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1782.] 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.

"Beside the advantage to individuals from this arrangement, 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 wants; the national credit would revive, and stand hereafter on a secure basis.

"This was another object of the proposed duty.

"If it be conceded that a similar fund is necessary, it can hardly be disputed that the one recommended is the most eligible. It has been already shown that it affects all parts of the community in proportion to their consumption, and has therefore the best pretensions to equality. It is the most agreeable tax to the people that can be imposed, because it is paid insensibly, and seems to be voluntary.

"It may, perhaps, be imagined that it is unfavorable to commerce; but the contrary can easily be demonstrated. It has been seen that it does not diminish the profit of the merchant, and of course can be no diminution of his inducements to trade. It is too moderate in its amount to discourage the consumption of imported goods, and cannot, on that account, abridge the extent of importations. If it even had this effect, it would be an advantage to commerce by lessening the proportion of our imports to our exports, and inclining the balance in favor of this country.

"The principal thing to be consulted for the advancement of commerce, is to promote exports. All impediments to these, either by way of prohibiting, 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. For the same reason, taxes on possessions, and the articles of our own growth or manufacture, whether in the form of a land tax, excise, or any other, are more hurtful to trade than impost duties. The tendency of all such taxes is to increase the prices of those articles which are the objects of exportation, and to enable others to undersell us abroad. The farmer, if he pays a heavy land tax, must endeavor to get more for the products of his farm. The mechanic and laborer, if they find the necessaries of life grow dearer by an excise, must endeavor to exact higher wages; and these causes will produce an increase of prices within, and operate against foreign commerce.

"It is not, however, to be inferred that the whole revenue ought to be drawn from imports; all extremes 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 tendency of these observations is only to show that taxes on possessions, on articles of our own growth and manufacture, are more prejudicial to trade than duties on imports.

"The observations which conclude the letter on which these remarks are made, naturally lead to reflections that deserve the serious attention of every member of the Union. 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 government, prevents system in the administration, defeats the most salutary measures, breeds confusion in the state, disgusts

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