Alexander Hamilton Papers

Report Relative to the Additional Supplies for the Ensuing Year, 16 March 1792

Report Relative to the Additional Supplies
for the Ensuing Year

Treasury Department
March 16, 1792.
[Communicated on March 17, 1792]1

[To the Speaker of the House of Representatives]

The Secretary of the Treasury pursuant to a Resolution of the House of Representatives of the 8th instant directing the said Secretary to report to the House his opinion of the best mode of raising the Additional Supplies requisite for the ensuing year,2 respectfully submits the following report.

The sum which is estimated to be necessary for carrying into effect the purposes of the Act for making further and more effectual provision for the protection of the Frontiers of the United States3 beyond the provision made by the Act making appropriations for the support of Government for the year 17924 is Dollars 675.950.8

The returns which have been received at the Treasury subsequent to the Secretarys Report of the 23rd. of January last,5 among which are those of some principal ports afford satisfactory ground of assurance, that the quarter ending the last of December was considerably more productive than it was supposed likely to prove; authorizing a reliance that the revenues to the end of the year 1791 will yield a surplus of 150.000 dollars which may be applied in part of the sum of 675.950 dollars and eight Cents above stated to be necessary.

Provision remains to be made for the residue of this sum namely 525.950 Dollars & 8 Cents.

Three expedients occur to the option of the government for providing this sum.

One, to dispose of the Interest, to which the United States are intitled in the Bank of the United States. This, at the present market price of Bank Stock, would yield a clear gain to the Government much more than adequate to the sum required.

Another, to borrow the money; upon an establishment of funds, either merely commensurate with the interest to be paid, or affording a surplus which will discharge the principal by installments within a short term.

The third is to raise the amount by taxes.

The first of these three expedients appears to the Secretary altogether unadviseable.

First. It is his present opinion, that it will be found, in various respects, permanently the interest of the United States to retain the Interest to which they are intitled in the Bank. But

Secondly—If this opinion should not be well founded, it would be improvident to dispose of it at the present juncture—since upon a comprehensive view of the subject, it can hardly admit of a doubt, that its future value, at a period not very distant, will be considerably greater than its present—While the Government will enjoy the benefit of whatever dividends shall be declared in the Interval. And

Thirdly—Whether it shall be deemed proper to retain or dispose of this Interest, the most useful application of the proceeds will be as a fund for extinguishing the public debt. A necessity of applying it to any different object, if it should be found to exist, would be matter of serious regret.

The second expedient would in the judgment of the Secretary be preferable to the first.

For this the following Reason, if there were no other, is presumed to be conclusive—namely, That the probable increase of the value of the Stock may itself be estimated as a considerable, if not a sufficient fund, for the repayment of the sum which might be borrowed.

If the measure of a Loan should be thought eligible, it is submitted as most adviseable to accompany it with a provision, sufficient not only to pay the interest, but to discharge the principal within a short period. This will, at least, mitigate the inconvenience of making an addition to the public debt.

But the result of mature reflection is, in the mind of the Secretary, a strong conviction, that the last of the three expedients, which have been mentioned, is to be preferred to either of the other two.

Nothing can more interest the National Credit and prosperity, than a constant and systematic attention to husband all the means previously possessed for extinguishing the present debt, and to avoid, as much as possible, the incurring of any new debt.

Necessity alone therefore can justify the application of any of the public property, other than the annual Revenues, to the current service, or to the temporary and casual exigencies of the Country—or the contracting of an additional debt, by loans, to provide for these exigencies.

Great emergencies indeed might exist in which loans would be indispensible. But the occasions which will justify them must be truly of that description.

The present is not of such a nature. The sum to be provided is not of magnitude enough to furnish the plea of necessity.

Taxes are never welcome to a community. They seldom fail to excite uneasy sensations more or less extensive. Hence a too strong propensity, in the Governments of Nations, to anticipate and mortgage the resources of posterity, rather than encounter the inconveniences of a present increase of taxes.

But this policy, when not dictated by very peculiar circumstances, is of the worst kind. Its obvious tendency is, by enhancing the permanent burdens of the people, to produce lasting distress, and its natural issue is in National Bankruptcy.

It will be happy, if the Councils of this country, sanctioned by the voice of an enlightened community, shall be able to pursue a different course.

Yielding to this impression, The Secretary proceeds to state for the consideration of the House the objects, which have occurred to him as most proper to be resorted to, for raising the requisite sum by taxes.

From the most careful view, which he is able to take of all the circumstances, that at the present juncture naturally enter into consideration, he is led to conclude, that the most eligible mode, in which the necessary provision can at this time be made, is by some additional duties on imported articles.

