Alexander Hamilton Papers
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From Alexander Hamilton to Theodore Sedgwick, [20 January 1797]

To Theodore Sedgwick

[New York, January 20, 1797]

Dear Sir

I received your late letter1 in due time. You seem to be of opinion to defer to a future period the commencement of direct taxation.2 I acknowlege I am inclined to lay gently hold of it now. Leaders of the opposite party favour it now, perhaps with no good design. But it will be well to take them while in the humour and make them share the responsibility. This will be the more easy as they are inclined to take the lead. Our external affairs are so situated, that it seems to me indispensable to open new springs of revenue and press forward our little naval preparation3 & be ready for augmenting it. But on the whole I have always leaned to the opinion that half a million from direct taxes was enough to begin with—nor should I have proposed more.

What are we to do with regard to our good allies? Are we to leave our commerce a free prey to them? I hope not. It seems to me we are even beyond the point at which we were with G Britain when Mr Jay was sent thither & that something like a similar plan ought to be pursued, that is, we ought to make a final effort to accommodate & then resort to measures of defence. I believe ere long an embargo on our own Vessels will be adviseable; to last till the conduct of France changes or till it is ascertained it will not change. In the last event the following system may be adopted—to grant special letters of mark with authority to repel aggressions and capture assaisants—to equip our frigates—to arm a number of sloops of war of existing Vessels to convoy our merchantmen. This may be a middle term to general hostility though it may slide into the latter. Yet in this case it may be well to let France make the progress. But at all events we must protect our commerce & save our honor.

As to the ballance business the agitation of the question has been every way unfortunate.4 There is not an individual in the state of New York, who is not profoundly convinced that the settlement was wholly artificial and as it regarded the rule of quotaing manifestly unjust, and consequently that there is no justice in paying it.5 I never saw but one mode of getting through the business which is for Congress to call for a certain sum of each debtor state annually say a fiftieth part declaring that if not paid each installment shall bear interest from the time it becomes due but till then the principal to carry no interest. I believe the state for harmony sake would yield to such an arrangement. It may be said this will be only a nominal payment. I answer—true—but an artificial ballance ought only to be nominally paid. The conduct of some Gentlemen in the late question has pained me much. It is inconsistent with a tacit pledge of faith. Every New Yorker who had any thing to do with our fiscal arrangements has been personally compromitted.

Yrs. truly

A Hamilton

Theodore Sedgwick Esqr

ALS, Hamilton Papers, Library of Congress.

1Letter not found.

2The House of Representatives was at this time debating the desirability of raising extra revenue by direct taxes. See H to William Loughton Smith, January 19, 1797.

3On March 27, 1794, Congress had passed “An Act to provide a Naval Armament,” which provided for the construction of six frigates (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 350–51). Progress was so slow that a year later only the hulls of three frigates had been completed and construction on the hulls of two other frigates had just begun. After the negotiation of a peace treaty with Algiers in 1795, work on the frigates stopped altogether. On April 20, 1796, however, a supplementary naval act authorized completion of three of the frigates, the United States, the Constitution, and the Constellation (“An Act supplementary to an act entitled ‘An act to provide a Naval Armament’” [1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 453–54]).

After President Washington in his annual message of December 7, 1796, had again called the attention of Congress to the need for a strong navy (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1592–97), the House of Representatives on December 16, 1796, appointed a committee headed by Josiah Parker of Virginia to inquire “… into the state of the Naval equipment, ordered by former act of Congress; and whether any, and what, other Naval force shall be necessary for the protection of the commerce of the United States, and the support of their flag” (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1671). On December 21, Parker, on behalf of the Naval Committee, requested Secretary of War James McHenry to submit a report on progress made toward construction of the frigates already authorized and estimates of the sum needed to complete them. McHenry’s report, dated January 11, 1797, estimated that approximately $200,000 would be required to finish the three frigates (ASP description begins American State Papers, Documents, Legislative and Executive, of the Congress of the United States (Washington, 1832–1861). description ends , Naval Affairs, I, 25–28). Convinced that this sum “… will be insufficient under existing circumstances…,” the committee recommended that “the vessels should be finished as soon as possible, and that —— dollars should be appropriated for the purpose …” (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1983). On March 3, 1797, Congress appropriated $172,000 to finish the three frigates (“An Act making appropriations for the Military and Naval establishments for the year one thousand seven hundred and ninety-seven” [1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 508–09]). The ships were completed and launched in 1797.

4This is a reference to the congressional debate over attempts to settle the accounts of the United States and the individual states. “An Act to provide more effectually for the settlement of the Accounts between the United States and the individual States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 178–79 [August 5, 1790]) had provided for the establishment of a board of three commissioners. See Tobias Lear to H, August 19, 1793, note 1. On June 29, 1793, the commissioners made their final report. They found that Massachusetts, Connecticut, New Hampshire, Rhode Island, New Jersey, South Carolina, and Georgia had balances due them. The remaining states, including New York, were debtors of the United States. New York owed $2,074,846.

The question of payment of debts due the United States by the several states became an issue in the second session of the Fourth Congress, which convened on December 5, 1796. On December 20, 1796, Joshua Coit, Representative from Connecticut, called “the attention of the House to a subject which he thought of some importance—it was the balances due from certain States to the United States. Three years, he said, had elapsed since the report was made by the Commissioners on that subject. He did not know what order was proper to be taken, but something ought to be done; he thought the first step would be to ask the debtor States for payment.…” Coit then offered a resolution directing the Committee of Ways and Means “to report whether any, and what, further measures ought to be taken relative to the balances which … were found due from certain States to the United States” (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1691).

5Congressmen from New York took the lead in opposing the resolution, arguing, as John Williams put it, that “had a just and equitable settlement been made … the State of New York would have been a creditor State …” (Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1747). For the attempts to settle this problem in the 1796–1797 session of Congress, see Annals of Congress description begins The Debates and Proceedings in the Congress of the United States: with an Appendix, Containing Important State Papers and Public Documents, and All the Laws of a Public Nature (Washington, 1834–1849). description ends , VI, 1529, 1531–32, 1538, 1540–42, 1552–53, 1563, 1565, 1569, 1691–93, 1696, 1747–62, 1783, 1785, 1789–1815, 2166–67, 2183, 2326–27, and 2335. Congress was unwilling to call on the debtor states for payment, and the balances which they owed were never collected.

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