Deficiencies of the Confederation
CHAPTER 5|Document 5
James Madison, Notes on Debates in Congress28 Jan. 1783Papers 6:142--49
On the motion of Mr. Madison the whole proposition was new-modelled as follows;
"That it is the opinion of Congress that the establishment of permanent & adequate funds to operate generally throughout the U. States is indispensibly necessary for doing complete justice to the Creditors of the U. S., for restoring public credit, & for providing for the future exigencies of the war." The words "to be collected under the authority of Congress" were as a seperate question left to be added afterwards.
Mr. Rutlidge objected to the term "generally", as implying a degree of uniformity in the tax which would render it unequal. He had in view particularly a land tax according to quantity as had been proposed by the office of finance. He thought the prejudices of the people opposed to the idea of a general tax & seemed on the whole to be disinclined to it himself, at least if extended beyond an impost on trade; urging the necessity of pursuing a valuation of land, and requisitions grounded thereon.
Mr. Lee 2ded. the opposition to the term "general." he contended that the States wd. never consent to a uniform tax because it wd. be unequal; that it was moreover repugnant to the articles of confederation; and by placing the purse in the same hands with the sword, was subversive of the fundamental principles of liberty. He mentioned the repeal of the impost by Virga. himself alone opposing it & that too on the inexpediency in point of time, as proof of the aversion to a general revenue. He reasoned upon the subject finally as if it was proposed that Congress sd. assume & exercise a power immediately & without the previous Sanction of the States, of levying money on them. In consequence.
Mr. Wilson rose & explained the import of the motion to be that Congress should recommend to the States the investing them with power. He observed that the confederation was so far from precluding, that it expressly provided for future alterations; that the power given to Congress by that Act was too little not too formidable, that there was more of a centrifugal than centripetal force in the States & that the funding of a common debt in the manner proposed would produce a salutary invigoration & cement of the Union.
Mr. Elseworth acknowledged himself to be undecided in his opinion: that on the one side he felt the necessity of continental funds for making good the continental engagements but on the other desponded of a unanimous concurrence of the States in such an establishment. He observed that it was a question of great importance how far the federal govt. can or ought to exert coercion against delinquent members of the confederacy; & that without such coercion no certainty could attend the constitutional mode which referred every thing to the unanimous punctuality of thirteen different councils. Considering therefore a continental revenue as unattainable, and periodical requisitions from Congress as inadequate, he was inclined to make trial of the middle mode of permanent State funds, to be provided at the recommendation of Congs. and appropriated to the discharge of the common debt.
Mr. Hamilton in reply to Mr. Elseworth dwelt long on the inefficacy of State funds, He supposed too that greater obstacles would arise to the execution of the plan than to that of a general revenue. As an additional reason for the latter to be collected by officers under the appointment of Congress, he signified that as the energy of the federal Govt. was evidently short of the degree necessary for pervading & uniting the States it was expedient to introduce the influence of officers deriving their emoluments from & consequently interested in supporting the power of, Congress.1
Mr. Williamson was of opinion that continental funds altho' desirable, were unattainable at least to the full amount of the public exigences. He thought if they could be obtained for the foreign debt, it would be as much as could be expected, and that they would also be less essential for the domestic debt.
Mr. Madison observed that it was needless to go into proofs of the necessity of payg. the public debts; that the idea of erecting our national independence on the ruins of public faith and national honor must be horrid to every mind which retained either honesty or pride; that the motion before Congress contained a simple proposition with respect to the truth of which every member was called upon to give his opinion. That this opinion must necessarily be in the affirmative, unless the several objects; of doing justice to the public Creditors, &c &c. could be compassed by some other plan than the one proposed, that the 2 last objects depended essentially on the first; since the doing justice to the Creditors alone wd. restore public credit, & the restoration of this alone could provide for the future exigencies of the war. Is then a continl revenue indispensibly necessary for doing complete justice &? This is the question. To answer it the other plans proposed must first be reviewed.
In order to do complete justice to the public Creditors, either the principal must be paid off, or the interest paid punctually. The 1st. is admitted to be impossible on any plan. The only plans opposed to the continl one for the latter purpose; are 1st. periodical requisitions according to the foederal articles: 2dly. permanent funds established by each State within itself & the proceeds consigned to the discharge of public debts.
Will the 1st. be adequate to the object? The contrary seems to be maintained by no one. If reason did not sufficiently premonish, experience has sufficiently demonstrated that a punctual & unfailing compliance by 13 separate & independent Govts. with periodical demands of money from Congress, can never be reckoned upon with the certainty requisite to satisfy our present creditors, or to tempt others to become our creditors in future.