This conclusion is made with reluctance, for reasons which were noticed upon a former occasion, and from the reflection, that frequent and unexpected alterations in the rates of duties, on the objects of Trade, by inducing uncertainty in mercantile speculations and calculations, are really injurious to Commerce and hurtful to the interests of those who carry it on.

The stability of the duties to be paid by the merchants is in fact of more consequence to them than their quantum; if within reasonable bounds.

It were therefore much to have been wished that so early a resort to new demands on that class of Citizens could have been avoided—and especially that they could have been deferred, until a general Tariff could have been maturely digested, upon principles, which might with propriety render it essentially stationary.

But while there are these motives to regret, there are others of a consoling tendency; some of which indicate, that an augmentation of duties, at the present juncture, may have the effect of lessening some public evils, and producing some public benefits.

It is a pleasing fact, if the information of the Secretary be not very erroneous—that the improved state of the credit of this country enables our Merchants to procure the supplies, which they import from abroad, upon much more cheap, and advantageous terms than heretofore; a circumstance which must alleviate to them the pressure of somewhat higher rates of duty; and must contribute at the same time to reconcile them to burthens, which being connected with an efficacious discharge of the duty of the government, are of a nature to give solidity and permanency to the advantages they enjoy under it.

It is certain, also, that a spirit of manufacturing prevails at this time, in a greater degree, than it has done at any antecedent period; and as far as an increase of duties shall tend to second and aid this spirit, they will serve to promote essentially the industry, the wealth, the strength, the independence and the substantial prosperity of the country.

The returns for a year, ending with the 30th of September last, an abstract of which is in preparation to be communicated to the Legislature, evince a much increased importation, during that year, greater far than can be referred to a naturally increasing demand, from the progress of population, and announce a probability of a more than proportional increase of consumption; there being no appearance of an extraordinary abundance of goods in the Market. If happily an extension of the duties shall operate as a restraint upon excessive consumption, it will be a salutary mean of preserving the community from future embarrassment, public and private. But if this should not be the case, it is at least prudent in the government, to extract from it the resources necessary for current exigencies, rather than postpone the burthen to a period, when that very circumstance may cause it to be more grievously felt.

These different considerations unite with others, which will suggest themselves to induce, in the present state of things, a preference of taxes on imported articles to any other mode of raising the sum required.

It is therefore respectfully submitted.

That the existing duties6 on the Articles hereafter enumerated be repealed and that in place of them the following be laid—Vizt.

Wines. Cents
Madeira of the quality of London parti~ per Gall. 56
ditto London Market per ditto 49
Other Madeira Wines per ditto 40
Sherry per ditto 33
St. Lucar per ditto 30
Lisbon per ditto 25
Oporto per ditto 25
Teneriffe & Fayal per ditto 20
All other Wines 40 per Centum ad valorem.
Those distilled wholly or chiefly from Grain.
Of the first class of proof per Gallon 28
Of the second ditto per ditto 29
Of the third class of proof per Gallon 31.
Of the fourth ditto per ditto 34
Of the fifth ditto per ditto 40
Of the sixth ditto per ditto 50.
Other distilled Spirits.
Of the second class of proof & under per Gall. 24
Of the third ditto per ditto 27
Of the fourth ditto per ditto 31
Of the fifth ditto per ditto 37
Of the sixth ditto per ditto 45
Beer, Ale and Porter per Gallon 8
Steel per Cwt. 100
Nails. per lb. 2
Cocoa per do. 2
Chocolate per do. 3
Playing Cards per pack 25
Shoes & Slippers of silk 20
Shoes & Slippers of stained or colored
  Leather (other than black) for Men & Women
} 10
  ditto ditto for Children 7
All other Shoes & slippers for (men & women) clogs & goloshoes 10
All other Shoes & slippers for children 7
Articles ad valorem.
China Wares } 15. per Centum advalorem.
Looking Glass, Window and other glass and all manufactures of Glass, black quart bottles excepted
Swords, Cutlasses, Hangers & other fire & side Arms
Hair Powder
Cast Slit and rolled Iron, and generally all manufactures of Iron, Steel, Tin, Pewter, Copper, brass or of which either of these Metals is the Article of chief value (not being otherwise particularly enumerated) } 10 per Centum advalorem.
Cabinet wares
Leather tanned and tawed and all manufactures of Leather, or of which leather is the article of chief value (not being otherwise particularly enumerated)
Medicinal drugs, except those commonly used in dying
Hats, Caps and Bonnets of every sort
Gloves and Mittens
Millinary ready made
Artificial flowers, feathers and other ornaments for womens Head dresses.
Dolls dressed and undressed.
Buttons of every kind
Carpets & Carpeting, Mats and floor Cloths
Sail Cloth
Sheathing & Cartridge paper
All powders, pastes, balls, balsams, ointments, oils, waters, washes, tinctures, essences liquors, or other preparation or composition, commonly called sweet-scents, odours, perfumes or cosmetics
All Dentifrice, powders, tinctures, preparations or compositions whatsoever for the teeth or gums.
Printed Books, except those specially imported for a College, Academy or other public or incorporated Seminary of Learning or institution which shall be wholly Exempted from duty.

