Thomas Jefferson Papers

To Thomas Jefferson from Edwards Pierce, 30 March 1805

Charleston 30th. March 1805,


It gives me much pleasure to find that the People of the United States have chosen a second time, a Gentleman to preside over them, who is studious, & anxious, to lessen our Duties & Taxes as much as possible;    which induced me to think, you will not be displeased with the Liberty I now take, of sending you a new System of Taxation, by which the present, or any larger Amount of the Expences of Government can be annually discharged, which are now paid by the present System of Taxation,   My meaning is, That this shall be the only mode of Taxation, with two Exceptions only, vizt. Postage on Letters, and Tonnage on Vessels; and instead of laying Duties on the Tonnage of Vessels as at present, that all Duties of Tonnage on American Vessels shall cease; & to lay a Tonnage Duty on foreign Vessels only, & that Duty not to be as high as it now is.—Whatever is the Amount that is laid per Ton on foreign Vessels, take from that Amount, the Amount which is laid on American Vessels, & lay the Difference only on foreign Vessels; which will give to American Vessels the same Advantage, which the present System of Duties on Tonnage of Vessels gives them.   This will induce other Nations to put the Tonnage Duties on American Vessels on the same footing, & tend to introduce a more pacific & friendly System amongst the Nations of the civilized parts of the World.

Incredible as it must appear to you Sir, until I explain this new System of Taxation, yet it is a Fact; That no Article which will be sold, ought to be sold higher on Account of the Duty which I propose should be laid, than 10 perCent; and the Advantages to this Country in other respects would be astonishing.

As no Duty would be paid on any Article imported, nor any Excise, the Importers of Merchandize could import a larger Quantity of Merchandize with the same Capital,—the wholesale Dealers could purchase a larger Quantity of Merchandize from the Importers with their Capitals; and the Retailers a larger Quantity with their Capitals.

The Money which is now locked up in the Treasury Department for a time, & kept out of Circulation, would by this System be thrown into the hands of the Public; & no Specie in the United States would be kept locked up, except that which each individual kept locked up in his Chest, or which he deposited in Bankers hands for safe keeping.   This System would also tend to keep the Specie in this Country, but I am afraid we could not carry this System into Execution in the United States, without the Assistance of our Bank Notes, but if so, it is not on that Account worse than our present System of Taxation, as our present Duties & Taxes are paid with them.

There is another Advantage which would also arise from this new System of Taxation, that Remittances could be made for a short time, with the Government paper which would be issued in order to carry this System into Execution, to every part of the United States, by remitting with such Government paper, or Draft payable in Specie or Bank Notes for the Amount of the Duty thereon.

When I resided in my native Country, (Great Britain,) Specie was paid at the Bank of England for their Bank Notes when demanded, which I hear is not now the Case;   Then the Bank of England Notes would often circulate through one hundred persons hands & upwards, before any person would carry the same to the Bank to demand Money for them; which was the Case in this City with our Bank Notes, also, till lately, but our Banks finding such large Calls on them for Specie for their Notes, for the purpose of sending the same to the East Indies, and Europe, now give but a small proportion of Cash in payment of Drafts on them, and the remainder in Bank Notes;—but if this System is adopted, & supposing that there is in the United States a sufficient Quantity of Specie with which the Duties of this new System might be paid, the 12th. holder of the Government papers which would be issued to carry this new System into Execution, would be paid with Specie for the same; but if not, said Government paper would be sunk by being paid to the 12th. holder with Bank Notes.   Part of the national Debt might also be sunk each year by this System, as will plainly appear Sir, when I have fully described it to you.   The Quantity of Government Paper which would be issued each year for this purpose, would answer the end of Bank Notes for the very short time it would remain in Circulation, so that Trade might be carried on with more facility for ready money.—Each paper that was issued, would be sunk & discharged with Specie or Bank Notes, as soon as it had passed through the hands of the public Creditor, & the hands of ten other Persons, as the 12th. holder of each Government paper would be paid the Money for the same; which 12th. holder should be compelled by Law to deliver the same to some Treasury Officers (of which one at least should be appointed in every City & Town in the United States,) who should forward such paper to the Treasury Office that issued it; where when it was examined & found to be genuine, it should be cancelled; & if found to be forged, it should be traced to the Forger, who should be punished agreeably to Law.   For the more easy Detection of Forgeries, each Holder (beginning with the Public Creditor,) should be obliged to write his Name on the back of said Government paper before he passed it away; of Course the first Signature on the back of the paper (if forged) should be considered as the Forger; & the 12th Signature would be the Name of the person who had been paid the Amount of the same.

Whether it was War or Peace, the Duty on the Government paper would always be the same, that is 10 perCent on the Amount of the paper issued.

The public Creditor (to whom the paper was issued in payment of what was due to him,) should pay no Duty thereon when he paid the same away; but if he afterwards took it in payment of Merchandize sold, or on any other Account, he should when he afterwards paid it away, pay the same Duty of 10 perCent thereon that any other person paid.

I propose that the Government paper issued, should be called Government Certificates; which should certify that such an Amount was due to such a person (expressing his Name) by the Government of the United States.   And in order to make the Certificates more negociable, each Certificate should be issued for the Sum of 10 Dollars,* so that the Duty which each of the 10 persons, who paid the Duty, would have to pay on the same (after it had passed out of the hands of the public Creditor,) would be 1 Dollar; which would make up the 10 Dollars, the Amount of the Certificate.   The Person who had paid the last tenth part of the Duty, would pay away the Certificate to some other person with the 10 Dollars.   This last person should deliver the Certificate to the Treasury Office, of the City or Town in which he lived; who should forward it to the Treasury Department for it to be examined & cancelled.

In the Margin of each Certificate should be stamped the Figures 1, 2, 3, 4, 5, 6, 7, 8, 9, 10.   After the public Creditor had endorsed any Certificate & paid it away without paying any Duty with it, the next person that paid it away, should cut off the figure 1, & give one Dollar with it when he paid it away,—the second that paid it away should cut off the figure 2, & give 2 Dollars with it,—the third person cut off the 3, & give 3 Dollars,—the fourth person the 4, & give 4 Dollars,—the fifth person the 5, & give 5 Dollars,—the sixth person the 6, & give 6 Dollars,—the seventh person the 7, & give 7 Dollars,—the eighth person the 8, & give 8 Dollars,—the ninth person the 9, & give 9 Dollars,—the tenth person the 10, & give 10 dollars; so that each person who paid the Duty would sink 10 perCent on the Amount of the Certificate; which 10 perCent each would lay on the Amount of the Goods they sold for such Certificate.

This System of Taxation would greatly lessen the Number of Revenue Officers.

Though no Duties or Excise On Merchandize imported would exist after this System took place, there should still be Custom Houses, in order that every Importer should declare there on Oath, the Value of the Goods he imported; & every Exporter the Value of what he Exported, by which Government would be able to ascertain the Balance of Trade of this Country.

I hope Sir, I have explained my System so as that you may fully comprehend my meaning, should you wish for any further Explanation, you have only to let me know the same.

with the greatest Respect & Veneration, I remain sir, Your Most Obedt. Servant

Edwards Pierce

P S.

The Custom Houses could receive the Duties on Tonnage of Vessels as at present.

*  When Government paid the public Creditors with their Certificates, if the Sum to be paid to any Creditor was short of the Sum of 10 Dollars, such public Creditor should give the Change of a ten Dollar Certificate in Money to Government, which Change could be applied to the paying some Expenses of Government which on a Number of payments in that Situation would amount to a very considerable Sum of Money.

ViW: Jefferson Papers, Tucker-Coleman Collection.

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