2dly. Will funds separately established within each State & the amount submitted to the appropriation of Congress be adequate to the object? The only advantage which is thought to recommend this plan, is that the States will be with less difficulty prevailed upon to adopt it. Its imperfections are 1st. that it must be preceded by a final & satisfactory adjustment of all accts. between the U. S. and individual States; and by an apportionment founded on a valuation of all the lands throughout each of the States in pursuance of the law of the confederation: for although the States do not as yet insist on these prerequisites in the case of annual demands on them with wch. they very little comply & that only in the way of an open acct.; yet these conditions wd. certainly be exacted in case of a permanent cession of revenue; and the difficulties & delays to say the least incident to these conditions, can escape no one. 2dly. the produce of the funds being always in the first instance in the hands & under the controul of the States separately, might at any time & on various pretences, be diverted to State-objects. 3dly. That jealousy which is as natural to the States as to individuals & of which so many proofs have appeared, that others will not fulfil their respective portions of the common obligations, will be continually & mutually suspending remittances to the common treasury, until it finally stops them altogether. These imperfections are too radical to be admitted into any plan intended for the purposes in question.
It remains to examine the merits of the plan of a general revenue operating throughout the U. S. under the superintendence of Congress.
One obvious advantage is suggested by the last objection to separate revenues in the different States; that is, it will exclude all jealousy among them on that head, since each will know whilst it is submitting to the tax, that all the others are necessaryly at the same instant bearing their respective portions of the burden.
Again it will take from the States the opportunity as well as the temptation to divert their incomes from the general to internal purposes since these incomes will pass directly into the treasury of the U. S.
Another advantage attending a general revenue is that in case of the concurrence of the States in establishing it, it would become soonest productive; and would consequently soonest obtain the objects in view. Nay so assured a prospect would give instantaneous confidence & content to the public creditors at home & abroad, and place our affairs in the most happy train.
The consequences with respect to the Union, of omitting such a provision for the debts of the Union also claims particular attention. The tenor of the memorial from Penna. and of the information just given on the floor by one of its delegates (Mr Fitzimmons) renders it extremely probable that that State would as soon as it sd. be known that Congress had declined such provision or the States rejected it, appropriate the revenue required by Congress, to the payment of its own Citizens & troops, creditors of the U. S. The irregular conduct of other States on this subject enforced by such an example could not fail to spread the evil throughout the whole continent. What then wd become of the confederation? What wd. be the authority of Congress? wt. the tie by which the States cd. be held together? what the source by which the army could be subsisted & cloathed? What the mode of dividing & discharging our foreign debts? What the rule of settling the internal accts? What the tribunal by which controversies amg the States could be adjudicated?
It ought to be carefully remembered that this subject was brought before Congress by a very solemn appeal from the army to the justice & gratitude of their Country. Besides immediate pay, they ask for permanent security for arrears. Is not this request a reasonable one? will it be just or politic to pass over the only adequate security that can be devised, & instead of fulfilling the stipulations of the U. S. to them, to leave them to seek their rewards separately from the States to which they respectively belong? The patience of the army has been equal to their bravery, but that patience must have its limits; and the result of despair can not be foreseen, nor ought it to be risked.
It has been objected agst. a general revenue that it contravenes the articles of confederation. These Articles as has been observed have presupposed the necessity of alterations in the foederal system & have left a door open for them: They moreover authorize Congress to borrow money. Now in order to borrow money permanent & certain provision is necessary, & if this provision cannot be made in any other way as has been shewn, a general revenue is within the spirit of the confederation.
It has been objected that such a revenue is subversive of the soverignty & liberty of the States. If it were to be assumed without the free gift of the States this objection might be of force, but no assumption is proposed. In fact Congress are already invested by the States with the constitutional authority over the purse as well as the sword. A general revenue would only give this authority a more certain & equal efficacy. They have a right to fix the quantum of money necessary for the common purposes. The right of the States is limited to the mode of supply. A requisition of Congress on the States for money is as much a law to them; as their revenue acts when passed are laws to their respective Citizens. If for want of the faculty or means of enforcing a requisition, the law of Congress proves inefficient; does it not follow that in order to fullfil the views of the foederal constitution, such a change sd. be made as will render it efficient? Without such efficiency the end of this Constitution which is to preserve order & justice among the members of the Union, must fail; as without a like efficiency would the end of State constitutions wch. is to preserve like order & justice among its members.