The foregoing duties to be permanently established and to be appropriated in the first place to the payment of the interest of the public debt, in the second to such other grants and appropriations as have been heretofore made, and in the third to the purposes of the Act for making further and more effectual provision for the protection of the frontiers of the United States.

An addition of two & half per Cent advalorem to be made to the duty on all goods heretofore rated at five per Centum ad valorem.

This addition to be temporary, and accordingly to be so established as that it shall not continue longer, than till the present Indian War shall terminate, and the expences of carrying it on shall have been defrayed, which will of course include the reimbursement of any sums, that may have been borrowed by way of anticipation of the product of the duties.

It is represented that the present duty on Salt operates unequally from the considerable difference in weight in proportion to quantity of different kinds of Salt, a bushel weighing from about 56 to upwards of 80 Wt. It would have an equalizing effect if the bushel were defined by weight; and if 56 pounds were taken as the standard, a valuable accession to the revenue would result.

This regulation is therefore submitted as a resource upon the present occasion. The rate of duty to remain as it is.

It will be a reasonable accomodation to Trade, if it is made a part of this arrangement, to extend the credit for the duty on salt to a longer term. It is an article which from the circumstances of its importation frequently lies on hand for a considerable time; and in relation to the Fisheries is usually sold upon a credit of several Months.

Some remarks may be proper in regard to the proposed duties.

Those on Spirits and Wines may appear high. They are doubtless considerable. But there are precedents elsewhere of much higher duties on the same Articles. And it is certainly in every view justifiable to make a free use of them for the purposes of Revenue.

Wines generally speaking are the luxury of classes of the community who can afford to pay a considerable duty upon them.

It has appeared adviseable to adhere to the idea of a specific duty per Quantity on all the species of wines in most common consumption in the Country, and those most susceptible of precise designation; as affording greatest certainty to the Revenue. And to adopt a general ad valorem rate for other kinds, proportioned to the specific duties. This rate is 40 per Cent.

The distinction has proceeded from the difficulty of a precise enumeration of all the other kinds of Wine, which are and may be imported, and of such an adjustment of specific rates, as will bear some reasonable proportion to the value of the Article. The present lowest rate of duty on Wines amounts to 200 and 300 per Cent on the value of certain kinds; which may be considered as equivalent to a prohibition.

While therefore ideas of proportion will be better consulted than heretofore, by the proposed arrangement, it is probable, that the revenue will be benefitted, rather than injured, by a reduction of the duties on low priced Wines.

The considerations which render Ardent Spirits a proper object of high duties, have been repeatedly dwelt upon. It may be added that it is a familiar and a just remark that the peculiarly low price of Ardent spirits in this Country is a great source of Intemperance.

To bring the price of the Article more nearly to a level with the price of it in other markets by an increase of duty, while it will contribute to the advancement of the revenue, cannot but prove in other respects a public benefit. The rates proposed will be still moderate compared with examples in other Countries; and the Article is of a nature to enable the Importer, without difficulty, to transfer the duty to the consumer.

A discrimination is suggested in respect to duties on spirits distilled from Grain. To this, there have been two inducements—One, that the difference in the duty is conformable to the difference [between]7 the cost of the grain Spirits usually imported and [that] of West India Rum. Another, that it is in a particular manner the interest of the United States to favor the distillation of its own grain, in competition with foreign spirits from the same material. In the second division of Spirits, the first class of proof is dropped; because none of it comes from the West Indies; and because any other Spirits usually imported which may be of so low a proof are higher priced, even than some of the higher proofs of West India Spirits. The dropping of that class of proof therefore in this case is favorable to the Revenue and favorable to equality.

Several of the other specific duties which are proposed, besides the inducements to them as items of revenue are strongly recommended by considerations which have been stated in the Report of the Secretary on the subject of manufactures.8 The same Report states inducements to a 15 per Cent duty on some of the Articles, which are mentioned, as proper to be comprized under that rate.

With regard to China and Glass there are two weighty reasons for a comparitively high duty upon them. The use of them is very limited except by the wealthier classes. And both their bulk and liability to damage in transportation are great securities against evasions of the Revenue. It will however merit consideration whether for the accommodation of Importers a longer term of credit ought not to be allowed on these Articles.

