Philadelphia feby. 11th. 1815
Without having the honour of being Known by Your Excellency, I take the Liberty to call your attention, upon an important matter for the Nation, Who has so wisely entrusted its honour and prosperity to the accreditted talents and integrity of your Excellency: the undertaking is daring, but I hope, that the intention and the Object which dictate it, will Serve Me as an Appology.
With Some Experience in finances, and a Great desire to acquire all possible informations on So important a Matter, I was Stimulated, Since my Arrival in the united States in 1796, to Study and become familiar, with the financial affairs of this Country; assisted by the Knowledge, that this Step procured me, when I Saw By Mr Galatin’s report to the Comitee of Ways and Means, of the 10th January 1812, that in case of a War taking place, ten millions of dollars, raised by way of loans, added to Nine Millions, accruing from taxes and Sale of Lands, were Considered Sufficient for the Yearly ordinary & Extraordinary Expenses, even if war was to last five years, I found No difficulty in foreseeing, that the Ways and means proposed, being inadequate to its object, Government would be in the Necessity, to raise new taxes to Enable him by a Surplus of revenue, to Create an Efficient New Sinking fund, in order to Keep its Credit unimpaired.
But a little Knowledge on the Effects of Banking-System was Necessary, to anticipate also, the fatal Results to the public, that were to be Expected from the prodigious Number of Chartered Banks: the Jealousy that was Naturally to arise among them, for the Sake of profits too much Subdivided, could not otherwise, but viciate the System, and occasion the absence of the precious Metals; those Results were the more to be feared in a Country, where the Consumption of foreign goods, exceeds the amount of its domestic Exports; those founded Causes of the disappearance of Gold & Silver, were Strengtened, by the impolitic Measure adopted by the banks in 1810, in diminishing by better than 4 p%, the accustomed and assigned value by law, of the Spanish Gold Coins, and that, at a time when france & England, allowed a premium of from 5. to 12 p.⟨%⟩ upon the Same
Persuaded by the aforesaid considerations, of the Embarassments and inconveniences Government would be Involved in, I dedicated Myself to try, to discover the Means to remedy if possible, or at least to diminish them in part: the Result of so bold an attempt, Encumbered with many difficulties, Will I hope, prove advantagious to the United States, as well as to the Undertaker. It consists in a plan of Internal taxation, (in my Opinion) the most equitable and better adapted to the Situation of the united States, and to the genius and Spirit of its free Government; because it bears equally, upon all Sorts of real capitals, as well as on those proceeding from industry and proffessions. By the plan, the direct tax has Experienced important improvements, So as to bear equally in all its operation. The Amount of the actual direct tax is 6 millions of Dollars, and by the Plan, 7.600000 are raised, upon land in its three Branches, and upon houses: Those already authorised upon a part of domestic Manufactures, and that to be raised on each Barrel of flour, by the treasury department, Amount to more than 3.800000. dollars; and by the plan, all upon Manufactures without Exception, Amount to 4.200000 drs.; an other like Sum is produced by the plan by other items, making together a total amount of 16.000000; to which, 8.970000 are to added, accruing from the Sale of lands; Customs & many other internal taxes, already in operation, making an aggregate of 24.970000.: and allowing 20 p% for charges of Collection, and Errors in the Estimates, it will form a Neat amount of revenue, of 20.000000. of dollars, Sufficient to meet the ordinary Expenses of government, and to Leave a Surplus of One Million of Dollars
To facilitate the operation of the finances, a National Bank is a ramification of My plan; the Shape I have given to this institution is truly National And will in My opinion, Answer all the purposes of Government and reconcile the Opinion as well as the interests of all Classes of Citizens. As the Credit of government Can be retrieved, but by the Creation of an efficient New Sinking-fund, the plan embraces also an establishment of this Kind, the Operation of Which, Will Gradually and finally Extinguish a National debt of more than 250 millions, in a Short period of years. The plan contains also many other items, to provid⟨e⟩ for a Common Circulating-medium, to preserve the precious metals in the Country, and to Encourage the Importation of the Same from abroad
I went to Washington in october last (as your Excellency will See by the inclosed Letters of Introduction) for the Sole purpose of Submitting My Plan to your consideration, But a Violent indisposition Compelled Me to return home, 15 days after my Arrival; Since that time, I have been confined in My room, from whence, I have the honour to address your Excellency
Should your Excellency think of any advantages to the united States the Ideas I have pointed out in this Letter, I shall have the honour to forward them, on the first intimation of your Excellency I am with Great consideration Your obedt. humble Servt.
DLC: Papers of James Madison.