most mortal diseases of society. The expenses arising from those institutions which are relative to the mere domestic police of a state, to the support of its legisla tive, executive, and judicial departments, with their different appendages, and to the encouragement of agriculture and manufactures (which will comprehend almost all the objects of state expenditure), are insignificant in comparison with those which relate to the national defense.'

In the kingdom of Great Britain, where all the ostentatious apparatus of monarchy is to be provided for, not above a fifteenth part of the annual income of the nation is appropriated to the class of expenses last mentioned; the other fourteen-fifteenths are absorbed in the payment of the interest of debts contracted for carrying on the wars in which that country has been engaged, and in the maintenance of fleets and armies. If, on the one hand, it should be observed that the expenses incurred in the prosecution of the ambitious enterprises and vainglorious pursuits of a monarchy are not a proper standard by which to judge of those which might be necessary in a republic, it ought, on the other hand, to be remarked that there should be as great a disproportion between the profusion and extravagance of a wealthy kingdom in its domestic administration, and the frugality and economy which in that particular become the modest simplicity of republican government. If we balance a proper deduction from one side against that which it is supposed ought to be made from the other, the proportion may still be considered as holding good.

But let us advert to the large debt which we have ourselves contracted in a single war, and let us only calculate on a common share of the events which disturb the peace of nations, and we shall instantly perceive, without the aid of any elaborate illustration, that there must always be an immense disproportion between the objects of federal and State expenditures. It is true that several of the States, separately, are encumbered with consider

This was so true in 1788, when this was written, that Jefferson ("Writings," v. 115) seriously argued that nations should be absolutely prohibited from borrowing money. Though military and naval expenses are still the great causes of public debt, yet in the democratization of modern nations there is more and more tendency to employ the public credit for public works and improvement, and this change is especially marked in America.-EDITOR.

Hamilton]

EXPENSE OF STATES.

211

able debts, which are an excrescence of the late war. But this cannot happen again, if the proposed system be adopted; and when these debts are discharged, the only call for revenue of any consequence, which the State governments will continue to experience, will be for the mere support of their respective civil lists; to which; if we add all contingencies, the total amount in every State. ought to fall considerably short of two hundred thousand pounds.

In framing a government for posterity as well as ourselves, we ought, in those provisions which are designed to be permanent, to calculate, not on temporary, but on permanent causes of expense. If this principle be a just one, our attention would be directed to a provision in favor of the State governments for an annual sum of about two hundred thousand pounds; while the exigencies of the Union could be susceptible of no limits, even in imagination. In this view of the subject, by what logic can it be maintained that the local governments ought to command, in perpetuity, an EXCLUSIVE source of revenue for any sum beyond the extent of two hundred thousand pounds? To extend its power further, in exclusion of the authority of the Union, would be to take the resources of the community out of those hands which stood in need of them for the public welfare, in order to put them into other hands which could have no just or proper occasion for them.

Suppose, then, the convention had been inclined to proceed upon the principle of a repartition of the objects of revenue between the Union and its members, in proportion to their comparative necessities; what particular fund could have been selected for the use of the States that would not either have been too much or too little

'None the less, the national government was in such straits during the war of 1812 that the states of New York and Pennsylvania advanced it nearly a million and a half dollars; and during the Civil War most of the northern states incurred war debts," that of New York alone being in excess of twenty-seven million dollars. But this latter was so greatly out of proportion to the debts of the other states that recently the larger part was refunded by the national government.--EDITor.

too little for their present, too much for their future wants? As to the line of separation between external and internal taxes, this would leave to the States, at a rough computation, the command of two-thirds of the resources of the community to defray from a tenth to a twentieth part of its expenses; and to the Union onethird of the resources of the community to defray from nine-tenths to nineteen-twentieths of its expenses. If we desert this boundary, and content ourselves with leaving to the States an exclusive power of taxing houses and lands, there would still be a great disproportion between the means and the end; the possession of one-third of the resources of the community to supply, at most, one-tenth of its wants. If any fund could have been selected and appropriated, equal to and not greater than the object, it would have been inadequate to the discharge of the existing debts of the particular States, and would have left them dependent on the Union for a provision for this purpose.

The preceding train of observation will justify the position which has been elsewhere laid down, that “A CONCURRENT JURISDICTION in the article of taxation was the only admissible substitute for an entire subordination, in respect to this branch of power, of State authority to that of the Union." Any separation of the objects of revenue, that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the Union to the POWER of the individual States. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident that it has at least the merit of reconciling an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities. There remain a few other lights, in which this important subject of taxation will claim a further consideration.

PUBLIUS.

A limitation of taxation will end in undue burdens on particular objects-A restriction to duties will result in their being carried to an injurious excess-High duties produce smuggling, undue favoring of manufacturing classes, and oppression of the merchant-Payment of duties falls upon both seller and buyer-Consideration of the maxim that the consumer pays the duties-High duties certain to be attended with inequality- An equalization only to be obtained by excises—Special interest of New York-The desire for revenue likely to limit excess in duties -Consideration of the objection that the House of Representatives is too small—Actual representation of all classes purely visionary-Interests of mechanics and manufacturers-Of the learned professions—Of the landed interests-Taxation of land-The representative body will be chiefly composed of landholders-Mutual interest of all classes-Responsiveness of representatives to public opinion-Extensive information needed in the business of taxation-The most productive system of finances is the least burdensome.

To the People of the State of New York:

Before we proceed to examine any other objections to an indefinite power of taxation in the Union, I shall make one general remark; which is that, if the jurisdiction of the national government, in the article of revenue, should be restricted to particular objects, it would naturally occasion an undue proportion of the public burdens to fall upon those objects. Two evils would spring from this source: the oppression of particular branches of industry; and an unequal distribution of the taxes, as well among the several States as among the citizens of the same State.

Suppose, as has been contended for, the federal power of taxation were to be confined to duties on imports, it is evident that the government, for want of being able to command other resources, would frequently be tempted to extend these duties to an injurious excess. There are persons who imagine that they can never be carried to too great a length; since, the higher they are, the more

it is alleged they will tend to discourage an extravagant consumption, to produce a favorable balance of trade, and to promote domestic manufactures. But all extremes are pernicious in various ways. Exorbitant duties on imported articles would beget a general spirit of smuggling, which is always prejudicial to the fair trader and eventually to the revenue itself; they tend to render other classes of the community tributary, in an improper degree, to the manufacturing classes, to whom they give a premature monopoly of the markets; they sometimes. force industry out of its more natural channels into others in which it flows with less advantage; and, in the last place, they oppress the merchant, who is often. obliged to pay them himself without any retribution from the consumer. When the demand is equal to the quantity of goods at market, the consumer generally pays the duty; but when the markets happen to be overstocked, a great proportion falls upon the merchant, and sometimes not only exhausts his profits, but breaks in upon his capital. I am apt to think that a division of the duty between the seller and the buyer more often happens than is commonly imagined. It is not always possible to raise the price of a commodity in exact proportion to every additional imposition laid upon it. The merchant, especially in a country of small commercial capital, is often under a necessity of keeping prices down in order to a more expeditious sale.

The maxim that the consumer is the payer is so much oftener true than the reverse of the proposition that it is far more equitable that the duties on imports should go into a common stock than that they should redound to the exclusive benefit of the importing States. But it is not so generally true as to render it equitable that those duties should form the only national fund. When they are paid by the merchant they operate as an additional tax upon the importing State, whose citizens pay their proportion of them in the character of consumers. In this view they are productive of inequality among the States; which inequality would be increased with the