A duty of two Cents per lb on Cocoa is less in proportion to value than the present duty on Coffee. As an extensive article of consumption it is a productive one of Revenue.

The Duty on playing cards can give rise to no question except as to the practicability of a safe Collection. In order to this it will be proper to supperadd certain precautions, which will readily occur in regulating the details of a bill for the purpose. A similar attention will be requisite in regard to the duties on Wines. The employment of marks and certificates may advantageously be extended to this Article.

The rate of 10 per Centum ad valorem it is hoped will not be deemed immoderate in relation to the Articles to which it is proposed to apply it. It is difficult to assign rules for what ought to be considered as a just standard. But after the best consideration, which the Secretary has been able to bestow upon it, he cannot discover, that any real inconvenience is likely permanently to result from the extension of that rate to the cases proposed.

The addition of 2½ per Cent to the duty on the mass of articles now rated at 5 will constitude an important, though not an excessive augmentation. Nevertheless, it is proposed, that it shall be only temporary—and there is reasonable ground of expectation, that the cause for having recourse to it will not be of very long continuance.

It will not have escaped the observation of the House that the duties which were suggested in the Secretary’s report, on that subject, as encouragements to Manufactures, are for the most part included among the objects of this report.

It may tend to avoid future embarrassment, if such abolitions and drawbacks, as shall be deemed expedient, with a view to promoting manufactures, shall accompany the establishment and appropriation of whatever further duties may be laid, for the object in contemplation.

And it may be found convenient to qualify the appropriation of the surplus which is to be applied to that object, so as to let in such other appropriations during the session as occurrences may suggest.

An estimate of the additional revenue which may be expected from the proposed duties is subjoined.

It will occur to the house, that the Credit allowed for the duties will require an anticipation of their product by a temporary loan for which provision in the law will be requisite.9

[All which is humbly submitted

Alexander Hamilton
Secy of the Treasury]

Estimate of probable additional Revenue
from the proposed duties
Madeira Wine 300 000 Gallons average increase 12 Cents
  per Gallon
} 36.000
Other Wines 700.000 Gs. average increase 3 Cents
   per Gallon
} 21.000
Distilled Spirits 3.600 000 Gallons average increase, allowing for
  proposed deduction from the duties on domestic Spirits 2 Cents
} 72 000.
Salt, from the equalizing regulation proposed will probably
   yield ⅙ more or 2 Cents per bushell on 2.000 000 bush.
} 40.000.
Malt liquors 200.000 Gallons at 2½ Cents 5.000
Nails & Spikes 1.800.000 lb at 1 Cent 18 000
Cocoa      800.000 at 1 Cent 8 000
Playing Cards   20.000 at 15 Cents 3 000
Other enumerated Articles ad valorem at 15 per Cent 10 000.
Increased duty on articles rated permanently at 10 per Cent ad valorem
   computed at 2 Millions of Dollars in value at 3 per Cent
} 60.000
Temporary addition at 2½ per Cent on the Articles now rated at
   5 computed on 10.000.000 of dollars
} 250 000.
Dollars     523.000

DS, RG 233, Reports of the Treasury Department, 1792–1793, Vol. III, National Archives.

1Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 538. The communicating letter may be found in RG 233, Reports of the Treasury Department, 1792–1793, Vol. III, National Archives.

2After some debate, the House on March 8, 1792, “Resolved, That the Secretary of the Treasury be directed to report to this House his opinion of the best mode for raising the additional supplies requisite for the ensuing year” (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 530–31).

3This act provided for raising three additional regiments for the protection of the country’s frontiers (1 Stat. 241–43 [March 5, 1792]).

4Section 4 of “An Act making Appropriations for the Support of Government for the year one thousand seven hundred and ninety-two” had appropriated $37,339.48 for the protection of the frontiers (1 Stat. 228 [December 23, 1791]).

6The existing duties on wines and spirits were imposed by “An Act repealing, after the last day of June next, the duties heretofore laid upon Distilled Spirits imported from abroad, and laying others in their stead; and also upon Spirits distilled within the United States, and for appropriating the same” (1 Stat. 199–214 [March 3, 1791]). The existing duties on the remaining articles had been imposed by “An Act making further provision for the payment of the debts of the United States” (1 Stat. 180–82 [August 10, 1790]).

7Material in brackets in this document is in the handwriting of H.

9Early in April, 1792, the House considered H’s report, and between April 17 and April 21 debated and passed a bill that followed H’s suggestions. Before the end of April the Senate and the House agreed to a bill with minor amendments (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826), I. description ends , 563, 566–69, 575, 580–84, 591–93, 595). See “An Act for raising a farther sum of money for the protection of the frontiers, and for other purposes therein mentioned” (1 Stat. 259–63 [May 2, 1792]).

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