Formation of the Union, 1750-1829Hart, Albert Bushnell
History
Formation of the Union, 1750-1829
Hart, Albert Bushnell
United States -- History; United States -- Politics and government
The first necessity of the new government was to lay the taxes authorized
under the new Constitution for its own support, for the payment of
interest, and eventually for sinking the principal of the public debt. Two
days after the House organized, Madison introduced a scheme, which
eventually passed into the first tariff act. On May 13, 1789, after
agreeing to a duty on "looking-glasses and brushes," it was moved to lay a
tax of ten dollars each on imported slaves. A Georgia member protested
against the tax as intended for the benefit of Virginia, and "hoped
gentlemen would have some feeling for others;" the proposition failed.
[Sidenote: Question of protection.]
Another amendment, however, raised the most important political question
connected with taxation. April 9, 1789, a Pennsylvania member wished to
increase the list of dutiable articles, so as "to encourage the
productions of our country and to protect our infant manufactures." A
South Carolina member at once objected. Two days later a petition from
Baltimore manufacturers asked Congress to impose on "all foreign articles
which can be made in America such duties as will give a just and decided
preference to our labors." New England opposed the proposed duties because
molasses, hemp, and flax were included; molasses was a "raw material" for
the manufacture of rum; and hemp and flax were essential for the cordage
of New England ships. Lee of Virginia moved to strike out the duty on
steel, since a supply could not be furnished within the United States, and
he thought it an "oppressive, though indirect, tax on agriculture."
[Sidenote: The first tariff.]
The act as passed July 4, 1789, bore the title of "An Act for the
encouragement and protection of manufactures;" yet the highest ad valorem
duty was fifteen per cent. To be sure, the high rates of freight at that
time afforded a very large additional protection; but no general revenue
act ever passed by Congress has imposed so low a scale of duties.
[Sidenote: Hamilton's scheme.]
By the time the revenue had begun to come in under this Act, Secretary
Hamilton had worked out in his mind a general financial system, intended
to raise the credit and to strengthen the authority of the Union. The
first step was to provide a sufficient revenue to pay running expenses and
interest. Finding that the first tariff produced too little revenue, in
1790 and again in 1792 it was slightly increased, at Hamilton's
suggestion. The second part of his scheme was to lay an excise, an
internal duty upon distilled spirits. In 1791 a tax, in its highest form
but twenty-five cents a gallon, was laid on spirits distilled from foreign
or domestic materials. The actual amount of revenue from this source was
always small; but Hamilton expected that the people in the interior would
thus become accustomed to federal officers and to federal law. The effect
of the revenue Acts was quickly visible: in 1792 the annual revenue of the
government had risen to $3,600,000.
Public-domain text, read in full here on John Shaqi.
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