Alexander Hamilton's fiscal reform: Transforming the structure of taxation in the early republic

William and Mary Quarterly

Volumn 61, Issue 4, 2004, Pages 713-744

  Edling, Max M ^a   Kaplanoff, Mark D ^a  

^a NONE

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EID: 33845940259     PISSN: 00435597     EISSN: 1933-769     Source Type: Journal    
DOI: 10.2307/3491426     Document Type: Conference Paper

References (129)

1. Robert A. Becker, Revolution, Reform, and the Politics of American Taxation, 1763-1783 (Baton Rouge, La., 1980) 219-229
2. Becker, "Salus Populi Suprema Lex: Public Peace and South Carolina Debtor Relief Laws, 783-1788," South Carolina Historical Magazine, LXXX (1979), 65-75
3. Roger H. Brown, Redeeming the Republic: Federalists, Taxation, and the Origins of the Constitution (Baltimore, 1993), 32-138
4. Richard Buel, Jr., Dear Liberty: Connecticut's Mobilization for the Revolutionary War (Middletown, Conn., 1980), 326-327, 330
5. John P. Kaminski, "Democracy Run Rampant: Rhode Island in the Confederation," in James Kirby Martin, ed , The Human Dimensions of Nation Making: Essays on Colonial and Revolutionary America (Madison, Wis., 1976), 243-269
6. Edwin J. Perkins, American Public Finance and Financial Services, 1700-1815 (Columbus, Ohio, 1994), 137-196
7. Oliver Wolcott, "Direct Taxes," American State Papers: Documents, Legislative and Executive, of the Congress of the United States; Selected and Edited under the Authority of Congress, 38 vols. (Washington, D.C., 1832-1861), V, 437
8. George Washington, "Seventh Annual Address," in James D. Robinson, comp., A Compilation of the Messages and Papers of the Presidents, 1789-1908, 11 vols. (Washington, D.C., 1909), I, 184
9. Alexander Hamilton, "The Defence of the Funding System," in Harold C. Syrett, ed., The Papers of Alexander Hamilton, 27 vols. (New York, 1961-1987), XIX, 17-18
10. For contemporary reactions to Shays's Rebellion, see Forrest McDonald and Ellen Shapiro McDonald, Requiem: Variations on Eighteenth-Century Themes (Lawrence, Kans., 1988), 72-76
11. Hamilton, "Defence of the Funding System," in Syrett, ed., Papers of Hamilton, XIX, 35
12. E. James Ferguson, The Power of the Purse: A History of American Public Finance, 1776-1790 (Chapel Hill, N.C., 1961), 332
13. The funding and assumption plans are treated in Stanley Elkins and Eric McKitrick, The Age of Federalism (New York, 1993), 114-123
14. Hamilton's major biographers are Henry Cabot Lodge, Alexander Hamilton (Boston, 1882)
15. Nathan Schachner, Alexander Hamilton (New York, 1946)
16. John C. Miller, Alexander Hamilton: Portrait in Paradox (New York, 1959)
17. Broadus Mitchell, Alexander Hamilton: The National Adventure, 1784-1804 (New York, 1962)
18. Forrest McDonald, Alexander Hamilton: A Biography (New York, 1979)
19. Jacob Ernest Cooke, Alexander Hamilton (New York, 1982)
20. His most recent ones are Richard Brookhiser, Alexander Hamilton: American (New York, 1999)
21. and Willard Sterne Randall, Alexander Hamilton: A Life (New York, 2003)
22. Becker, Revolution
23. Brown, Redeeming the Republic
24. Woody Holton, "'From the Labours of Others': The War Bonds Controversy and the Origins of the Constitution in New England," William and Mary Quarterly, 3d Ser., LXI (2004) 271-316
25. Frederick Dalzell, "Prudence and the Golden Egg: Establishing the Federal Government in Providence, Rhode Island," New England Quarterly, LXV (1992), 355-388
26. Dalzell, "Taxation with Representation: Federal Revenue in the Early Republic" (Ph.D. diss., Harvard University, 1993)
27. Robin L. Einhorn, "Slavery and the Politics of Taxation in the Early United States," Studies in American Political Development, XIV (2000), 156-183
28. Einhorn, "Patrick Henry's Case against the Constitution: The Structural Problem of Slavery," Journal of the Early Republic, XXII (2002), 549-573
29. H. James Henderson, "Taxation and Political Culture: Massachusetts and Virginia, 1760-1800," WMQ, 3d Ser., XLVII (1990), 90-114
30. Other notable works on taxation in the early Republic include William D. Barber, "'Among the Most Techy Articles of Civil Police': Federal Taxation and the Adoption of the Whiskey Excise," WMQ, 3d Ser., XXV (1968), 58-84
31. Dall W. Forsythe, Taxation and Political Change in the Young Nation 1781-1833 (New York, 1977)
