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CHAPTER lature, and the next year had been a member of the Convention to consider the Federal Constitution. In that 1790. body he had taken a decided stand against ratification, a merit for so it was considered in Virginia—which now helped to place him in the federal Senate. Another change in that body had been occasioned by the retirement of Patterson, chosen to fill the place, as governor of New Jersey, left vacant by the death of that eminent Revolutionary patriot, William Livingston. Patterson's seat was filled by Philemon Dickinson, who had rendered good service during the Revolutionary war as commander of the New Jersey militia.

The president's speech congratulated Congress on the financial prosperity of the country, evinced by the unexpected productiveness of the import duties, which, in little more than thirteen months, up to the end of September, had produced the sum of $1,900,000. In consequence of the improving credit of the country, certificates of the domestic debt had risen to seventy-five cents on the dollar. A loan, in part execution of the powers intrusted to him for the liquidation of the foreign debt, had been obtained in Holland without difficulty and on favorable terms. Attention was called to the state of the Western frontier, a short account being given of the expedition authorized under Harmer, rumors of the repulse of which just began to arrive. After some allusions to the disturbed state of Europe, the consideration was suggested of measures for the protection of American commerce, especially in the Mediterranean. Attention was also called to regulations touching the authority of consuls, especially those of France under the consular convention; to the establishment of a mint; to a uniform system of weights and measures; to a reorganization of the post-office system, and a uniform militia.

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There would be needed, according to the calculations CHAPTER of the Secretary of the Treasury, principally to meet the charges growing out of the assumption of the state debts, 1790. an additional annual revenue of $826,000. This sum he proposed to raise by an increase of the duties on imported spirits, and a tax by way of excise on those produced at home. This measure of an excise, notwithstanding the repugnance to it exhibited at both the previous sessions, was pressed in a very elaborate report. The plan proposed would be free from the objections principally urged to taxes by excise. No summary jurisdiction would be vested in the excise officers, nor any authority of searching and visiting without special warrant, except the places specially designated by the dealers and manufacturers themselves as depositaries of spirits. The practicability of the collection had been already demonstrated, a similar duty on spirits having been heretofore imposed by the states of Pennsylvania, Massachusetts, and Connecticut, and even a general excise by the latter state upon the consumption of all foreign articles. As to the expense of the collection, which was much objected to, the secretary considered the machinery necessary for the collection of the domestic duty essential to secure the due payment of the foreign impost. There were but two systems for the collection of taxes-reli ance on the integrity of the individuals to be taxed, the system hitherto chiefly followed in the collection of state taxes, and reliance upon the vigilance of public officers. It was this latter method which he proposed to adopt. The other method held out too great a temptation to false swearing, resulting in great frauds on the revenue, the temptation of interest being too powerful for men in general to resist.

Duties on the great mass of imported articles had

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CHAPTER been carried to a point which it was not desirable to exceed, and which could not be exceeded without going 1790. counter to the sense of the great body of the merchants. Considering their general attachment to the federal system, their ready co-operation in the enforcement of the revenue laws, their cheerful submission to the additional duties imposed at the last session, and the extent of the innovation already made on the former system of contributions, their opinion, though not decisive on the subject, the secretary considered to be entitled to respect. Nor would it be wise to give occasion for supposing that trade was to bear the whole weight of federal taxation.

1791.

Direct taxes were not only difficult of collection, but it was desirable to reserve them for cases directly involving the public safety, and interesting, therefore, to the whole community. The only alternative seemed, therefore, to be a tax on internal consumption; and surely, of all articles consumed, none were fitter to be taxed than spirits, whether foreign or domestic. Indeed, the policy of this tax, as regarded the health and morals of the community, was supported by a memorial from the Philadelphia College of Physicians.

A bill in close conformity to the secretary's plan was Jan. 5. very warmly opposed by the voluble Jackson, who did not wish to subject the trade between Georgia and the West Indies to any further burdens; by Parker of Virginia; by Stone of Maryland; and with great earnestness by Steele and Bloodgood of North Carolina. According to Steele, the consumption of spirits was so great in North Carolina, that the amount of tax thus made to fall upon his constituents would be ten times as great as in the case of Connecticut. Livermore, on the other hand, sustained the bill, as proposing a mode of taxation not only equal and just, but one likely to be agreeable to the peo

of the national debt.

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ple, who would consider it a drinking down, as it were, CHAPTER The bill was also supported by Madison. As money must be had, he saw no better 1791. means of raising it. The opposition to the bill was strengthened by a series of resolutions against it, passed by the Pennsylvania Legislature, then in session at Philadelphia. But, after a series of warm debates, it was carried through the House by a vote of thirty-five to twenty-one. As finally passed, the act imposed upon all imported spirits a duty varying from twenty to forty cents per gallon, according to strength-a great advance upon the first timid tariff, but not half the amount which has since been levied. The excise to be collected on domestic spirits varied with their strength, from nine to twenty-five cents per gallon on those distilled from grain, and from eleven to thirty cents when the material was molasses or other imported product; thus allowing, especially when the duty on molasses was taken into account, a considerable discrimination in favor of the exclusively home product.

For the collection of these duties, each state was made an inspection district, with its Supervisor; each district to be subdivided, as might be necessary, into Surveys of Inspection, each with its Inspector. As As many Offices of Inspection as might be found convenient were to be established in each district, to have the control of the landing of all imported spirits, and, in the case of domestic spirits, the ascertainment of the quantity and quality, as well as the collection of the duties. All distillers were required to enter their distilleries at the nearest office of inspection, with a complete description of all the buildings, which buildings were to be subject to the constant examination of an inspector appointed for that purpose, who was to gauge and brand the casks, the duties

CHAPTER to be paid before the removal of the spirits from the disIII. tillery, But, to save the expense and the trouble to 1791. both parties of this constant oversight, the small country

stills not situate in any town or village were to pay an annual rate of sixty cents per gallon on the capacity of the still. All casks containing spirits, not properly branded and certified, were liable to forfeiture. On the exportation of domestic spirits, a drawback was allowed equivalent to the excise, except a deduction of half a cent per gallon, with an additional drawback of the molasses duty in case of spirits distilled from that material.

The resolutions of the Legislature of Pennsylvania against this tax being echoed in North Carolina, Virginia, and Maryland, no doubt became one principal cause of the opposition encountered in its collection. In these four states the small private distilleries were very numerous, amounting, it was said, in Pennsylvania alone, to not less than five thousand.

While the House had been employed on the excise, another proposition of the Secretary of the Treasury for a national bank had been under consideration in the Senate. In his report on this subject, Hamilton had urged in favor of such an institution the facilities which banks afforded to trade, and the benefits to be expected in a commercial point of view. But what he chiefly dwelt upon was the convenience to the government of a paper medium in which to conduct its monetary transactions, and of a resource for such temporary loans as might from time to time be required.

Duly to estimate the force of these reasons, it is necessary to understand the precise monetary position of the United States at the moment they were offered, and what had been hitherto the experience of the country on that subject. From the first commencement of the North