H. OF R.]

Indirect Taxes.

[FEBRUARY, 1797. country at present required it, and it would be provided considerable revenue, was also laid aside. safe, prudent, and discreet, to do so. The Secre- They had agreed to lay low duties upon distilled tary of the Treasury had estimated the internal domestic spirits ; no increase could therefore be revenue at 337.255 dollars, while those gentlemen expected from that quarter. They could, then, made it 469,579. This they stated from the reve- only resort to such articles of impost as would be nue of last year, which it was probable would be likely, from their general demand and other circonsiderably more than this. He thought there cumstances, to produce additional revenue. As, was as much reason for taking one as the other therefore, no prospect appeared of getting other statement; and the Government would be ex- revenue than by the articles before them, he posed to hazard and danger, unless allowances should be compelled to agree, though with relucwere made for deficiencies.

tance, to the advance of the duty on sugar. The deficiency, according to his calculation, With respect to their lands, they had authorized was 1,012.969 dollars, and after deducting from public stock to be received in payment; and, that sum 200,000 for ihe additional duties in the ihough he thought this a very valuable regulabill before them, there would remain a balance of tion, both for facilitating the sale of the land, and 812.969 dollars. Admitting the gentleman's own for paying off the debt, the lands, on this account, statement to be true, there would still be a defi- would not produce much cash into the Treasury. ciency of 100,000 dollars, and this without making Mr. S. Smith said, very early in the present any allowance whatever for accidents and occur- session, he read, with some attention, the report rences which will always happen, without making of the Secretary of the Treasury on the subject any provision for the purchase of the public debt, of direct taxes. He cast his eye upon certain which might at this time be purchased to great articles which he thought proper subjects upon advantage. If there had been money in the which to raise further sums from indirect sources, Treasury for the purpose, instead of paying the among which were salt, sugar, tea, and the whole debt at par, it might have been bought up at 16 of the 10 per cent. class of goods; he communior 17s. in the pound. And he was of opinion, cated his sentiments to other gentlemen, and they from the present situation of things, the Public had been brought forward. Debt would remain low, and that a surplus in the He supposed the House would have gone into Treasury might be well employed in purchasing it. a system of direct taxes. This he had always

So much for the revenue and expenses of the considered as a difficult subject, and he never present year. With respect to 1798, there was no could, himself, form a plan adequate to effect it; necessity to go much into that subject. The gen- but he was desirous that the subject should have tleman from Pennsylvania had estimated the in- been taken up, that in case of extremity it might stalment of the Dutch debt, payable in this year, be called into operation. He did not think any at 160,000 dollars only; but he asked whether it immediate wants of the revenue required this would be wise to pay only that sum ? And whe- tax to be put into execution, but he wished to take ther it had not been in the contemplation of that it into consideration, to see what could be done gentleman, as well as others, to pay as much as with it. He had still his doubts whether it could they could yearly? He knew they should not be carried into execution; if it could it would be obliged to pay more; but he believed it would doubtless form a valuable source of revenue, which be a wise policy to pay an equal sum every year. could not be injured. He had no doubt, however, That gentleman made another deduction of of the present revenue being equal to our present 280,000 dollars, which had been grayted to the wants. The gentleman from South Carolina Dey and Regency of Algiers this year; but might [Mr. W. Smith] had taken his calculations from they pot expect items which they did not con- the report of the Secretary of the Treasury; but template, to this amount? Contingencies, he the Secretary went into a permanent calculation said, occurred, which always swelled the expenses for a period of 18 years, in ihe course of which he greater than were contemplated. There was al- calculated the sinking of the whole debt. ways something of an extraordinary nature oc- The trade of 1796, Mr. S. said, would give dearcurring to call for money; either an Indian war, ly a million of dollars; of course there could be or insurreciion, depredations of foreign Powers, or no apprehensions upon the minds of gentlemen attacks by the Algeriges. There was no guard that the receipts of 1797 would not be equal to ing with certainty against them. The next de- the wants of Government. The tax upon sugar duction was 100,000 dollars for the frigates. Whe-would produce 300,000 dollars. The gentleman ther this would be saved or not, was uncertain. from Pennsylvania [Mr. Gallatin) was correct The next House might agree to go on with the on this subject. frigates.

