FReeper Book Club: The Debate over the Constitution, Federalist #36

² We have seen that the result of the observations to which the foregoing number has been principally devoted is that from the natural operation of the different interests and views of the various classes of the community, whether the representation of the people be more or less numerous, it will consist almost entirely of proprietors of land, of merchants and of members of the learned professions who will truly represent all those different interests and views.

³ If it should be objected that we have seen other descriptions of men in the local legislatures, I answer that it is admitted there are exceptions to the rule but not in sufficient number to influence the general complexion or character of the government.

⁴ There are strong minds in every walk of life that will rise superior to the disadvantages of situation and will command the tribute due to their merit, not only from the classes to which they particularly belong, but from the society in general.

⁵ The door ought to be equally open to all, and I trust for the credit of human nature that we shall see examples of such vigorous plants flourishing in the soil of federal as well as of state legislation, but occasional instances of this sort will not render the reasoning founded upon the general course of things, less conclusive.

⁶ The subject might be placed in several other lights that would all lead to the same result, and in particular it might be asked: What greater affinity or relation of interest can be conceived between the carpenter and blacksmith, and the linen manufacturer or stocking weaver, than between the merchant and either of them?

⁷ It is notorious that there are often as great [rivalries] between different branches of the mechanic or manufacturing arts as there are between any of the departments of labor and industry, so that unless the representative body were to be far more numerous than would be consistent with any idea of regularity or wisdom in its deliberations, it is impossible that what seems to be the spirit of the objection we have been considering should ever be realized in practice.

⁸ But I forbear to dwell any longer on a matter which has hitherto worn too loose a garb to admit even of an accurate inspection of its real shape or tendency.

⁹ There is another objection of a somewhat more precise nature that claims our attention.

¹⁰ It has been asserted that a power of internal taxation in the National Legislature could never be exercised with advantage, as well from the want of a sufficient knowledge of local circumstances, as from an interference between the revenue laws of the Union and of the particular states.

¹¹ The supposition of a want of proper knowledge seems to be entirely destitute of foundation.

¹² If any question is depending in a state legislature respecting one of the counties which demands a knowledge of local details, how is it acquired?

¹⁴ Cannot the like knowledge be obtained in the National Legislature from the representatives of each state?

¹⁵ And is it not to be presumed that the men who will generally be sent there will be possessed of the necessary degree of intelligence to be able to communicate that information?

¹⁶ Is the knowledge of local circumstances as applied to taxation a minute topographical acquaintance with all the mountains, rivers, streams, highways and bypaths in each state, or is it a general acquaintance with its situation and resources, with the state of its agriculture, commerce, manufactures, with the nature of its products and consumption, with the different degrees and kinds of its wealth, property and industry?

¹⁷ Nations in general, even under governments of the more popular kind, usually commit the administration of their finances to single men or to boards composed of a few individuals who digest and prepare in the first instance the plans of taxation which are afterwards passed into laws by the authority of the sovereign or legislature.

¹⁸ Inquisitive and enlightened statesmen are deemed everywhere best qualified to make a judicious selection of the objects proper for revenue, which is a clear indication, as far as the sense of mankind can have weight in the question, of the species of knowledge of local circumstances requisite to the purposes of taxation.

¹⁹ The taxes intended to be comprised under the general denomination of internal taxes may be subdivided into those of the direct, and those of the indirect kind.

²⁰ Though the objection be made to both, yet the reasoning upon it seems to be confined to the former branch.

²¹ And indeed, as to the latter, by which must be understood duties and excises on articles of consumption, one is at a loss to conceive what can be the nature of the difficulties apprehended.

²² The knowledge relating to them must evidently be of a kind that will either be suggested by the nature of the article itself or can easily be procured from any well informed man, especially of the mercantile class.

²³ The circumstances that may distinguish its situation in one state from its situation in another must be few, simple and easy to be comprehended.

²⁴ The principal thing to be attended to would be to avoid those articles which had been previously appropriated to the use of a particular state, and there could be no difficulty in ascertaining the revenue system of each.

²⁵ This could always be known from the respective codes of laws, as well as from the information of the members from the several states.

²⁶ The objection, when applied to real property or to houses and lands, appears to have, at first sight, more foundation, but even in this view it will not bear a close examination.

²⁷ Land taxes are commonly laid in one of two modes, either by actual valuations, permanent or periodical, or by occasional assessments, at the discretion, or according to the best judgment of, certain officers whose duty it is to make them.