32. Kaminski, Democracy Run Rampant," in Martin, ed., Human Dimensions of Nation Making, 243-269
33. Edward C. Papenfuse, "The Legislative Response to a Costly War: Fiscal Policy and Factional Politics in Maryland, 1777-1789," in Ronald Hoffman and Perer J. Albert, eds., Sovereign States in an Age of Uncertainty (Charlottesville, Va., 1981), 134-156
34. Richard Sylla, "Experimental Federalism: The Economics of American Government, 1789-1914, " in Stanley L. Engerman and Robert E. Gallman, eds., The Cambridge Economic History of the United States, 3 vols. (Cambridge, 2000), II, 483-541
35. For the former, see, for instance, Van Beck Hall, Politics without Parties: Massachusetts, 1780-1791 (Pittsburgh, 1972), 295-297
36. Henderson, "Taxation and Political Cultute," WMQ, 3d Ser., XLVII (1990), 111-113
37. For the latter, see, in particular, Perkins, American Public Finance, 217-219
38. and Richard Sylla, "Shaping the U.S. Financial System, 1690-1913: The Dominant Role of Public Finance," in Sylla, Richard Tilly, and Gabriell Tortella, eds., The State, the Financial System, and Economic Modernization (Cambridge, 1999), 263
39. John M. Murrin, "The Great Inversion, or Court versus Country: A Comparison of the Revolutionary Settlements in England (1688-1721) and America (1776-1816)," in J. G. A. Pocock, ed., Three British Revolutions: 1641, 1688, 1776 (Princeton, N.J., 1980), 407
40. John R. Nelson, Jr., Liberty and Property: Political Economy and Policymaking in the New Nation, 1789-1812 (Baltimore, 1987), 30-31. Although Murrin and Nelson take a rather one-sided view on how to restore public credit - a question that to contemporaries was as crucial as it was difficult - this is not the place to attempt to refute their argument
41. Edwin J. Perkins provides a more balanced view of the appreciation of securities in American Public Finance, 227-231
42. Edwin J. Perkins, The Economy of Colonial America (New York, 1980), 125
43. Sylla, "Experimental Federalism," in Engerman and Gallman, eds., Cambridge Economic History of the United States, 504-507
44. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. R. H. Campbell, A. S. Skinner, and W. B. Todd, 2 vols. (Oxford, 1976), II, 825
45. See also Buel, Dear Liberty, 289-290
46. Becker, Revolution, 48, 70, 79-80
47. Paul B. Trescott, "Federal-State Financial Relations, 1790-1860," Journal of Economic History, XV (1955), 227, 232 (investments and loans)
48. Don C. Sowers, The Financial History of New York State from 1789 to 1912 (New York, 1914), appendix 2, "Classified Receipts," 324-325 (land)
49. See, for instance, E. James Ferguson, "Currency Finance: An Interpretation of Colonial Monetary Practices," WMQ, 3d Ser., X (1953), 153-180
50. Merrill Jensen, The New Nation: A History of the United States during the Confederacy, 1781-1789 (Boston, 1981), 313-326
51. Forrest McDonald, E Pluribus Unum: The Formation of the American Republic, 1776-1790, 2d ed. (Indianapolis, Ind., 1979), 80, 97-99. 111-113, 146-148, 179-181
52. Votes and Proceedings of the House of Delegates of the State of Maryland, November Session, 1785 (Nov. 14, 1785-Mar. 12, 1786) (Annapolis, Md., 1786), 12-18
53. Votes and Proceedings of the House of Delegates of the State of Maryland, November Session, 1786 (Annapolis, Md., 1787), 39-40
54. Votes and Proceedings of the House of Delegates of the State of Maryland, November Session, 1787 (Annapolis, Md., 1788), 26-27
55. and Perkins, Economy of Colonial America, 123-144
56. See Patrick K. O'Brien, "The Political Economy of British Taxation, 1660-1815," Economic History Review, 2d Ser., XLI (1988), 1-32, for the structure of the British tax revenue
57. Brown, Redeeming the Republic, 98, 118
58. Richard Buel, Jr., "The Public Creditor Interest in Massachusetts Politics, 1780-86," in Robert A. Gross, ed., In Debt to Shays: The Bicentennial of an Agrarian Rebellion (Charlottesville, Va., 1993), 50
59. Max M. Edling, A Revolution in Favor of Government: Origins of the U.S. Constitution and the Making of the American State (Oxford, 2003), 180-183
60. Jackson Turner Main, The Antifederalists: Critics of the Constitution, 1781-1788 (Chapel Hill, N.C., 1961), 143-146
61. "South Carolina House Journal, 7 January 1790," in Michael E. Stevens, ed., The State Records of South Carolina: Journals of the House of Representatives, 1789-1790 (Columbia, S.C., 1984), 302
62. McDonald and McDonald, Requiem, 70
