The Life of George Washington, Vol. 4 / Commander in Chief of the American Forces During the War / which Established the Independence of his Country and First / President of the United States

by John Marshall

The friends of the bill contended, that the reasons for believing the existing revenue would be insufficient to meet the engagements of the United States, were as satisfactory as the nature of the case would admit, or as ought to be required. The estimates were founded on the best data which were attainable, and the funds already provided, had been calculated by the proper officer to pay the interest on that part of the debt only for which they were pledged. Those estimates were referred to as documents, from which it would be unsafe to depart. They were also in possession of official statements, showing the productiveness of the taxes from the time the revenue bill had been in operation; and arguments were drawn from these, demonstrating the danger to which the infant credit of the United States would be exposed, by relying on the existing funds for the interest on the assumed debt. It was not probable that the proposed duties would yield a sum much exceeding that which would be necessary; but should they fortunately do so, the surplus revenue might be advantageously employed in extinguishing a part of the principal. They were not, they said, of opinion, that a public debt was a public blessing, or that it ought to be perpetuated.

An augmentation of the revenue being indispensable to the solidity of the public credit, a more eligible system than that proposed in the bill, could not, it was believed, be devised. Still further to burden commerce, would be a hazardous experiment which might afford no real supplies to the treasury. Until some lights should be derived from experience, it behoved the legislature to be cautious not to lay such impositions upon trade as might probably introduce a spirit of smuggling, which, with a nominal increase, would occasion a real diminution of revenue. In the opinion of the best judges, the impost on the mass of foreign merchandise could not safely be carried further for the present. The extent of the mercantile capital of the United States would not justify the attempt. Forcible arguments were also drawn from the policy and the justice of multiplying the subjects of taxation, and diversifying them by a union of internal with external objects.

Neither would a direct tax be adviseable. The experience of the world had proved, that a tax on consumption was less oppressive, and more productive, than a tax on either property or income. Without discussing the principles on which the fact was founded, the fact itself was incontestable, that, by insensible means, much larger sums might be drawn from any class of men, than could be extracted from them by open and direct taxes. To the latter system there were still other objections. The difficulty of carrying it into operation, no census having yet been taken, would not be inconsiderable; and the expense of collection through a country thinly settled, would be enormous. Add to this, that public opinion was believed to be more decidedly and unequivocally opposed to it, than to a duty on ardent spirits. North Carolina had expressed her hostility to the one as well as to the other, and several other states were known to disapprove of direct taxes. From the real objections which existed against them, and for other reasons suggested in the report of the secretary, they ought, it was said, to remain untouched, as a resource when some great emergency should require an exertion of all the faculties of the United States.

Against the substitution of a duty on internal negotiations, it was said, that revenue to any considerable extent could be collected from them only by means of a stamp act, which was not less obnoxious to popular resentment than an excise, would be less certainly productive than the proposed duties, and was, in every respect, less eligible.

The honour, the justice, and the faith of the United States were pledged, it was said, to that class of creditors for whose claims the bill under consideration was intended to provide. No means of making the provision had been suggested, which, on examination, would be found equally eligible with a duty on ardent spirits. Much of the public prejudice which appeared in certain parts of the United States against the measure, was to be ascribed to their hostility to the term "excise," a term which had been inaccurately applied to the duty in question. When the law should be carried into operation, it would be found not to possess those odious qualities which had excited resentment against a system of excise. In those states where the collection of a duty on spirits distilled within the country had become familiar to the people, the same prejudices did not exist. On the good sense and virtue of the nation they could confidently rely for acquiescence in a measure which the public exigencies rendered necessary, which tended to equalize the public burdens, and which in its execution would not be oppressive.

A motion made by Mr. Jackson, to strike out that section which imposed a duty on domestic distilled spirits, was negatived by thirty-six to sixteen; and the bill was carried by thirty-five to twenty-one.

Some days after the passage of this bill, another question was brought forward, which was understood to involve principles of deep interest to the government.

On a national bank.

The secretary of the treasury had been the uniform advocate of a national bank. Believing that such an institution would be "of primary importance to the prosperous administration of the finances; and of the greatest utility in the operations connected with the support of public credit," he had earnestly recommended its adoption in the first general system which he presented to the view of congress; and, at the present session, had repeated that recommendation in a special report, containing a copious and perspicuous argument on the policy of the measure. A bill conforming to the plan he suggested was sent down from the senate, and was permitted to proceed, unmolested, in the house of representatives, to the third reading. On the final question, a great, and, it would seem, an unexpected opposition was made to its passage. Mr. Madison, Mr. Giles, Mr. Jackson, and Mr. Stone spoke against it. The general utility of banking systems was not admitted, and the particular bill before the house was censured on its merits; but the great strength of the argument was directed against the constitutional authority of congress to pass an act for incorporating a national bank.

The government of the United States, it was said, was limited; and the powers which it might legitimately exercise were enumerated in the constitution itself. In this enumeration, the power now contended for was not to be found. Not being expressly given, it must be implied from those which were given, or it could not be vested in the government. The clauses under which it could be claimed were then reviewed and critically examined; and it was contended that, on fair construction, no one of these could be understood to imply so important a power as that of creating a corporation.