²⁸ In either case, the execution of the business, which alone requires the knowledge of local details, must be devolved upon discreet persons in the character of commissioners or assessors, elected by the people or appointed by the government for the purpose.

²⁹ All that the law can do must be to name the persons or to prescribe the manner of their election or appointment, to fix their numbers and qualifications, and to draw the general outlines of their powers and duties.

³⁰ And what is there in all this that cannot as well be performed by the National Legislature as by a state legislature?

³¹ The attention of either can only reach to general principles; local details, as already observed, must be referred to those who are to execute the plan.

³² But there is a simple point of view in which this matter may be placed that must be altogether satisfactory.

³³ The National Legislature can make use of the system of each state within that state.

³⁴ The method of laying and collecting this species of taxes in each state can, in all its parts, be adopted and employed by the federal government.

³⁵ Let it be recollected that the proportion of these taxes is not to be left to the discretion of the National Legislature, but is to be determined by the numbers of each state as described in the Second Section of the First Article.

³⁶ An actual census or enumeration of the people must furnish the rule, a circumstance which effectually shuts the door to partiality or oppression.

³⁷ The abuse of this power of taxation seems to have been provided against with guarded circumspection.

³⁸ In addition to the precaution just mentioned, there is a provision that “all duties, imposts, and excises shall be uniform throughout the United States.”

³⁹ It has been very properly observed by different speakers and writers on the side of the Constitution that if the exercise of the power of internal taxation by the Union should be discovered on experiment to be really inconvenient, the federal government may then forbear the use of it and have recourse to requisitions in its stead.

⁴⁰ By way of answer to this, it has been triumphantly asked: Why not in the first instance omit that ambiguous power and rely upon the latter resource?

⁴² The first is that the exercise of that power, if convenient, will be preferable because it will be more effectual, and it is impossible to prove in theory or otherwise than by the experiment that it cannot be advantageously exercised.

⁴⁴ The second answer is that the existence of such a power in the Constitution will have a strong influence in giving efficacy to requisitions.

⁴⁵ When the states know that the Union can apply itself without their agency, it will be a powerful motive for exertion on their part.

⁴⁶ As to the interference of the revenue laws of the Union and of its members, we have already seen that there can be no clashing or repugnancy of authority.

⁴⁷ The laws cannot, therefore, in a legal sense interfere with each other, and it is far from impossible to avoid an interference even in the policy of their different systems.

⁴⁸ An effectual expedient for this purpose will be mutually to abstain from those objects which either side may have first had recourse to.

⁴⁹ As neither can control the other, each will have an obvious and sensible interest in this reciprocal forbearance.

⁵⁰ And where there is an immediate common interest, we may safely count upon its operation.

⁵¹ When the particular debts of the states are done away and their expenses come to be limited within their natural compass, the possibility almost of interference will vanish.

⁵² A small land tax will answer the purpose of the states and will be their most simple and most fit resource.

⁵³ Many specters have been raised out of this power of internal taxation to excite the apprehensions of the people: double sets of revenue officers, a duplication of their burdens by double taxation, and the frightful forms of odious and oppressive poll taxes have been played off with all the ingenious dexterity of political legerdemain.

⁵⁴ As to the first point, there are two cases in which there can be no room for double sets of officers: one, where the right of imposing the tax is exclusively vested in the Union which applies to the duties on imports; the other, where the object has not fallen under any state regulation or provision which may be applicable to a variety of objects.

⁵⁵ In other cases, the probability is that the United States will either wholly abstain from the objects preoccupied for local purposes or will make use of the state officers and state regulations for collecting the additional imposition.

⁵⁶ This will best answer the views of revenue because it will save expense in the collection and will best avoid any occasion of disgust to the state governments and to the people.

⁵⁷ At all events, here is a practicable expedient for avoiding such an inconvenience, and nothing more can be required than to show that evils predicted to not necessarily result from the plan.

⁵⁸ As to any argument derived from a supposed system of influence, it is a sufficient answer to say that it ought not to be presumed, but the supposition is susceptible of a more precise answer.

⁵⁹ If such a spirit should infest the councils of the Union, the most certain road to the accomplishment of its aim would be to employ the state officers as much as possible and to attach them to the Union by an accumulation of their emoluments.

⁶⁰ This would serve to turn the tide of state influence into the channels of the national government instead of making federal influence flow in an opposite and adverse current.

⁶¹ But all suppositions of this kind are invidious and ought to be banished from the consideration of the great question before the people.

