In this paper Hamilton argues for the importance of a united set of States for a strong revenue base as well as the protection of the ideals of a free society. Hamilton links these two issues by suggesting that a vote for disunion would necessitate more militant means of revenue collection by separate States, as well as greater armed measures to protect sources of revenue from illicit trade and smuggling.
The arbitrary and vexatious powers with which the patrols are necessarily armed, would be intolerable in a free country. This would be necessary because
a nation cannot long exist without revenues. Destitute of this essential support, it must resign its independence, and sink into the degraded condition of a province.
Hamilton uses various arguments to support the importance of trade to American finances. He uses the example of Germany which has fertile land as well as mines producing a wealth of precious metals. However, without a strong trading culture, Germany has
but slender revenues. Hamilton also distinguishes America from England, which is able to raise revenue through direct taxation of superior landed wealth, which is not possible in America. In fact, Hamilton argues, it would be difficult to raise substantial revenue in America except through taxes on consumption, which necessarily means duties on goods of trade.
Hamilton first illustrates the problems of enforcing duties through the example of France. France, he explains has something like 20,000 armed patrols to guard its waterways and other points at which illegal smuggling could frustrate government’s collection of duties. America would face the same problem if it failed to remain as a union, he says, given that the States have rivers and bays where they intersect, given the familiarity between groups of traders, their common language and culture. Like France, America would need to endure the expense of patrols and bear the social impact that these patrols would have upon American ideals of freedom.
A united country, however, would have
but one side to guard – the atlantic coast. Hamilton points out that America’s geographical distance would make smuggling from Europe unlikely, making landing illegally more precarious, and it would be easier and cheaper to guard the coast. Added to this, States would have a common interest to stop smuggled goods:
It is therefore evident, that one national government would be able, at much less expense, to extend the duties on imports, beyond comparison, further than would be practicable to the States separately, or to any partial confederacies.
Hamilton backs up this analysis with a cheap shot at the spirits trade. He argues that even if trade in spirits fell as a result of the federal duties, America would benefit because it would be favourable to her own agriculture, economy, morality and health. It’s a narrow argument, but I guess given the tensions over the taxation of whisky, it’s not surprising he chose this example.
Without a union, Hamilton concludes, America would not have
the consolations of a full treasury, to atone for the oppression of that valuable class of citizens who are employed in the cultivation of the soil.
4 March 2018