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<h1 class="entry-title"><a rel="bookmark" href="12">Federalist № 12</a></h1>
<h2 class="entry-summary">
The Utility of the Union In Respect to Revenue
</h2>
<div class="entry-content">
<p id="salutation">To the People of the State of New York:</p>
<p id="p1"><span class="initial">The</span> effects of Union upon
the commercial prosperity of the States have been sufficiently
delineated. Its tendency to promote the interests of revenue will
be the subject of our present inquiry. <a class="permalink"
href="#p1">¶</a></p>
<p id="p2">The prosperity of commerce is now perceived and
acknowledged by all enlightened statesmen to be the most useful as
well as the most productive source of national wealth, and has
accordingly become a primary object of their political cares. By
multipying the means of gratification, by promoting the
introduction and circulation of the precious metals, those darling
objects of human avarice and enterprise, it serves to vivify and
invigorate the channels of industry, and to make them flow with
greater activity and copiousness. The assiduous merchant, the
laborious husbandman, the active mechanic, and the industrious
manufacturer,—all orders of men, look forward with eager
expectation and growing alacrity to this pleasing reward of their
toils. The often-agitated question between agriculture and
commerce has, from indubitable experience, received a decision
which has silenced the rivalship that once subsisted between them,
and has proved, to the satisfaction of their friends, that their
interests are intimately blended and interwoven. It has been found
in various countries that, in proportion as commerce has
flourished, land has risen in value. And how could it have
happened otherwise? Could that which procures a freer vent for the
products of the earth, which furnishes new incitements to the
cultivation of land, which is the most powerful instrument in
increasing the quantity of money in a state—could that, in
fine, which is the faithful handmaid of labor and industry, in
every shape, fail to augment that article, which is the prolific
parent of far the greatest part of the objects upon which they are
exerted? It is astonishing that so simple a truth should ever have
had an adversary; and it is one, among a multitude of proofs, how
apt a spirit of ill-informed jealousy, or of too great abstraction
and refinement, is to lead men astray from the plainest truths of
reason and conviction. <a class="permalink" href="#p2">¶</a></p>
<p id="p3">The ability of a country to pay taxes must always be
proportioned, in a great degree, to the quantity of money in
circulation, and to the celerity with which it circulates.
Commerce, contributing to both these objects, must of necessity
render the payment of taxes easier, and facilitate the requisite
supplies to the treasury. The hereditary dominions of the Emperor
of Germany contain a great extent of fertile, cultivated, and
populous territory, a large proportion of which is situated in
mild and luxuriant climates. In some parts of this territory are
to be found the best gold and silver mines in Europe. And yet,
from the want of the fostering influence of commerce, that monarch
can boast but slender revenues. He has several times been
compelled to owe obligations to the pecuniary succors of other
nations for the preservation of his essential interests, and is
unable, upon the strength of his own resources, to sustain a long
or continued war. <a class="permalink" href="#p3">¶</a></p>
<p id="p4">But it is not in this aspect of the subject alone that
Union will be seen to conduce to the purpose of revenue. There are
other points of view, in which its influence will appear more
immediate and decisive. It is evident from the state of the
country, from the habits of the people, from the experience we
have had on the point itself, that it is impracticable to raise
any very considerable sums by direct taxation. Tax laws have in
vain been multiplied; new methods to enforce the collection have
in vain been tried; the public expectation has been uniformly
disappointed, and the treasuries of the States have remained
empty. The popular system of administration inherent in the nature
of popular government, coinciding with the real scarcity of money
incident to a languid and mutilated state of trade, has hitherto
