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Thoughts on a Financial System adapted to the present circumstances, and future prosperity of the Union.

The occurrences, during the present session of congress, are calculated, in more than one respect, to awaken an unusual degree of interest.

The chief magistrate of the Union, at the opening of the session, announced to the representatives of the people, the bad success which had attended every attempt to adjust, in a friendly manner, the subsisting differences with one of the great belligerent powers of Europe. He affirmed, that to continue any longer to negotiate, would be degrading; that no means were left, to vindicate our rights, and to support our honour, except an appeal to arms; and that it was, therefore, proper to put the country immediately in a state of defence, and in a warlike attitude.

The house, as usual, re-echoed the tenor of his message. The predominating sentiment, in most of the speeches delivered on the occasion, was the immediate necessity of repelling injustice by force, and of avenging the country's wrongs. Our interests, our rights, our pledged faith to France, it was contended, equally exacted this line of conduct.—Accordingly, the raising of a regular army, of twenty-five thousand men, was decreed: a body of volunteers, no less than fifty thousand, was to be immediately equipped: It was even contemplated, to create at once, a formidable navy. In short— appropriations, to the amount of upwards of ten millions of dollars, were made in a few weeks, and even the question was started, whether Canada, after the conquest of that province, should be annexed to the Union, or suffered to erect a government of its own, or be treated as a colony.

In the meanwhile the committee of ways and means called on the secretary of the treasury, for a report respecting the financial concerns of the Union, and the resources which might be resorted to, for the purpose of defraying the expenses of the projected campaign. The report was made, and had the immediate effect of abating considerably the military ardour of our legislators, and of allaying their thirst for conquest, which, before, appeared almost irresistible.

We shall not, at this moment, enter into the merits of the question of peace or war, nor examine whether the course, which events will probably take, affords a subject of regret, or of congratulation. However this might be, we should, nevertheless, consider as very much to be deplored, the condition of a country, which could not, at any time, assert its hoDour, and maintain its rights, with promptitude and vigour.

We must certainly, as a general rule, take it for granted, that, whenever the representatives of the people choose to go to war, such a war is inevitable, honourable, and just. The reverse of this may occur—since deliberative assemblies are, unfortunately, as well as individuals, subject to be influenced by prejudice and passion. Still, however, that would be a preposterous doctrine, which should go to establish, in the impotence of the country, and in its absolute unfitness to repel aggression, or anticipate it by attack, a check against the bad consequences of a possible deviation by its rulers, from the path of sound policy, or political rectitude.

The true doctrine is, certainly, that which has been consecrated in the farewell address of our illustrious Washington, who expressly enjoins it as a permanent and fundamental maxim, to avoid war by being always prepared for it.—Robust health may sometimes render us too impatient of injustice; infirmity may induce a more careful attention to the dictates of prudence; but, who would, on that account, recommend a feeble and helpless condition, as the preferable state of permanent existence!

In general, weakness provokes insult and aggression. In general, wars last long in proportion as they are feebly begun, and languidly conducted. In general, they become ruinous and oppressive, proportionably to their duration. Generally also, they are the more calamitous, the more they interrupt the usual pursuits and regular industry of a nation; the more they force it out of its habitual attitude.

We are constrained, of course, to inquire—what, in this respect, is our situation? How are we prepared to meet the impending event?

In order to bring the nature of our situation, at once and forcibly, within the reach of intuitive perception, let us suppose Napoleon to have succeeded in his great object—the subjugation of Great Britain; let us suppose him, in the progress of his constitutional enmity to popular institutions, and popular governments—in his pursuit of universal empire, nay. in obedience to the laws of self-interest and necessity, to have collected his legions at Halifax and Quebec, commanded by a Ney, or a Massena, with the avowed purpose of invading the United States; or, what, perhaps, might also occur, let us suppose a Wellington, a Graham, at the head of a consiible British force, earnestly intent on the same object—and i look at ourselves, and at our means of resistance!

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Have we an army?—We are but slowly attempting to raise one.—Have we military commanders, military science, without which, in our days, numbers and valour are of little avail? —We can have none, because talents, like other commodities, appear only where they are valued, and we have slighted them. We console ourselves with the vague hope that chance may bring them forward.—Are we provided with the physical materials of war—arms, ammunition, ordnance?—We have bought, it is said, some sulphur: Saltpetre is now refining in Kentucky. Our armories, our founderies are at work. An additional twelvemonth, and we shall not be badly supplied!

Are our most exposed, and most important places in a proper state of defence?—The doctrine has been spread that our cities are nuisances, our strong holds—the forest and the mountain.—Have we a navy to afford at least a slight protection to our coasting trade?—We own a few ships, half rotten. We think of repairing them, and talk of building more. We had a squadron of gun boats;—they have disappeared.

