TO THE GOVERNORS OF NORTH CAROLINA, SOUTH CAROLINA, AND GEORGIA.
Office of Finance, December 19th, 1781.
Sir,
In my circular letter on that subject, I have already had the honor to transmit the requisitions of Congress, contained in their Acts of the 30th of October and 2d of November last, by which the quota of your State for the year 1782 is —— dollars, payable in quarterly payments, commencing the 1st day of April next.
The distresses which your State has lately suffered, will not, I fear, permit the collection of this quota in hard money, although the subsistence of the army will naturally call for an expenditure to a great amount in such articles as the State can furnish. The mode hitherto pursued of granting receipts and certificates by every one empowered or employed to impress or purchase, cannot but be attended with much confusion and difficulty, if not with oppression and fraud. It is the duty of those who are intrusted with the management of the public affairs, to prevent as much as possible these evils, and as much as possible to equalize and diminish those burdens, which the people must bear. It would give me great pleasure to be put in such a situation, as that I might at once contract for the supplies of the southern army; but I have not specie for the purpose; nor do I find that taxes are yet laid in the Southern States to procure it. Wherefore, I must wait yet some time, until the public treasury is replenished, until the hard money now in America gets somewhat more diffused, and until I have a prospect of receiving back from those States in hard money their quota of the public taxes.
In this situation of things, I have devised and proposed to the Delegates of the three Southern States, the following plan. To appoint a Receiver of the taxes in each State, agreeably to the Act of Congress, and to empower such Receiver to issue notes on the warrants of the General, payable in those taxes, or from the amount of them when collected. By which means those articles necessary for the consumption of the army may be purchased, and the quota of the State be thereby paid.
The Delegates of North and South Carolina thought the plan eligible, but one of the Delegates of Georgia was disinclined to that part of it, which requires the previous passing of a law to raise the quota of taxes called for by the United States. I am this morning informed, that upon a reconsideration of the matter, a majority of the Delegates of South Carolina are also of opinion, that it would be better not to make the enacting such a law an indispensable part of the system. I am very sorry for this circumstance, because, as all the Delegates from the three States mentioned, approve of the plan in other respects, I did expect their warm recommendation of it to their respective Legislatures; for your Excellency will perceive at a single glance, that it originated in the sincere desire of relieving those States, and has that relief for its object, as far as the public service of the United States will possibly permit.
Those gentlemen who object to making a tax bill the preliminary to any issues of the notes, have proposed as an expedient, a law, promising the payment of the notes when taxation shall become practicable, compelling the receipt of them in payment as specie, and limiting the prices of those articles, which the army may want. This is done to obviate two objections, which are supposed to be against taxation, that the state of the country will not admit of the collection, and that those who have no property left but lands, cannot pay the taxes without extreme distress.
Before I go into any detailed observations on these subjects, I beg leave to state one general reason why I must insist on the tax law, even if in other respects I should have no material objections to the expedient proposed. As Superintendent of the Finances of the United States, it is my duty to urge a compliance with the requisitions of Congress, and, therefore, to facilitate that compliance; but I should betray the trust reposed in me, if by any expedient whatever, I assisted in eluding those requisitions. With me, therefore, the propriety of passing the tax bill can admit of no question; and in consequence, my orders are precise, to prevent the issue of a single note, until such bills shall have been enacted, and effectual provision made for the collection.
I shall now take the liberty of trespassing on your patience, with some observations as to the two laws proposed. And first, as to the expediency of taxing, and the weight of the objections against it. When it is considered, that the expenditures of the army, (supposing the war to be carried on in the Southern States, must greatly exceed the amount of the sums called for from those States,) one position is clear, that by complying with the requisitions of Congress, a balance of money must necessarily be brought in from the other States, to supply the deficiency of the whole revenue in those particular States, when compared with the amount of the whole expenditure. But by neglecting to comply with the requisitions of Congress, (as it will be impossible to supply the army in the same regular manner, which prevails elsewhere,) the whole cost of the expenditure will fall in the first instance on those who are near the seat of war, subject to a future settlement of accounts. Besides which, it is demonstrable, that this latter mode of supply, which is at present practised, is very wasteful and expensive. Nor is this the only objection, though certainly a very strong one. We must further consider, that according to the present mode of taking supplies, the burden falls very unequally on the inhabitants, and of course, very unjustly. I fear that, with truth, it may added, that in some instances, it is attended with strong circumstances of distress.