defeated every experiment for extensive collections, and has at
length taught the different legislatures the folly of attempting
them. <a class="permalink" href="#p4">¶</a></p>
<p id="p5">No person acquainted with what happens in other
countries will be surprised at this circumstance. In so opulent a
nation as that of Britain, where direct taxes from superior wealth
must be much more tolerable, and, from the vigor of the
government, much more practicable, than in America, far the
greatest part of the national revenue is derived from taxes of the
indirect kind, from imposts, and from excises. Duties on imported
articles form a large branch of this latter description. <a
class="permalink" href="#p5">¶</a></p>
<p id="p6">In America, it is evident that we must a long time
depend for the means of revenue chiefly on such duties. In most
parts of it, excises must be confined within a narrow compass. The
genius of the people will ill brook the inquisitive and peremptory
spirit of excise laws. The pockets of the farmers, on the other
hand, will reluctantly yield but scanty supplies, in the unwelcome
shape of impositions on their houses and lands; and personal
property is too precarious and invisible a fund to be laid hold of
in any other way than by the inperceptible agency of taxes on
consumption. <a class="permalink" href="#p6">¶</a></p>
<p id="p7">If these remarks have any foundation, that state of
things which will best enable us to improve and extend so valuable
a resource must be best adapted to our political welfare. And it
cannot admit of a serious doubt, that this state of things must
rest on the basis of a general Union. As far as this would be
conducive to the interests of commerce, so far it must tend to the
extension of the revenue to be drawn from that source. As far as
it would contribute to rendering regulations for the collection of
the duties more simple and efficacious, so far it must serve to
answer the purposes of making the same rate of duties more
productive, and of putting it into the power of the government to
increase the rate without prejudice to trade. <a class="permalink"
href="#p7">¶</a></p>
<p id="p8">The relative situation of these States; the number of
rivers with which they are intersected, and of bays that wash
there shores; the facility of communication in every direction;
the affinity of language and manners; the familiar habits of
intercourse; —all these are circumstances that would
conspire to render an illicit trade between them a matter of
little difficulty, and would insure frequent evasions of the
commercial regulations of each other. The separate States or
confederacies would be necessitated by mutual jealousy to avoid
the temptations to that kind of trade by the lowness of their
duties. The temper of our governments, for a long time to come,
would not permit those rigorous precautions by which the European
nations guard the avenues into their respective countries, as well
by land as by water; and which, even there, are found insufficient
obstacles to the adventurous stratagems of avarice. <a
class="permalink" href="#p8">¶</a></p>
<p id="p9">In France, there is an army of patrols (as they are
called) constantly employed to secure their fiscal regulations
against the inroads of the dealers in contraband trade. Mr. Neckar
computes the number of these patrols at upwards of twenty
thousand. This shows the immense difficulty in preventing that
species of traffic, where there is an inland communication, and
places in a strong light the disadvantages with which the
collection of duties in this country would be encumbered, if by
disunion the States should be placed in a situation, with respect
to each other, resembling that of France with respect to her
neighbors. The arbitrary and vexatious powers with which the
patrols are necessarily armed, would be intolerable in a free
country. <a class="permalink" href="#p9">¶</a></p>
<p id="p10">If, on the contrary, there be but one government
pervading all the States, there will be, as to the principal part
of our commerce, but <em>one side</em> to guard—the
<em>Atlantic coast</em>. Vessels arriving directly from foreign
countries, laden with valuable cargoes, would rarely choose to
hazard themselves to the complicated and critical perils which
would attend attempts to unlade prior to their coming into port.