The gentleman from South Carolina (Mr. W. Upon the whole, Mr. S. said, it would be pru- Smith) had said, it was not wise to calculate dent to provide a sufficiency of revenue, and there upon the highest returns; but Mr. S. Smith said it was no prospect of getting it from any other than was right to calculate upon a preceding year, and the objects contained in the bill before them. when they knew that there would be received in A land tax was agreed to be laid aside for the pre- this year from 700,000 dollars to one million, there sent. as gentleinen from the Eastward seemed could be no doubt of the year 1798 falling far wholly against it, and those of the middle States short of that sum. For he was not one of those who seemed to have grown lukewarm upon the sub-thought the revenue arising from this year would ject. The duty on stamps, which would have I be much inferior to that arising from the last.

FEBRUARY, 1797.]

Indirect Taxes.

[H. OF R.

He saw

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The gentleman from South Carolina (Mr. Naval Depariment

$ 190,000 Harper) had supposed that the British spolia- Balance due on Algerine business

376,505 tions had not affected our revenue, but that those of the French would be severely felt.

Internal expenses of 1797

2,255,255 no difference between them, and believed they would be felt alike in proportion to their extent. The expenses of the Quartermaster's Depart[Mr. HARPER explained.] He believed the Uni- ment would in future be considerably lessened; ied States would only consume a certain portion for, said Mr. S., heretofore great expense had been of the goods imported; the rest would be re- incurred by land carriage, which in future would exported, and the drawback received upon them; be avoided, as the forage would all be conveyed and, as he did not believe the consumption of the by water. Indeed it had not been an unusual United States had been lessened, it would follow thing for the horses employed in conveying forage that it had been the re-exportation which had from one post to another, to eat the whole of it in been diminished, and, of course, that it would not their journey to and from their destination, and be the duties which would be decreased, but the some horses had been known to die from want on drawbacks. This being the case, little was to be the road. The conveyance being now by water, apprehended from a defalcation of the revenue great destruction of horses would be prevented, this year.

and he doubted not that one hundred thousand Indeed, he was of opinion, that the revenue dollars would be saved under this head. arising from the present year, would be equal to Mr. S. said, with respect to the internal reveany preceding year. The expenses of 1797 would nue, he would call back the recollection of the be as follow:

gentleman from South Carolina (Mr. W. Smith) Estimate for the year 1797.

to the time when the excise system was under Instalment due on part of the Dutch debt, with interest

consideration : $400,000, at that time, was the

sum estimated to be raised from that source. Beon the whole debt, together about $ 992,000 Annual 8 per cent. and 6 per cent. stock

sides this, there had been a new duty on carriages;

2,324,175 Annual interest on 3 per cent. do.


yet they were now told that $337,255 only could Ditto on 51 per cent. do.


be expected from this quarter. Did not the genDitto on 4 per cent. do.


tleman know that till lately some parts of the Ditto on supposed unfunded debt

78, 261

State of Pennsylvania had scarcely paid any duty Ditto on Bank loans

372,200 at all, but that now the duty was generally col

lected ? and, so far from its being lessened by the

4,463,971 law lately passed, he trusted it would be very Internal expenditures (as below)

2,255, 255 considerably increased.