Hence, then, I conclude that the propriety of taxation is evident, unless the reasons against it are of weight sufficient to counterbalance the inconveniences, which would result from neglecting it. I proceed, therefore, to examine them. And first, as to the state of the country and the means of collection. It is clear that within the enemy's lines, taxes cannot be collected; but out of them, they certainly may be. For, surely, it is as easy to compel a man to pay money by seizing his property, as it is to seize that property for the subsistence of the troops. There is, however, this additional advantage in taxing, that those may be compelled to pay, who have not articles useful for the army, as well as those who have. The objection, that those who have land only will be distressed by the sale of it, will have just as much weight as the Legislature may choose to give it; for if no taxes are raised on land, the objection will vanish, and certainly the Legislature will be in capacity to determine whether any tax should be laid on it, and what that tax should be.
But, further, it appears that the objection is calculated to favor the rich, who are great landholders, in preference to the poor, who labor on a small plantation; and how far this may be either wise or just is not for me to determine. I will, however, suggest an expedient, that, as the taxes are payable quarterly, the first two quarters' tax should be raised on the polls, the slaves, and other personal property in the State, and the land tax be paid on the last quarterly instalments. This will give the several landholders room to turn themselves, so as to provide for their several appropriations in season. I will just add under this head, that if (as there is some reason to hope) the southern States should be totally evacuated, the extension of their commerce will soon obviate every objection, which can possibly be in the way of taxation.
I must observe further, that those States, which delay the levying of taxes to answer present requisitions, will become totally incapable of complying with future calls, and consequently, we shall always be dealing in doubts and uncertainties, instead of establishing that confidence and vigor, which alone can perfect our independence.
I come now to the proposed law for compelling the receipt of the notes and regulating the prices of articles. My opinion of all such laws is decidedly fixed. I know both from reason and experience, that they injure the credit of the paper they appear designed to support. They show doubts in the mind of the Legislature, they communicate those doubts to the breasts of the people, the credit of the paper is then destroyed before it is issued, and all the after operation of the law is one continued scene of fraud and iniquity. If, therefore, such tax bill shall be passed as will permit issuing the notes in question, I entreat, that on no representation, nor for any cause whatever, any law be passed making the notes a tender, valuing the price of goods, or anything of that sort. I ask for no embargo, no regulations. On the contrary, I wish and pray, that the whole detestable tribe of restrictions may be done away, and the people be put in possession of that freedom, for which they are contending. I have no system of finance, except that which results from the plain self-evident dictates of moral honesty. Taxation and economy are the two pillars by which that system is supported, and if the several States will provide the former, I will pledge myself for the latter, as far as my abilities will permit.
To return then, Sir, to the plan I have to propose. It is simply this. I expect that the Legislature of your State will immediately pass laws to collect by the days named, the sums called for from them for the service of the year 1782. To facilitate the collection and payment of the taxes, I consent to receive the notes signed by the Receiver of the continental taxes for your State. If, therefore, the Legislature approve of my plan, they will merely add a clause rendering those notes receivable by their collectors as specie, in the continental taxes. They will, I doubt not, provide the ways and means by which the Receiver shall compel the several collectors to pay over whatever sums, either of those notes or of hard money, they may have received. This will leave it purely optional with the people to take the notes, or to let them alone. If the taxes are collected, they must either pay those notes or hard money. If they pay hard money, the notes will not be necessary. If they pay the notes, the public will already have received the value of them, in the articles for which they are first paid.
I enclose the form of the notes and the denominations, and I will appoint the Receiver of the continental taxes for your State, as soon as I can fix on a proper person, and prepare the necessary instructions. In the meantime, the law may easily be passed, with a clause directing the mode in which the appointment of such Receiver shall be announced to the public.
I have the honor to be, &c.
ROBERT MORRIS.