They would have to dread both the dangers of the coast, and of
detection, as well after as before their arrival at the places of
their final destination. An ordinary degree of vigilance would be
competent to the prevention of any material infractions upon the
rights of the revenue. A few armed vessels, judiciously stationed
at the entrances of our ports, might at a small expense be made
useful sentinels of the laws. And the government having the same
interest to provide against violations everywhere, the
co-operation of its measures in each State would have a powerful
tendency to render them effectual. Here also we should preserve by
Union, an advantage which nature holds out to us, and which would
be relinquished by separation. The United States lie at a great
distance from Europe, and at a considerable distance from all
other places with which they would have extensive connections of
foreign trade. The passage from them to us, in a few hours, or in
a single night, as between the coasts of France and Britain, and
of other neighboring nations, would be impracticable. This is a
prodigious security against a direct contraband with foreign
countries; but a circuitous contraband to one State, through the
medium of another, would be both easy and safe. The difference
between a direct importation from abroad, and an indirect
importation through the channel of a neighboring State, in small
parcels, according to time and opportunity, with the additional
facilities of inland communication, must be palpable to every man
of discernment. <a class="permalink" href="#p10">¶</a></p>
<p id="p11">It is therefore evident, that one national government
would be able, at much less expense, to extend the duties on
imports, beyond comparison, further than would be practicable to
the States separately, or to any partial confederacies. Hitherto,
I believe, it may safely be asserted, that these duties have not
upon an average exceeded in any State three per cent. In France
they are estimated to be about fifteen per cent., and in Britain
they exceed this proportion.<a class="note" href="#note1">1</a>
There seems to be nothing to hinder their being increased in this
country to at least treble their present amount. The single
article of ardent spirits, under federal regulation, might be made
to furnish a considerable revenue. Upon a ratio to the importation
into this State, the whole quantity imported into the United
States may be estimated at four millions of gallons; which, at a
shilling per gallon, would produce two hundred thousand pounds.
That article would well bear this rate of duty; and if it should
tend to diminish the consumption of it, such an effect would be
equally favorable to the agriculture, to the economy, to the
morals, and to the health of the society. There is, perhaps,
nothing so much a subject of national extravagance as these
spirits. <a class="permalink" href="#p11">¶</a></p>
<p id="p12">What will be the consequence, if we are not able to
avail ourselves of the resource in question in its full extent? A
nation cannot long exist without revenues. Destitute of this
essential support, it must resign its independence, and sink into
the degraded condition of a province. This is an extremity to
which no government will of choice accede. Revenue, therefore,
must be had at all events. In this country, if the principal part
be not drawn from commerce, it must fall with oppressive weight
upon land. It has been already intimated that excises, in their
true signification, are too little in unison with the feelings of
the people, to admit of great use being made of that mode of
taxation; nor, indeed, in the States where almost the sole
employment is agriculture, are the objects proper for excise
sufficiently numerous to permit very ample collections in that
way. Personal estate (as has been before remarked), from the
difficulty in tracing it, cannot be subjected to large
contributions, by any other means than by taxes on consumption. In
populous cities, it may be enough the subject of conjecture, to
occasion the oppression of individuals, without much aggregate
benefit to the State; but beyond these circles, it must, in a
great measure, escape the eye and the hand of the tax-gatherer. As
the necessities of the State, nevertheless, must be satisfied in
some mode or other, the defect of other resources must throw the
principal weight of public burdens on the possessors of land. And
as, on the other hand, the wants of the government can never
obtain an adequate supply, unless all the sources of revenue are
open to its demands, the finances of the community, under such
embarrassments, cannot be put into a situation consistent with its
respectability or its security. Thus we shall not even have the
consolations of a full treasury, to atone for the oppression of
that valuable class of the citizens who are employed in the
cultivation of the soil. But public and private distress will keep
pace with each other in gloomy concert; and unite in deploring the
infatuation of those counsels which led to disunion. <a
class="permalink" href="#p12">¶</a></p>
<address class="vcard author">
<span class="nickname">Publius</span>.
[<span class="fn">Alexander Hamilton</span>]
</address>
<ol id="notes">
<li id="note1">
If my memory be right they amount to twenty per cent.
</li>
</ol>
</div>
<div class="meta">
<p>
First published in the <abbr class="published updated"
title="1787-11-27">Tuesday, November 27, 1787</abbr> issue of the
<span class="publication">New York Packet</span>.
</p>
<p class="rights">
This work is in <a rel="copyright license" href="http://creativecommons.org/licenses/publicdomain/">the public domain</a>.
</p>
<p>
Read about this
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