It might be a pleasant thing, Mr. S. said, for $6,719,226 gentlemen unconnected with commerce to talk

about the embarrassments of commerce, but he

did not believe commercial men would feel themCivil List, Mint, and Diplomatic, (agreeably to the selves much obliged by such lamentable views of

Fecretary's report, estimated on the session of six their situation as were taken in that House. It months)


would not have been a very agreeable sound in a Deduct savings arising on the session of four months only


foreign country, to hear that three or four of our

merchanis had been arrested for their debts; this 511,953

was not a very pleasant thing to become everyBill for foreign intercourse


where the subject of conversation. Such asserLight-houses.


tions, he said, went to destroy the credit of our Miscellaneous claims


merchants abroad. Although it might happen,

from some temporary embarrassments, that the $ 609,600

bond of a merchant at the custom-house might be

put in suit, because if not paid the moment it beMilitary Department.

came due, the collector was obliged to put it in Pay of four regiments and artillery corps

suit; but he believed the American merchants

$256,450 Subsistence


had always honorably paid their duties--they had (lothing


done it, and they would continue to do it. It was Bounties


true, merchants had suffered much from commerHospital Department

cial embarrassments, but they had now nearly got

25,000 Ordnance


clear of them; they were doubtless inconvenient Two instructers


to the merchant, but he did not believe they would Quartermaster's Department


at all injure the revenue. The law said, a merDef-n ise protection


chant who once failed in the payment of his, Indian Department


duties would have no credit in future; therefore, Contingencies of War Department


whatever else went unpaid, a merchant would Repairing fortifications

20,000 take care that his duties were paid. Military Pensions

93,330 Much of the embarrassments which had arisen

had been owing to derangements of a temporary $1,079, 150 | nature, and mostly from what had happened in H. op R.)

Indirect Taxes.

[FEBRUARY, 1797.

this city ; but it was now found that the Banks the Deferred Stock, they would have acted wisecould again discount as much as they ought to ly. He wished the gentlemen's calculations who discouni. Bank Stock had risen 3 per cent., 6 opposed the raising of more revenue to come out per cents were at 16s. 4d., and this day had sold for right, but he doubted it. It was well known that 17s., which did not bear an appearance so very our expenditures overran calculation. A few distressing as had been too frequently painted'; days since they were called on for $201,312 for and he thought gentlemen should be better in the defence of the frontiers; it was also said that formed before they dwelt so largely on the embar- upwards of $100,000 more would be called for to rassments of the merchants.

complete the payments for services of the like paThe gentleman from South Carolina (Mr. W. ture; $24,000 was appropriated for fortifications, SMITH) had stated an expense of $50,000 as an ex- and other necessary claims were before them, pense for premiums, remittances, &c., in the pay- which were not taken notice of in the gentleman's ment of the Dutch Debt. This was estimated by calculations. If the Post Office bill was passed as the Secretary of the Treasury when he was tak- it went from that House, there would be a great ing into account his eighteen years' plan, in the diminution of the sum from that quarter-percourse of which various losses, &c., might be ex- haps not a dollar would be raised by ii. But, said pected. He knew the Secretary of the Treasury Mr. W., the objection to raising money by indicould not remit at par, and he would not be rect taxation was in consequence of the wishes of charged 5 per cent. for doing business which he gentlemen for direct taxes. He wished that sysor any other merchant could have done for one-| tem to be kept out of sight, until indirect taxes half per cent.

were found insufficient. He hoped, therefore, the Nothing which had been said upon this subject motion would be adopted, which would bring in had convinced him they stood in need of additional $110,000, and not be felt by the consumer. revenue for this year; but he would consent to Mr. THATCHER wished to say a word in answer the taxes in the bill before the House, but to go to what had fallen from the gentleman last up; farther he believed would be impolitic and im- with respect to the revenue arising from the Post proper.

Office. That gentleman believed a single dollar Mr. Williams observed, that were we calculat- would not arise from that source if the present ing for our revenue to amount to a certain sum, bill passed ; on the contrary, he was of opinion and that any overplus would be lost to Govern- that $40,000, if not $50,000, would be received ment, it would be worth while to enter upon the from thence if the bill passed. subject with all the accuracy the nature of the Mr. SwanWICK said it was a most extraordinacase would admit of; but should the revenue ry thing, in the present scarcity of that article. amount to more than was necessary for our pre- that sugar should have been fixed upon as the fitsent exigencies, it was by law to be applied to test object from which to increase our revenue. It wards the reduction of our debt-a thing so de- was well known that most of the sugar brought sirable.