It has been objected that the States have manifested such aversion to the impost on trade as renders any recommendations of a general revenue hopeless & imprudent. It must be admitted that the conduct of the States on that subject is less encouraging than were to be wished. A review of it however does not excite despondence. The impost was adopted immediately & in its utmost latitude by several of the States. Several also which complied partially with it at first, have since complied more liberally. One of them after long refusal has complied substantially. Two States only have failed altogether & as to one of them it is not known that its failure has proceeded from a decided opposition to it. On the whole it appears that the necessity & reasonableness of the scheme have been gaining ground among the States. He was aware that one exception ought to be made to this inference: an exception too wch peculiarly concerned him to advert to. The State of Virga as appears by an Act yesterday laid before Congress, has withdrawn its assent once given to the scheme. This circumstance cd. not but produce some embarrassment in a representative of that State advocating the scheme; one too whose principles were extremely unfavorable to a disregd. of the sense of Constitnts. But it ought not to deter him from listening to considerations which in the present case ought to prevail over it. One of these considerations was that altho' the delegates who compose Congress, more immediately represented & were amenable to the States from which they respectively come, yet in another view they owed a fidelity to the collective interests of the whole. 2dly. Altho' not only the express instructions, but even the declared sense of constituents as in the present case, were to be a law in general to these representatives, still there were occasions on which the latter ought to hazard personal consequences from a respect to what his clear conviction determines to be the true interest of the former; and the present he conceived to fall under this exception. Lastly the part he took on the present occasion was the more fully justified to his own mind by his thorough persuasion, that with the same knowledge of public affairs which his station commanded, the Legislature of Va would not have repealed the law in favor of the impost & would even now rescind the repeal.
The result of these observations was that it was the duty of Congress under whose authority the public debts had been contracted to aim at a general revenue as the only means of discharging them; & that this dictate of justice & gratitude was enforced by a regard to the preservation of the confederacy, to our reputation abroad & to our internal tranquility.
Mr. Rutledge complained that those who so strenuously urged the necessity & competency of a general revenue operating throughout all the States at the same time, declined specifying any general objects from which such a revenue could be drawn He was thought to insinuate that these objects were kept back intentionally untill the general principle cd. be irrevocably fixed when Congs. wd. be bound at all events to go on with the project, whereupon Mr. Fitzimmons expressed some concern at the turn wch. the discussion seemed to be taking. He said that unless mutual confidence prevailed no progress could be made towards the attainment of those ends wch. all in some way or other aimed at. It was a mistake to suppose that any specific plan had been preconcerted among the patrons of a general revenue.
Mr. Wilson with whom the motion originated gave his assurances that it was neither the effect of preconcert with others, nor of any determinate plan matured by himself, that he had been led into it, by the declaration on Saturday last by Congs. that substantial funds ought to be provided; by the memorial of the army from which that declaration had resulted, by the memorials from the State of Pa. holding out the idea of separate appropriations of her revenue unless provision were made for the public creditors, by the deplorable & dishonorable situation of public affairs which had compelled Congress to draw bills on the unpromised & contingent bounty of their ally, and which was likely to banish the Superintdt. of Finance whose place cd not be supplied, from his department. He observed that he had not introduced details into the debate because he thought them premature, until a general principle should be fixed; and that as soon as the principle sd. be fixed he would altho' not furnished with any digested plan, contribute all in his power to the forming such a one.
Mr. Rutlidge moved that the proposition might be committed in order that some practicable plan might be reported, before Congress sd. declare that it ought to be adopted.
Mr. Izard 2ded. the motion from a conciliating view.
Mr. Madison thought the commitment unnecessary: and would have the appearance of delay; that too much delay had already taken place, that the deputation of the army had a right to expect an answer to their memorial as soon as it could be decided by Congress. He differed from Mr. Wilson in thinking that a specification of the objects of a general revenue would be improper, and thought that those who doubted of its practicability had a right to expect proof of it from details before they cd. be expected to assent to the general principle; but he differred also from Mr. Rutledge who thought a commitment necessary for the purpose; since his views would be answered by leaving the motion before the house and giving the debate a greater latitude. He suggested as practicable objects of a general revenue. 1st an impost on trade 2dly. a poll tax under certain qualifications 3dly. a land tax under do.
Mr. Hamilton suggested a house & window tax. he was in favor of the mode of conducting the discussion urged by Mr. Madison
On the motion for the commt. 6 States were in favor of it, & five agst. it. so it was lost--in this vote the merits of the main proposition very little entered.
Mr. Lee said that it was a waste of time to be forming resolutions & settling principles on this subject. He asked whether these wd. ever bring any money into the public treasury. His opinion was that Congress ought in order to guard agst. the inconveniency of meetings of the different Legislatures at different & even distant periods, to call upon the Executives to convoke them all at one period, & to lay before them a full state of our public affairs. He said the States would never agree to those plans which tended to aggrandize Congress; that they were jealous of the power of Congress; & that he acknowledged himself to be one of those who thought this jealousy not an unreasonable one; that no one who had ever opened a page or read a line on the subject of liberty, could be insensible to the danger of surrendering the purse into the same hand which held the sword.
The debate was suspended by an adjournment.
The Papers of James Madison. Edited by William T. Hutchinson et al. Chicago and London: University of Chicago Press, 1962--77 (vols. 1--10); Charlottesville: University Press of Virginia, 1977--(vols. 11--).
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