⁶⁴ The wants of the Union are to be supplied in one way or another; if to be done by the authority of the federal government, it will not be to be done by that of the state government.

⁶⁵ The quantity of taxes to be paid by the community must be the same in either case; with this advantage, if the provision is to be made by the Union that the capital resource of commercial imposts, which is the most convenient branch of revenue, can be prudently improved to a much greater extent under federal than under state regulation, and of course will render it less necessary to recur to more inconvenient methods; and with this further advantage, that as far as there may be any real difficulty in the exercise of the power of internal taxation, it will impose a disposition to greater care in the choice and arrangement of the means, and must naturally tend to make it a fixed point of policy in the national administration to go as far as may be practicable in making the luxury of the rich tributary to the public treasury in order to diminish the necessity of those impositions which might create dissatisfaction in the poorer and most numerous classes of the society.

⁶⁶ Happy it is when the interest which the government has in the preservation of its own power coincides with a proper distribution of the public burdens and tends to guard the least wealthy part of the community from oppression!

⁶⁷ As to poll taxes, I, without scruple, confess my disapprobation of them, and though they have prevailed from an early period in those states^* which have uniformly been the most tenacious of their rights, I should lament to see them introduced into practice under the national government.

⁶⁸ But does it follow because there is a power to lay them that they will actually be laid?

⁶⁹ Every state in the Union has power to impose taxes of this kind, and yet in several of them they are unknown in practice.

⁷⁰ Are the state governments to be stigmatized as tyrannies because they possess this power?

⁷¹ If they are not, with what propriety can the like power justify such a charge against the national government or even be urged as an obstacle to its adoption?

⁷² As little friendly as I am to the species of imposition, I still feel a thorough conviction that the power of having recourse to it ought to exist in the federal government.

⁷³ There are certain emergencies of nations in which expedients that in the ordinary state of things ought to be forborne become essential to the public weal.

⁷⁴ And the government, from the possibility of such emergencies, ought ever to have the option of making use of them.

⁷⁵ The real scarcity of objects in this country which may be considered as productive sources of revenue is a reason peculiar to itself for not abridging the discretion of the national councils in this respect.

⁷⁶ There may exist certain critical and tempestuous conjunctures of the state in which a poll tax may become an inestimable resource.

⁷⁷ And as I know nothing to exempt this portion of the globe from the common calamities that have befallen other parts of it, I acknowledge my aversion to every project that is calculated to disarm the government of a single weapon which in any possible contingency might be usefully employed for the general defense and security.

⁷⁸ I have now gone through the examination of such of the powers proposed to be vested in the United States which may be considered as having an immediate relation to the energy of the government and have endeavored to answer the principal objections which have been made to them.

⁷⁹ I have passed over in silence those minor authorities which are either too inconsiderable to have been thought worthy of the hostilities of the opponents of the Constitution or of too manifest propriety to admit of controversy.

⁸⁰ The mass of judiciary power, however, might have claimed an investigation under this head had it not been for the consideration that its organization and its extent may be more advantageously considered in connection.

⁸¹ This has determined me to refer it to the branch of our inquiries upon which we shall next enter.

At first glance this is an “odds and ends” piece, a series of short treatments of issues that seem only loosely related, especially to the New York newspaper reader who might have missed one or more of Hamilton’s preceding six papers on the broad topic of taxation. There is, however, an underlying theme, and the reader’s patience is solicited as it slowly emerges.

One reason it seems disjointed is that Hamilton opens with a continuation from his previous piece of a line of thinking significant to historians because it presages the class analysis that would pervade European social thought during the coming century. Who will actually populate the halls of Congress in this new government? Aristocrats? Millionaires? Farmers? Penniless street preachers?

As pointed out before, it will be people who represent class interests rather than actually being members of the classes represented. That is, after all, what “representation” means, and in a relatively classless society whose wealthier members insist on self-aggrandizement through a perpetuation of the European class system, this would bode well for those not overly oppressed by the necessity to plow a field, those possessed of leisure sufficient to pen such missives as the Federalist Papers, for example. Hamilton was, in the past, one of those merchants who occupied the middle ground between the contending membership of the other classes (6), but he was also a self-educated member of what he delicately phrased as “the learned professions,” i.e. a practicing attorney.