into the United States came from British islands He had read a book published by the gentleman in the West Indies, and that the French were from Pennsylvania, (Mr. GALLATIN,] who was op- pow constantly intercepting our vessels employed posed to the motion, in which that gentleman en- in that trade. The communication with the Hadeavored to show that our debt had been constant- vaona was at present almost destroyed, and no ly increasing under the present Government; the vessels were going there. But the gentleman same gentleman had also said that, in case of any from Maryland [Mr. S. SMITH] seemed to be of defalcation in our revenue, the Commissioners opinion that there would always be sugar enough could sell more Bank Stock. Mr. W. said, he imported for home consumption; but, in forming would ask if this was a proper mode of finance this opinion, gentlemen referred to the situation if it corresponded with that gentleman's observa- of last year, which had nothing to do with the tions heretofore on the National Debt? Were we present. It had also been estimated, that because to bring our Bank Stock into market for sale, espe- $600,000 were produced by the present revenue, cially when stock is so low, we should not only the duty being increased one-third, it would proinjure the public, but individuals? The gentle duce $200,000 more, This was by no means cerman from Maryland (Mr. 8. Smith) had said that tain. In the first place, from the great augmen6 per cent. stock was at 17s. The papers say tation of price, owing to the distressed situation 16s. 4d. ; some had been sold at 16s. 6d. The low of the West Indies, he apprehended so much would price of stock must operate much to the disadvan- not be consumed ; since, when the incomes of pertage of this country, and if difficulties did not ex- sons were diminished, they would endeavor to ist in Europe, by which money was in great de- limit their expenses. And that the frequent losses mand there, our stock would be purchased by fo- of merchants of $30,000 here and $20,000 there, reigners, and a loss of whatever is sold below would not affect their own circumstances and par Government would have to pay for it at par. others, could not be believed. By the act of the 3d March, 1795, the public faith It had been observed, that, by speaking of the was pledged for the reimbursment of the debt, we embarrassments of our merchants, their credit ought, therefore, not only to prevent stock being might be hurt in England. He did not think it sent to market, but use our endeavors to keep up would have that effect. The English were in its price. Indeed, had Congress two years ago great want of a market for their manufactures, so laid on more duties, and purchased up a part of much so that if a dealer in dry goods gave an or

FEBRUARY, 1797.]
Indirect Taxes.

[H. OFR. der to the value of one thousand pounds, the Eng- wholly paid from indirect taxes, persons never lish merchant would send him to the amount of knew what they paid towards the public expentwo, on his own risk; not so much from a wish to ses, and therefore they felt easy about public expencredit the American merchant as from a desire to ditures. find a market for his goods. No embarrassments With respect to the proposed additional half in the commerce of this country, therefore, would cent on sugar, it was very immaterial. He did make the British merchant ship less, except an- not think it would produce anything into the Treaother market should open to him. But was not sury. If the quantity of revenue raised upon suthere some danger, he asked, even in this trade be- gar last year could be continued, it would be as ing intercepted? There certainly was; since the much as could be raised. He doubted whether, if greater interest the British had'in sending their the advance were made, so much duty would be manufactures to America, the greater inducement raised as heretofore. there would be for the French to prevent this It was said, if there was any deficiency of revetrade, and this might not arise from any desire to nue, the remainder of the Bank Stock might be injure us, but io affect their enemy:

sold. It was to be regretted, he observed, that it Whether a peace should take place in Europe had not been sold some years ago, or at the time or the war should continue, our revenue, Mr. S. when the last was sold át 25 per cent. above par. said, would be likely to suffer. If a peace were to Gentlemen had mentioned a considerable rise in take place, England would find other markets for our stocks; if that were the case, he supposed it her goods, and the price of produce and all kinds arose from a prospect of peace in Europe. Such of property falling in value, people would be able an event might have that effect, and he was into consume less of foreign productions. He there- clined to think the probability had produced the fore thought those gentlemen right who calculat- change which they had been told had taken place. ed upon the necessity of an increase of revenue. Mr. Harper said, he desired no better argu