63. Brown, Redeeming the Republic, tables 7, 11
64. Terry Bouton, "A Road Closed: Rural Insurgency in Post-Independence Pennsylvania," Journal of American History, LXXXVII (2000), 859
65. See also Buel, Dear Liberty, 320, 322-324
66. Buel, "Public Creditor Interest," in Gross, ed., In Debt to Shays, 47-56
67. For British taxes and population, see O'Brien, "Political Economy," Economic History Review, 2d Ser., XLI (1988), table 2
68. and E. A. Wrigley and R. S. Schofield, The Population History of England, 1541-1871 (London, 1981), table 7.8
69. Conversion of Massachusetts and sterling pounds to dollar values is based on John J. McCusker, How Much Is That in Real Money? A Historical Commodity Price Index for Use as a Deflator of Money Values in the Economy of the United States, 2d ed. (Worcester, Mass., 2001), table 1, 34
70. State of the Accounts of David Rittenhouse, Esq., Treasurer of Pennsylvania; from 1st January till 1st November 1787; Including His Continental and State Money Accounts for the Year 1786 (Philadelphia, 1790), 6-40
71. North Carolina House Journal, Dec. 2, 1788, in William L. Saunders and Walter Clark, eds., State Records of North Carolina, 26 vols. (Goldsboro, N.C., 1886-1907), XXI, 142
72. Proceedings of the House of Delegates of the State of Maryland, November Session, 1790 (Annapolis, Md., 1791), 78-79
73. Journal of the House of Delegates of the Commonwealth of Virginia (Dec. 4, 1797-Jan. 19, 1798) (Richmond, Va., 1798), 53
74. McCusker, How Much Is That in Real Money? 61-88
75. Robert E. Wright, Hamilton Unbound: Finance and the Creation of the American Republic (Westport, Conn., 2002), 9-57
76. Ferguson, Power of the Purse, 220-250
77. Robert E. Wright, The Wealth of Nations Rediscovered: Integration and Expansion in American Financial Markets, 1780-1850 (New York, 2002), 64
78. Matthew M'Connell, An Essay on the Domestic Debts of the United States of America (Philadelphia, 1787), quoted ibid., 65
79. As economic historians explore the role of the financial sector in economic growth and especially in the coming of the industrial revolution, we are likely to learn more about the securities market in the 1780s, but at present this is unmapped territory. See Richard Sylla, "Shaping the U.S. Financial System," in Sylla, Tilly, and Tortella, eds., The State, 249-270
80. Wright, The Wealth of Nations Rediscovered
81. The state and federal public debt are discussed, and a number of securities and indents are illustrated, in William G. Anderson, The Price of Liberty: The Public Debt of the American Revolution (Charlottesville, Va., 1983)
82. Holton, "'From the Labours of Others,'" WMQ, 3d Ser., LXI (2004), tables I, II
83. The emissions of the 1780s are treated in Perkins, American Public Finance, 142-165
84. The emission of Rhode Island is treated in Ferguson, Power of the Purse, 243-244
85. John P. Kaminski, George Clinton: Yeomam Politician of the New Republic (Madison, Wis., 1993), 98-104
86. W. Robert Higgins, "A Financial History of the American Revolution in South Carolina" (Ph.D. diss., Duke University, 1969), 243-267
87. Comparisons between colonial and British tax rates are found in Perkins, Economy of Colonial America, 125
88. Henderson, "Taxation and Political Culture," WMQ, 3d Ser., XLVII (1990), 94 n. 4
89. Massachusetts taxes are from Joseph B. Felt, "Statistics of Taxation in Massachusetts, Including Valuation and Population," American Statistical Association, Collections, I, no. 3 (1847), 410
90. All other figures are from Becker, Revolution, 34, 70-72
91. Felt, "Statistics of Taxation," American Statistical Association, Colls., 543
92. Nor did the Pennsylvania bills of credit circulate widely. Wright and Michener argue that because of depreciation the bills became an object of speculative investment rather than a circulating medium; see "Conceptual Confusion," 22-23
93. Sowers, Financial History of New York, appendix 2, "Classified Receipts," 324-325
94. Kaminski, George Clinton, 198
95. State holdings of federal securities are listed in Trescott, "Federal-State Financial Relations," Journal of Economic History, XV (1955), table 3, 233
96. Paul Studenski and Herman E. Kroos, Financial History of the United States: Fiscal, Monetary, Banking, and Tariff, Including Financial Administration and State and Local Finance, 2d ed. (New York, 1963), 58 n. 19
