adventured their fortunes in support of our indepen-
dence. It would stamp the national character with indeli-
ble disgrace.
"An annual provision for the purpose will be too preca-
rious. If its continuance and application were certain, it
would not afford complete relief. With many, the regular
payment of interest, by occasional grants, would suffice;
but with many more it would not. These want the use
of the principal itself, and they have a right to it; but
since it is not in our power to pay off the principal, the
next expedient is to fund the debt, and render the evidences
of it negotiable.
"Besides the advantage to individuals from this arrange-
ment, the active stock of the nation would be increased by
the whole amount of the domestic debt, and of course, the
abilities of the community to contribute to the public
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? 30 THE LIFE OF
wants; the national credit would receive and stand here-
after on a secure basis. "
This was another object of the proposed duty.
The eligibility of this fund was next shown. "The'
principal thing," he said, "to be consulted for the ad-
vancement of commerce, is to promote exports; all im-
pediments to these, either by way of prohibition or by
increasing the prices of native commodities, decreasing by
that means their sale and consumption at foreign markets,
are injurious. Duties on exports have this operation.
Tor the same reasons, taxes on possessions and the articles
of our own growth and manufacture, whether in the form
of a land tax, excise, or any other, are more hurtful to trade
than import duties. But it was not to be inferred that the
whole revenue ought to be drawn from imports; all ex-
tremes are to be rejected. The chief thing to be attended
to is, that the weight of the taxes fall not too heavily in the
first instance upon particular parts of the community: a
judicious distribution to all kinds of taxable property, is a
first principle in taxation. "
The report closed with these impressive reflections, sug-
gested by the language of Rhode Island:--
"There is a happy mean between too much confidence
and excessive jealousy, in which the health and prosperity
of a state consist. Either extreme is a dangerous vice:
the first is a temptation to men in power to arrogate more
than they have a right to; the latter enervates govern-
ment, prevents system in the administration, defeats the
most salutary measures, breeds confusion in the state, dis-
gusts and discontents among the people, and may event-
ually prove as fatal to liberty as the opposite temper.
"It is certainly pernicious to leave any government in a
situation of responsibility disproportionate to its power.
The conduct of the war is intrusted to congress, and the
public expectation turned upon them, without any compe-
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? HAMILTON. 31
M
tent means at their command to satisfy the important
trust. After the most full and solemn deliberation, under
a collective view of all the public difficulties, they recom-
mend a measure which appears to them the corner-stone
of the public safety; they see this measure suspended for
near two years--partially complied with by some of the
states, rejected by one of them, and in danger on that ac-
count to be frustrated; the public embarrassments every
day increasing; the dissatisfaction of the army growing
more serious, the other creditors of the public clamoring
for justice--both, irritated by the delay of measures for
their present relief or future security; the hopes of our
enemies encouraged to protract the war--the zeal of our
friends depressed by an appearance of remissness and want
of exertion on our part--congress harassed, the national
character suffering, and the national safety at the mercy
of events. "
Resolutions were appended to this report giving the
first public pledge of a determination to establish a sink-
ing FUND. *
On the following day, in pursuance of another report
from Hamilton, the deputation from Rhode Island was
directed to proceed as soon as possible.
While these efforts were made, a publication appeared
* Dec. 16th. --Whereas it is essential to justice and to the preservation of
public credit, that whenever a nation is obliged by the exigencies of public
affairs to contract a debt, proper funds should be established, not only for
paying the annual value or interest of the same, but for discharging the
principal within a reasonable period, by which a nation may avoid the evils
of an excessive accumulation of debt. Therefore resolved, That whenever
the nett produce of any funds recommended by congress and granted by the
states, for funding the debt already contracted, or for procuring further loans
for the support of the war, shall exceed the sum requisite for paying the in-
terest of the whole amount of the national debt which these states may owe
at the termination of the present war, the surplus of such grants shall form
a sinking fund, to be inviolably appropriated to the payment of the principal
of the said debt, and shall on no account be diverted to any other purpose. --
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? 32
THE LIFE OF
in a Boston gazette, which gave a false view of the state
of the negotiations for foreign loans, and intimated that
the danger to be apprehended was not embarrassment for
want of funds, but from contracting too large a debt.
This misrepresentation tended to impede all the exertions
to obtain a grant of permanent funds. After some in-
quiry, Howell, a member from Rhode Island, avowed
himself the author of it, and made a motion braving the
opinion of congress, which was entered upon the journal.
Aware of the importance of an official declaration of its
falsity, Hamilton offered a resolution, which was seconded
by Carroll, that congress having, in respect to the articles
of the confederation, admitted on its journals an entry of a
motion of Mr. Howell highly derogatory to the dignity
and honour of the United States, that a committee should
be appointed to report the measures respecting it. They
reported that a true state of the negotiations should be
transmitted to the governor of Rhode Island.
i The preceding address to that state, shows Hamilton's
purpose to endeavour to establish an adequate and compre-
hensive system of finance. This would have provided for
the state emissions, and state debts incurred for the com-
mon defence. An estimate which he had submitted to the
superintendent of finance, showed that the probable re-
ceipts from the impost would be insufficient. It was
necessary to increase the revenue; but before the assent
of the states could be obtained to this increase, discontents
And in order that the several states may have proper information of the state
of their finances, it is further resolved, That as soon as the public debt can
be liquidated, each state be annually furnished with the amount thereof, and
of the interest thereon; and also of the proceeds and disposition of the funds
provided for the redemption thereof. That the faith of the United States
be pledged for the observance of the foregoing resolution, and that if any
state shall think it necessary to make it a condition of their grants, the same
will be considered by congress as consistent with their resolution of the 3d
of February, seventeen hundred and eighty-one.
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? HAMILTON.
which existed as to late requisitions were to be removed.
With these views, he moved the appointment of a com-
mittee to report what further provision should be made
"for discharging the interest on the loan-office certificates
and other liquidated debts, and to revise the requisitions.
of the preceding and present year, and to report whether
the same ought to be continued or altered. "
The principal cause of the frequent collisions between
the states as to the apportionment of the public burdens,
proceeded from the failure to carry into effect the rule of
the confederation as to the ratio of contribution. That
rule contemplated an actual specific valuation of the lands
in each state granted and surveyed, with the buildings
and improvements. Objectionable as the rule was, the
federal articles had prescribed it. Feeling the obligation
of an effort to act upon it, Hamilton, on the sixth of
January, offered a resolution in " order to enable congress
to form an eventual plan towards carrying into execu-
tion" this article of the confederation. His view was, that
this valuation should be made by commissioners appointed
by and acting under the authority of the United States
upon uniform principles. This resolution, together with
those of the sixteenth of December, was referred to a
committee composed of a member from each state.
The following day the house took up another subject
connected with the fulfilment of the public faith. The
large amount of old continental bills held in the New-
England states, they having furnished the principal sup-
plies, created a strong interest in that part of the union
that some provision should be made for their redemption.