It hardly seems surprising that the men struggling to create an entirely new system of law and government should be so heavily populated by specialists in both. That the curious imbalance continues to this day makes the contemporary observer wonder whatever did happen to all those “proprietors of land” and “merchants.” Approximately 45% of the current population of the US Congress is made up of lawyers. It would seem Hamilton was correct about the difference between classes and their representatives. He is, however, somewhat more reticent regarding what might be construed an oligarchy of “the learned professions.”

Thankfully, Hamilton retires the topic and returns to the more prosaic matter of how best to fund it. The objection has been made (10) that no national government may be possessed of knowledge of local conditions sufficient to make taxation of the latter an efficient matter. Nonsense, says Hamilton.

¹² If any question is depending in a state legislature respecting one of the counties which demands a knowledge of local details, how is it acquired?

¹⁴ Cannot the like knowledge be obtained in the National Legislature from the representatives of each state?

It can, but on a somewhat less granular and immediate basis. That, to Hamilton, does not matter – for purposes of taxation, it will be sufficient (16). But is it, really? The principle that economic transactions become transparent only at the level at which they are made would await fully a century and a half for Ludwig von Mises to formalize, but it is clear that the broad principle was already appreciated by those aware that a penny could better be squeezed from a taxpayer’s purse if its exact location were known.

But the general practice among nations is to centralize the authority in that regard (17). As to the taxes themselves, are they better exacted as the direct or (19) the indirect kind? Hamilton is aware that the Constitution specifies the latter (21), “by which must be understood duties and excises on articles of consumption.” That information is available from the merchant who sells them (22).

Similar information is not available for direct taxation, i.e. “real property or to houses and lands,” (26) but is instead to be garnered through the greater familiarity of local circumstances present in elected commissioners and assessors who are county agents. Hamilton still feels that this information is as easily passed to the federal government as to the state (30), but in fact is likely to be unnecessary inasmuch as the federal government’s exclusivity with regard to imposts will leave the states to fund their presumably reduced efforts through other means.

⁵² A small land tax will answer the purpose of the states and will be their most simple and most fit resource.

The notion of a federal government using state resources to gather tax information on citizens has already been viewed with alarm by Hamilton’s opponents. He dismisses it as paranoia (61) without really addressing it. A similar airy dismissal awaits the dark rumblings against two governments resulting in double taxation. It hardly matters, says Hamilton, “the quantity of taxes to be paid by the community must be the same in either case” (65). The logic of this is clear: what is to be funded is some government’s actions within specified roles, and it does not matter which government’s, at least as long as roles do not overlap between governments. If they do, however, that overlap must imply an overlap in the taxation necessary to fund it. There is no real guard against that. Here Hamilton is walking a fine political line between subordinating the state governments and empowering them, and his tax policy shows it.

The reader moves briefly once again through the topic of apportionment and the necessity for a national census that will enable it to be effected fairly (36). It will enable other things as well, specifically a “poll tax,” of which Hamilton disapproves (67) while admitting that certain states already have one. That is, after all, as “direct” as taxation gets.

The poll tax has a long and checkered history in the United States, and what Hamilton means by it is not necessarily the first thing that comes into the mind of the contemporary American reader. “Poll” in this usage means merely “head” – it is a tax uniform per person regardless of that person’s possession of wealth or consumption of material goods. That is, in economics, a regressive tax inasmuch as it constitutes a greater portion of a poor person’s liquid capital than a rich person’s. Part of the confusion in terminology arises from the usage of the word “poll” to designate a place of election as well – the etymology is the same – and the practice of collecting such a tax there as a prerequisite to voting. Abused, that sort of tax is a means of denying the vote to the poor. Hamilton’s sly suggestion that it is those states most jealous of state’s prerogatives that tended to employ such taxes (67) turned out, sadly, to be on the mark. Does this mean, then, that he considers them beyond the purview of the federal government? Hardly.

⁷² As little friendly as I am to the species of imposition, I still feel a thorough conviction that the power of having recourse to it ought to exist in the federal government.

And why not? He has repeatedly insisted that no limits be placed on a government whose challenges will face no limits. Unfortunately it flies directly in the face of his earlier dictum against double taxation. That, it turns out, is to be avoided only insofar as it does not prove an inconvenience to the federal government. Such principles must bow to exigency (77), and it is precisely this against which Hamilton’s opponents would rail the loudest.

Hamilton has by now touched on three of the broad headings of the proposed Constitution: Article I, the powers of the Legislative; Article II, those of the Executive; and Article IV, the limitations of the states’ powers. To follow is the so far neglected Article III, the powers of the Judiciary. Brutus’ attack has forced Hamilton out of his flow, to which he is about to return.

