Founding America (Barnes & Noble Classics) - Jack N. Rakove [109]
Also, a like duty of five per cent. on all prizes and prize goods condemned in the court of admiralty of any of these states as lawful prize:
That the monies arising from the said duties be appropriated to the discharge of the principal and interest of the debts already contracted, or which may be contracted, on the faith of the United States, for supporting the present war:
That the said duties be continued until the said debts shall be fully and finally discharged.
—Robert Morris—
REPORT ON PUBLIC CREDIT
JULY 29, 1782
OFFICE OF FINANCE JULY 29TH. 1782
SIR
The reference which congress were pleased to make, of a Remonstrance and Petition from Blair McClenaghan and others, has induced me to pray their Indulgence while I go somewhat at large into the Subject of that Remonstrance. The Propriety and Utility of public Loans, have been Subjects of much Controversy. Those who find themselves saddled with the Debts of a preceding Generation, naturally exclaim against Loans; and it must be confessed that when such Debts are accumulated by Negligence, Folly or Profusion, the Complaint is well founded. But it would be equally so against Taxes, when wasted in the same Way. The Difference is, that the Weight of Taxes being more sensible, the Waste occasions greater Clamor, and is therefore more speedily remedied; but it will appear that the eventual Evils which Posterity must Sustain from heavy Taxes, are greater than from Loans. Hence may be deduced this Conclusion, that in Governments liable to a vicious Administration it would be better to raise the current Expence by Taxes, but where an honest and wise Appropriation of Money prevails, it is highly advantageous to take the Benefit of Loans. Taxation to a certain Point is not only proper but useful, because by stimulating the Industry of Individuals, it increases the Wealth of the Community. But when Taxes go so far as to intrench on the Subsistence of the People, they become burthen-some and oppressive. The Expenditure of Money ought in such Case to be (if possible) avoided; and if unavoidable, it will be most wise to have Recourse to Loans.
Loans may be of two Kinds, either domestic or foreign. The relative Advantages and Disadvantages of each, as well as those which are common to both, will deserve Attention. Reasonings of this Kind, (as they depend on Rules of Arithmetic), are best understood by numerical Positions. For the Purposes of Elucidation, therefore, it may be supposed, that the annual Tax of any particular Husbandman were fifteen Pounds, during a ten Year’s War, and that his net Revenue were but fifteen Pounds, so that (the whole being regularly consumed in Payment of Taxes) he would be no richer at the End of the War, than he was at the Beginning. It is at the same Time notorious that the Profits made by Husbandmen, on Funds which they borrowed, were very considerable. In many Instances their Plantations, as well as the Cattle and farming Utensils, have been purchased on Credit, and the Bonds given for both have shortly been paid by Sales of Produce. It is therefore no Exageration to state the Profits at twelve per Cent. The enormous Usury which People in Trade have been induced to pay, and which will presently be noticed, demonstrates that the Profits made by other Professions are equal to those of the Husbandman. The Instance therefore taken from that, which is the most numerous Class of Citizens, will form no improper Standard for the whole. Let it then be farther supposed in the Case already