Have we sailors to man a navy?—We hnd, not long ago, an invaluable body of forty thousand seamen. They are dispersed. —Can we boast of able naval commanders?—The countrv may be proud of those it has produced. Some cultivate the fields. Others are engaged in mercantile pursuits. Some still plough the ocean as supercargoes!

Are we strong in national spirit, which facilitates all undertakings, disposes to sacrifices^ often supplies the want of talents, and is the hotbed in which they thrive?—There are professions of it in the newspapers of the party in power.—Have we a revenue?—The usual sources of it begin to fail. We hnve voted new taxes, to commence with the war.—Does public credit exist? Can we borrow?—It is said that the people abound with confidence in the administration. They also abound in wealth, but they have no money!

Such is the unexaggerated, strange state of things. To conceal it would be folly. It is best known to those who are, or may become our enemies. It is unknown only to ourselves. The contemplation of it, leaves the mind deeply impressed with the conviction, that our affairs, of late, must have been miserably mismanaged. What an undertaking, to expose all the errors, which have been committed; to devclope the misconceptions and interests, from which they have sprung! Useful as this task would be, we cannot now think of attempting it. But, we should conceive ourselves culpable, if we could refrain, at this important crisis, from subjecting, at least our financial concerns, to a more particular scrutiny.

This disquisition can hardly fail to excite particular attention, at a time when the occurrences of the day bring the subject so entirely home to our feelings; and it may, perhaps, be deemed particularly appropriate, when it is considered that we are only at the dawn of our political existence; that our duration as a people, as well as the character and rank, which, for ages to come, we may hold among the nations of the earth, will chiefly depend on the wisdom of our early institutions,on the correct structure of our fundamental polity; and that every political edifice, however brilliant and vast, must necessarily be frail, tottering, temporary, unless rising from the solid basis of a wise financial system—without which nothing nationally great and good can either be attempted, or achieved.

*1 In the actual state of civilized society," says Gam/A, "public contributions are a portion of private fortune, yielded to government to enable it to provide for the wants of the body politic, and to secure to every citizen his individual, and social rights. Without a public revenue, no public power,no government: And again, without a government, without a public power, no security, no property. Take away the protection which government owes to individuals, in return for the contributions it receives from them; or suppress the contributions, which individuals pay in return for the protection they enjoy, and nothing remains but arbitrary power, disposing of all and respecting nothing, or anarchy, equally fatal."

"Considered in their true light, public contributions imply a contract between government and individuals, the principle of their mutual relations, the basis of all political rights and duties, the true, if not the only, efficient guarantee of the social cocspact."*

This being the nature of public contributions—the aggregate of which constitutes the public revenue—it is obvious that in ancient times, when they were discharged by personal services, or in kind, no correct system of revenue was practicable. If the contributions, paid by each individual, are the price for the protection he receives, then justice requires, that the price given should bear a due proportion to the value obtained in return. But people are vulnerable in proportion a*

• Ch. GaniJh, Essai politique stir le ReveEii public, v. I. p. 272.

they are possessed of property. He who has nothing to lose, ►» hardly a subject of protection. The contributions of each individual, therefore, to be just, ought to be commensurate with his means. How was this practicable as long as thfcy could be discharged only by personal services, or in kind?

The difficulty has greatly diminished, and almost disappeared, since the introduction of money. A sufficiency of it among the people is, however, an indispensable concomitant of a good system of taxation. It is not enough that men are aware of their obligation to support the government, and willing to fulfil it. It is not enough that they are rich in produce and property. They must also have a convenient means of furnishing their proper quantum of contribution. They must have money.

It is further obvious, that the faculty of the people to conr tribute, is at all times limited. The object being security and protection, the price must not be ruin. But the exigencies of government are unequal. The body politic is sometimes so situated, that extraordinary efforts are required, in order to preserve its health and vigour. These efforts occasion extraordinary expenses. How can the funds for defraying them be provided, without defeating the ultimate purpose for which they are incurred?

There are but two modes. The gradual previous accumulation of treasure, in expectation of such emergencies; or, the firm establishment of public credit, on the basis of an ample revenue, and of good faith. A treasure supplies itself the funds when wanted. Publiccredit enables government to obtain them by means of loans.

The first mode, which was formerly pursued by wise and provident governments, is liable to three objections.

First. The use of the money may be wanted, before the accumulation is completed; or the emergency, which made it needful, may recur a second time, before the treasury is recruited.

Secondly. The sum accumulated may not be equal to the amount required, and may place government in the distressing alternative, of being obliged to choose between ruinous and oppressive taxes, or a sacrifice of the honour, and permanent interests of the nation.

Thirdly. The accumulation of treasure necessarily causes a large capital to remain unproductive, which therefore must be considered as idle, and lost to the country, while hoarded.

The second mode is not liable to any of these objections, and is therefore preferable. It is susceptible of being ren

Vol. III. 2 F

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