Much, Mr. S. observed, had been said about the ments than those of gentlemen themselves to embarrassments of commerce. They had been call- prove the propriety of his observations, and of ed temporary, that they were now mostly passed adopting the amendment. The propriety of this over, and were said to have chiefly arisen from measure rested upon the uncertainty of the prederangements in this city. He did not believe this sent revenue. Some gentlemen, who would justly was wholly the case, or that they were at an end ; lay claim to accuracy in their statements, tell us and he thought when money was loaned at 2 1-2 that the revenue arising from importations, &c., and 3 per cent. per month on good security, it of the present year, would be sufficient to the necould not be said that the banks were able to give cessities of the next; while some, equally well sufficient discounts.

informed, tell us there will be a deficiency of Mr. S. Smith said, the money for which 2 and $800,000. While such a great difference exhibit3 per cent. per month had been paid had nothing ed itself, he would ask, was the House to depend to do with fair commerce ; that kind of business upon mere opinion for the support of the Ameriwould always go on, though the banks discounted can Government? If so, said he, and we should ever so liberally.

come short of enough, to whom are we to resort? Mr. Swanwick was certain that the exorbitant Shall we apply to the gentleman from Pennsylprice of money was a strong proof of the embar-vania ? It is his opinion that others are quite rassments of commerce; it showed that things wrong and he is quite right, but this is not a founwere not sound, and that they must undergo a re- dation on which to build the financial credit of volution. The banks, it was true, would discount the country. According to some, we shall have to a certain amount; but they sometimes used money enough, but this, he said, was a mere convery curious arguments about the claims which jecture-quite an uncertainty. Mr. H. could not different persons had upon them, and were by no think any gentleman would wish to let the finanmeans certain sources for cash.

ces and credit of the country remain exposed to It was necessary, therefore, sometimes to have a deficiency, and not have any funds provided to recourse to brokers, and when that was the case, replace it. When the question was on the differhowever good might be your security, the price ent mode of raising taxes, he said, then it must be was paid which he had above stated.

left to rest on every man's opinion; but when on Much stress had been laid upon the expenses of the quantity to be obtained, then gentlemen ought Government being less in the next year than in to doubt, every one his own opinion, and respect this. He did not believe this would be the case; the report of the Secretary of the Treasury, who, he believed the expense of Government would in- from his examination of the subject, can best crease every year, notwithstanding all the econo-judge. Suppose, he said, gentlemen should not my of that House; for, though some gentlemen be right; no foreign or domestic loans; the Bank might be inclined to be economical in one article, already strained enough, we should then be rethey seemed to have no objection to be lavish on duced to great embarrassments; but if we are another; for every expense introduced failed not wrong in our idea, and the money is not wanted, to find its advocates. He did not believe any- it might go to reduce the Public Debt, and no inthing would tend so much to introduce economy jury be sustained; otherwise, the public faith into our Government as a direct tax; because a might be violated, which he hoped would never man would then know what he paid for the ex- be the misfortune of this country. penses of Government; but whilst ihe revenue was He would observe, that the gentleman from

H. or. R.]

Indirect Taxes.

[FEBRUARY, 1797. Pennsylvania was not, as he supposed, exclusively lay under from this heavy duty. The Committee alluded to; he did not know that gentleman was of Commerce and Manufactures were of opinion the only person who, after having preached a long that this additional duty, by depressing the manutime in favor of a direct tax and the deficiency of facture of chocolate, and encouraging the re-exthe revenue, should quietly give it up at last

, portation of cocoa, upon which a drawback was and say, we now want no money! As to the consequently received, raised very little more duty abandonment of the system of direct taxation, Mr. than when at two cents." H. thought it was impossible to carry it into ef- After some few remarks by Messrs. Coit, S. fect; he thought the difficulties insuperable, and Smith, and Swanwick, in its favor, and Mr. Galtherefore it would always remain so. Some gen. latin against it, the question was carried without tlemen said, that before they went to decide upon a division. the abstract principle, they ought to know upon Mr. GALLATIN moved an additional section, to what principles it should be founded; but no, it the following effect: was thought proper to decide upon it without

