If the expense is to be provided for, how is it to be done? It must be either by taxation or by loans. Indeed, it is probable that Congress will be obliged to resort to loans, even during the present session; but certainly it is their duty, as far as they are able, to provide for the public expenses, without going into measures which will increase the public debt. Our choice lies, therefore, between loans and taxation; and however inconvenient it may be to the people to pay taxes, he should certainly resort to taxes rather than loans. And if the money is to be raised by taxes, to what objects can we turn our attention? Congress must have recourse to internal revenue, or an increase of duty on the importation of some of the necessaries of life. Indeed, after turning his attention very seriously to the subject, he could not find how any considerable revenue could be raised, but by means of a direct tax on land and houses, or a tax on salt. He did not think any other could be relied upon; and, between the two, he believed it would be infinitely better, both for the United States and his constituents, to lay a tax on land and houses than on salt. The tax on land and houses will be laid according to the value of the property; and though there is less circulating medium in the back country, which is thinly settled, than in the larger towns, the property in those parts will be estimated at a much lower rate, and of course the people will have a smaller proportion of the tax to pay; and he thought it far preferable to lay a tax which would fall, in a great degree, upon persons according to their wealth, than one which would operate as a poll tax, (as a tax on salt would do,) according to their number.
Mr. Davis said, he believed he could prove to the gentleman from Pennsylvania (Mr. Gallatin) that his conclusions with respect to the ability of the people of the State of Kentucky to pay this tax, were not altogether correct; and that the number of the people inhabiting the State now, being double what it was when the last census was taken, will afford them no relief. For, if there were $10,000 in circulation in the State, when there were only 30,000 inhabitants, and no more, now there are 150,000—the tax would fall no lighter now than it would have fallen then. How, it might be inquired, does it happen that, though the population is so greatly increased, no increase should have been made in the quantity of circulating specie? It happens thus: Men who emigrate from the Atlantic States to this country, seldom bring much money with them; for, whatever they may have when they set out, it is expended on their journey, or paid for land to a single person when they reach us, so that none of their money comes into general circulation and though the people are able to raise plenty of produce, they are not able to exchange it for money. It is true, the more inhabitants they get, the more the general property of the State is increased, but it did not increase the circulating medium. He did not believe there is now so much money in circulation as there was when the census was taken. There was then an army there, and produce sold for a good price; but since a peace was made with the Indians, money has been constantly draining off from the State, to pay the debts which the merchants of that State had contracted whilst trade was brisk in this and other cities.
Mr. S. Smith did not think the fears of the gentlemen from Kentucky and Tennessee would be realized. It is no doubt true that the quantity of circulating specie in Kentucky had diminished since the peace with the Indians; but it is also true that the spring trade this year from Kentucky by the Mississippi has been both great and profitable. But gentlemen suppose, if we have a war with France, we shall also be at war with Spain, and our intercourse by that river will be cut off. But the interest of Spain will be against this; for in case of war, there will be great difficulty in getting flour to the Havana from the Atlantic ports, as our West India trade will be cut off, and they will have to depend upon a supply by the Mississippi. Besides, if produce be so much cheaper in the Western country than in the Atlantic States, as it has been stated to be, it will become the interest of neutrals in the Atlantic cities, to make remittances by produce from that country to the Havana. And if Spain should be drawn into the war, there would be other modes of the people of those States disposing of their produce. He did not think, therefore, gentlemen from that country need be so much alarmed as they appeared to be.
Mr. J. Williams had always been opposed to every system of direct taxes; but as a majority of the House had agreed to call forth the resources of the country by this means, he must give his vote for this bill. He was astonished to find the gentlemen from Kentucky and Tennessee opposing this bill, when so much of the money of the General Government had been expended in that country. They must acknowledge their States have had their portion of specie from the Treasury of the United States. An act had indeed been passed during the present session for paying a company of militia for a certain expedition in Tennessee, which amounted to nearly one fourth of the whole sum required from that State. He believed some of the troops of the United States are also now there, and likely to continue, so that they are constantly receiving supplies of cash from the Treasury of the United States. Besides, it ought to be considered that this tax will fall upon unimproved, as well as improved land, many of the owners of which, he supposed, lived out of that State, which would reduce the portion of the tax to the State. The district in which he lived would pay more tax than the whole State of Tennessee. He knew the tax would be collected in some places with difficulty, and more so, since the bill had undergone a change which had thrown the tax upon land more than it would otherwise have fallen.
But, whatever difficulty may attend the collection of this tax, when we see the ruinous effects of public debt in other countries, we ought to be cautious how we make extensive loans, and endeavor to draw forth the resources of the country, to meet any of the expenses which we may have to encounter.
Mr. Varnum should vote against this bill. He had always thought, since the establishment of the present Government, that there would be no necessity for resorting to direct taxes, except in case of our being engaged in war. He believed the measures already taken would not require a direct tax if no further expenses were contemplated. But he now believed a majority of the Government of the United States are determined on war, and he would, on that account, have given his vote for the bill, if the tax was proposed to be laid on just and equal principles. It was his opinion, that every species of property ought to be taxed, as well as houses and land. So far from this being the case, he believed that between one third and one half of the property taxed by the State Legislatures, in their system of direct taxes, would, by the present plan, be excused altogether from tax. Some of the most wealthy people in the Union would, by this means, be untaxed, in a great degree, while persons who hold a small property in houses or land, will bear the burden of it; and not only of this tax, but to any further extent to which the Government may have occasion to carry it.
Mr. T. Claiborne had opposed many of the measures which made this tax necessary; but a majority of Congress having determined upon a certain course of measures, however contrary they may be to his opinion, he should cheerfully submit to them, and vote in favor of this bill.
The people of Virginia, if they must be taxed, wished to be taxed in a direct way, and he doubted not this tax would be paid with alacrity. They always had been, and would continue to be, he had no doubt, prompt in their obedience to the laws of the General Government.
The yeas and nays were then taken upon the passing of the bill; it was passed—69 votes to 19.
Resolved, That the title be, "An act to provide for the valuation of lands and dwelling houses, and the enumeration of slaves, within the United States."