Hamilton got 33 and 52 wrong, I believe, because he was lying. He was making disingenuous arguments to have the constitution passed. First, he attended the constitutional convention where he, in part, argued for the outright dissolution of the states then finally acquiesced to the federal system because, he believed, it properly set up a system where the national government would reign supreme and eventually take over.

He plays an active role in the take over of the national government in at least two areas. First the Whiskey Rebellion,

{/quote}A source of government revenue was needed to pay the bond holders to whom the debt was owed. By December 1791, Hamilton believed that import duties, which were the government’s primary source of revenue, had been raised as high as was feasible.[4] He therefore promoted passage of an excise tax on domestically distilled spirits. This was to be the first tax levied by the national government on a domestic product.[5] Although taxes were politically unpopular, Hamilton believed that the whiskey excise was a luxury tax that would be the least objectionable tax that the government could levy.[6] In this he had the support of some social reformers, who hoped that a “sin tax” would raise public awareness about the harmful effects of alcohol.[7] The whiskey excise became law in March 1791.[8] {/quote}
http://www.freerepublic.com/perl/post?id=2555190%2C1

Other historical texts make it clear that Hamilton was picking a fight with the Westerners. He himself was a trader from the Caribbean and that the fact he “believed that import duties, …, had been raised as high as was feasible” was from his own self interest. In Hamilton’s mind, the whiskey tax was win-win.

Note that, “The whiskey tax was repealed after Thomas Jefferson’s “Democratic-Republican” Party, which opposed Hamilton’s Federalist Party, came to power in 1800.” But the damage was done, i.e. the Federal Government had established that it could impose laws that violated the spirit of the Constitution where it was written, “all duties, imposts, and excises shall be uniform throughout the United States.”

Second the “First National Bank”,

{quote} Officially proposed by Alexander Hamilton, Secretary of the Treasury, to the first session of the First Congress in 1790, the concept for the Bank had both its support and origin in and among Northern merchants and more than a few New England state governments. It was, however, eyed with great suspicion by the representatives of the Southern States, whose chief industry, agriculture, did not require centrally concentrated banks, and whose feelings of states’ rights and suspicion of Northern motives ran strong.

The bank’s charter expired in 1811 under President James Madison. The bill to recharter failed in the House of Representatives by one vote, 65 to 64, on January 24, 1811.{/quote}
http://en.wikipedia.org/wiki/First_Bank_of_the_United_States

The most damaging result for the establishment of the First National Bank was the precedent of opening the “Elastic Clause” of the Constitution with the decision of McCulloch vs. Maryland where it was decided that the national laws could be more than “Absolutely Necessary”. As we’ve found out over the past 200+ years, the set of laws “more than absolutely necessary” includes the set of laws that are almost totally unnecessary to execute the constitutional duties of the national government

Before anyone gets their panties in a bunch over me accusing a founding father of lying, take these three sentences:

13 No doubt from the information of the members of the county.

23 The circumstances that may distinguish its situation in one state from its situation in another must be few, simple and easy to be comprehended.

34 The method of laying and collecting this species of taxes in each state can, in all its parts, be adopted and employed by the federal government.

They are Obamaesque. They imply certainty when they are uncertain or imply uncertainty when they are certain. For instance take:

23 The circumstances that may distinguish its situation in one state from its situation in another must be few, simple and easy to be comprehended.

Who can argue with that? No one wants to. The things I comprehend are few, simple and easy for you to comprehend, right? Well they are to me. {I say with a glint in my eye} You on the other hand, think the things you comprehend are simple to understand, right? Well they aren’t to me. {I say with a smile on my face} Yet each of us hears the words “be few, simple and easy” the same even though we would apply them differently to those other than ourselves.

Now change some of the words:

23 The circumstances that may distinguish its situation in one state from its situation in another must be many, complex and difficult to be comprehended.

Who wants to argue with it? Everyone! It’s muddled, belittles the reason of the listener, makes the world too complex to be dealt with, etc. etc. Time proves them true, however. The situations of taxation ARE many, complex and difficult to comprehended.

I believe Hamilton knew his arguments were disingenuous and was arguing them for the expedient purpose of establish a supreme national government that would work according to his own desires. It’s my guess that Hamilton’s nose was up Washington’s backside and his character was ultimately revealed by how he died. Washington was certainly not the first nor the last leader to confuse loyalty with competence.

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