And be it further enacted, That the money arising looking into the detail. The very moment the from these duties shall be solely appropriated for the bill made its appearance in the House, after hav- following purposes, viz: for the payment of the principal ing been examined by the Secretary of the Trea- of the Foreign Debt of the United States, and for the sury, and the Committee of Ways and Means had principal of the Debt now due to the Bank of the United spent a fortnight, those who before were its warm- States." est friends abandoned it as radically bad; they The section was agreed to. saw the impracticability of it. What, then, he Mr. HENDERSON moved to strike out the words would ask, does this teach us? Why, that we relative to white cotton goods, and to insert, "all cannot look to this, because it cannot be effected; that class of goods which pays 10 per cent. ad vaconsequently, we must apply to other means. lorem.” He thought that the whole of this class

Mr. H. hoped that what the gentleman from of goods would bear an addition of 24 per cent. Maryland (Mr. S. SMITH) said was truth, viz: equally with the white cotton goods, and would, at that our merchants are not much embarrassed; he the same time, bring a very considerable sum into could sincerely wish no embarrassments did exist, the Treasury. but when he was so informed by at least a dozen of Mr. S. Smith agreed with the gentleman from the greatest merchants in this city, he must beg New Jersey, that if they increased the duty upon leave to differ from him. Mr. H. thought there all the 10 per cent. class of goods, it would be more was much embarrassment attending commerce, productive to the revenue, and be no more objecbut he also thought the country would soon get iionable than the duty on white cotton goods. He over it, although much revenue must be lost by it. would, however, rather not go into these duties at

With respect to spoliation. and detention in for- all, as nothing was more deceptious than the idea eign ports, he should not enter into a detail, as that of these duties being cheaply collected. It was gentleman was a mercantile man, and doubtless generally thought that the duty on im posts was understood it best; but this he knew, that, if mer-collected for 2 per cent. ; but, was this the fact ? chandise which ought to arrive in our ports were If it were, he would acknowledge it was the best carried into a foreign capital, it must produce a mode of collecting revenue. Betore the formation bad effect on our revenue; and though you may of the present Government, he said, individual raise a revenue from domestic sources, yet the ruin States were in the habit of collecting direct and of commerce will have a serious effect on that indirect taxes; but there was not a solitary instance internal source.

where, when indirect taxes amounted to 5 per cent., As he did not believe this deficiency of revenue they had not resort to direct taxes. He called would be permanent, Mr. H. said he only wanted gentlemen's recollection to the fact, that the oriaid to it until a return of more prosperous days. ginal plan of the General Government was caused He wou!d even, notwithstanding very great objec-by a five per cent. duty being laid, which different tions to the system, agree to a land tax, rather than States were averse to, and which caused gentlefall short of the present wants from the impost men to turn their attention to the origin of this system, as it was so very precarious. As to the Government. If individual States did not think article of brown sugar, the Committee had fixed it right to pay 5 per cent. upon their imposts, it on it as a proper object for extension, and, by a ought to caution us against attempting to raise all proper advance, he thought there would be no our revenue from that source. necessity to attempt to encounter the difficulties Mr. S. said he had already observed that perattending a direct system.

sons generally believed that an impost duty only The question was then put and negatived-there cost 24 per cent. in the collecting. He had made being only 25 in favor of it.

a calculation upon the subject, and found it to be Mr. Coit said, there had been a report from the the most expensive of all other taxes in the colCommittee of Commerce and Manufactures which lection. It would be found, from the various hands was referred to this Committee, recommending through which it went, that every £133 collected the duty on cocoa to be lowered from four cents to from an impost of 124 per cent. duty, only £95 two cents per pound. He wished the report to be found its way into the Treasury. This would show read. [It was read accordingly.) This report was the impolicy of raising all our revenue from this grounded upon the petition of some chocolate man- source; for though, said he, the people do not know ufacturers who complained of the bardships they l that they pay the tax at so dear a rate, we know it,

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