Abstract of Mr. G. Morris’s plan of American finances
- Consider all requisitions from Congress on the states as non-avenues.1 This gets rid of the adjustment of Quotas for the past.
- Settle the sum due from the Union to each state for it’s contributions in money, provisions &c. and after taking credit for money &c. furnished to such state, let the balance be constituted a debt from the Union to the respective states bearing an interest of 6. per cent.
- With the principal of this debt each state may, in the first place take up their own public paper (by commuting with the holders) or with the interest of it they may in the first place pay the interest of their own paper to the holders. The interest on the balance will support the state government.
- The states may therefore abandon to the Union all the subjects of taxation.
- Let the Union lay an Impost of 5. per cent on importations. This will bring in from 1½ to 2. millions of Dollars.
- Open a loan in Europe sufficient to pay the foreign debts and somewhat more in surplus. This would be (suppose) about 12. millions of Dollars, which at an interest of 5. percent, would require 600,000 Dollars, and would leave about 1. million a year of the impost.
- However instead of appropriating a specific part of this impost to the loans
- 1. Appropriate the whole to pay this interest in the first place.
- 2. To support government for a year or two till our other taxes become productive.
- 3. The surplus to form an Aggregate fund.
- Lay a direct tax of 1/20 of all produce, paiable in kind (in the nature of a tythe) but commutable for half it’s value in money. Should this produce more than the state’s quota, let the surplus go to the state. The state legislature may then be entrusted with fixing the objects on which it falls, their value, the places of delivery, sale of the produce, conduct of the receivers &c.
- This tax of 1/20 should be appropriated
- 1. To the military and naval establishments.
- 2. To pay the interest of the debts of the Union to the respective states.
- 3. The surplus into the aggregate fund.
- Postages and a tax on civil process form a 3d. fund. Appropriate it
- 1. To the Civil list.
- 2. The surplus into the Aggregate fund.
- The Aggregate fund thus formed of the residuary parts of all the taxes, must
- 1. pay the interest of the domestic debt
- 2. contingencies.
- 3. form a sinking fund to pay the capital of the general debts of the union. In the administration of this Sinking fund fix a certain order of paiment so as to ensure paiment to the holders; but at the same time leave a portion of it free to be employed by the executive according to their discretion in buying up the general debts. They might begin (if they saw it expedient) with buying the debts, to be constituted from the Union to the separate states, according to the above preliminary proposition.
MS (DLC); entirely in TJ’s hand; endorsed by him: “Finance. G. Morris’s system.” The copy enclosed in the foregoing letter to Madison may have been a PrC of this MS.
This is only TJ’s abstract of Morris’ plan, which is printed in full in Jared Sparks, Gouverneur Morris, iii, 469–78. Morris sent a copy to Robert Morris on 8 May 1789, saying that the plan was partly the result of his “maritime meditations” as he crossed on the Henrietta, but that he would not have been troubled by them “if circumstances had not retraced the ideas since my arrival. In effect, it has frequently happened, that, while sitting with Mr. Jefferson, our conversation turned on that subject. He, who also feels ardently for the welfare of America, induced me, without intending it, to make the sketch… . I afterwards showed it to him, and his approbation has given me a better opinion of it than I had before, and very probably much better than it deserves” (same, iii, 3). TJ’s opinion also probably reflected politeness rather than conviction. When Morris first showed him the plan on 19 Apr. 1789, TJ approved at once, but then asked for further time to consider it. Two days later Morris recorded in his diary: “Mr. Jefferson likes much my Plan of Finance” (Morris, Diary, i, 40, 45, 49).