97. B. U. Ratchford, American State Debts (Durham, N.C., 1941), 46. Jensen also notes that, in the early 1780s, 50 to 90 percent of state expenditures went to interest payments on the state debts, whereas Ratchford gives the same figures for the later half of the 1780s
98. Perkins, American Public Finance, 142-143, 213
99. McDonald, Hamilton, 143-188
100. W. F. Dodd, "The Effect of the Adoption of the Constitution upon the Finances of Virginia," Virginia Magazine of History and Biography, X (1902), 366
101. Senate Journal, Dec. 11, 1787, in Saunders and Clark, eds., State Records of North Carolina, II, 396, 398
102. South Carolina, General Assembly, Committee of Ways and Means, Second Report of Ways and Means (Charleston, S.C., 1785)
103. Jensen, New Nation, 348, 425
104. Brown, Redeeming the Republic, 3, 242
105. Bouton, "A Road Closed," JAH, LXXXVII (2000), 877
106. Terry Bouton, "'No Wonder the Times Were Troublesome': The Origins of Fries Rebellion, 1783-1799," Pennsylvania History, LXVII (Winter 2000), 37
107. Merrill Jensen, The Making of the American Constitution (Princeron, N.J., 1964), 81
108. Felt, "Statistics of Taxation," American Statistical Association, Colls., I, no. 3 (1847), 438
109. "Statement of Receipts at the Treasury from the Collectors of the Customs, from the Commencement of the Present Government to the Close of the Year 1799," American State Papers, V, 666
110. John J. McCusker, "Estimating Early American Gross Domestic Product," Historical Methods, XXXIII, no. 3 (2000), 155-162 (quotation on 159)
111. United States, Bureau of the Census, Historical Statistics, II, series U 9. Because most of the states imposed duties according to weight and measure and the federal government did so according to value, it is necessary to know the value of goods - for instance a pound of tea or a gallon of madeira - in order to compare customs duties. A comparison between federal legislation of 1789 and ad valorem rates on some items in New York legislation from 1784 and 1787 suggests that customs rates were doubled. See An Act for Laying a Duty on Goods, Wares, and Merchandises Imported into the United States, July 4, 1789, U.S. Statutes at Large, I, 24-27
112. William F. Zornow, "New York Tariff Policies, 1775-1789," New York History, XXXVII (1956), 44-47
113. For the Federalists, the Customs Service, and the merchants, see Dalzell, "Prudence and the Golden Egg," NEQ, LXV (1992), 355-388
114. Dalzell, "Taxation with Representation"
115. Carl E. Prince and Mollie Keller, The U.S. Customs Service: A Bicentennial History (Washington, D.C., 1989), 35-67
116. Pelatiah Webster, "Strictures on the Net Produce of the Taxes of Great-Britain," Political Essays on the Nature and Operation of Money, Public Finances, and Other Subjects (Philadelphia, 1791), 468
117. An interpretation of Federalist fiscal principles can be found in Edling, Revolution, 191-205, 219-229
118. For the views of some of the leading political theorists and economists of the time, see William Blackstone, Commentaries on the Laws of England, 4 vols. (Oxford, 1765-1769), I, 316-371
119. David Hume, "Of Taxes," in Knud Haakonssen, ed., Political Essays (Cambridge, 1994), 162-163
120. Charles de Secondat, baron de Montesquieu, The Spirit of the Laws, ed. and trans. Anne M. Cohler, Basia Carolyn Miller, and Harold Samuel Stone (Cambridge, 1989), 217
121. Smith, Wealth of Nations, ed. Campbell, Skinner, and Todd, II, 826, 895
122. These rates were increased by subsequent legislation. See Webster, "Strictures on the Taxes of Great-Britain," Political Essays, 468
123. The Federalist, No. 21, in Merrill Jensen, John P. Kaminski, and Gaspare J. Saladino, eds., The Documentary History of the Ratification of the Constitution, 19 vols. to date (Madison, Wis., 1976-), XIV, 417
124. Norman K. Risjord, Chesapeake Politics, 1781-1800 (New York, 1978), 472
125. Hall, Politics without Parties, 296-297
126. For the Jeffersonian opposition, see Lance Banning, The Jeffersonian Persuasion: Evolution of a Party Ideology (Ithaca, N.Y., 1978)
127. For the Whiskey and Fries's Rebellions, see Thomas P. Slaughter, The Whiskey Rebellion: Frontier Epilogue to the American Revolution (New York, 1986)
128. and the articles on Fries's Rebellion in Pennsylvania History, LXVII (2000)
129. Wolcott, "Direct Taxes," American State Papers, V, 418-436