the distribution becomes the more endangered, the more is left to arbitrary assessment. The fear of being wronged will make the tax invidious; productive of discord; inimical to social order.

Another-that the tax do not embarrass, or impede circulation; because free circulation of commodities is essential to trade; trade essential to division of labour; division of labour essential to its productiveness; and productiveness of labour essential to wealth. The alcavala of Spain, a duty levied on goods, whenever they changed hands, nearly put an end to all internal commerce, checked industry, and ruined the country.*

Another that the taxes possess a degree of flexibility, sufficient to adapt them to change of time and circumstances;-because the more they possess this characteristic, the less frequently will the financial proceedings and measures require innovation. Could a system of taxation be so contrived as never to require any; could it be engrafted upon, and made part, as it were, of our federal constitution, it would obviously be an inestimable advantage.

Finally-taxes should rather have a moral, than an immoral tendency. High duties on imported articles, tempt to smuggling; high internal taxes on consumption, stimulate ingenuity to defraud; and deviation from moral rectitude, any how induced, becomes habit. But, we should be careful not to commit a mistake, in endeavouring to accomplish an opposite purpose. It is thought that high duties on ardent spirits check, a prejudicial consumption. The secretary of our treasury, on this account, conceives them to be one of the most eligible objects of taxation. The fact is, however, that, in this country at least, not fewer drams will be taken on account of a high duty on spirits. It will only cause retailers to become cheats; and the common people to be poisoned with bad liquor.

Such are the principal features and characteristics of a good system of taxation. But to which system-susceptible of be ing put in practice-do they belong?

There have been invented two principal descriptions of taxes.-Taxes on consumable articles, called indirect; and taxes on land, and persons-called direct taxes.

The former constitute the greatest proportion of the taxes,

* D. G. Ustarist. Théorie Prat. du Comm. d'Esp.

Report of the secretary of the treasury to the committee of ways and means, of the 10th January, 1812.

paid in Great Britain, and in this country. They have been, more or less, introduced all over Europe, and they are strongly recommended, particularly by late French writers, as preferable to all others.

"The honour of this discovery," says Ganilh, speaking of indirect taxation, "belongs again to chance, and not to human wisdom. The importance of it was not felt, till the science of political economy taught the laws of the formation, the distribution, and the consumption of riches, and pointed out the influence, of the several modes of taxation, on the increase of national wealth. Then the advantages and inconveniences, attending them, were compared, and, from this comparison resulted the absolute preeminence, of taxes on consumable articles, over all others."*

It will, therefore, be proper to enter into a more particular examination of their merits and demerits, chiefly with a view to their operation in this country.

They are of two descriptions.-Some are paid on foreign goods and commodities, when imported. These are more strictly called duties, or customs. Others are paid on consumable commodities, produced, or manufactured at home. These are called indirect, internal taxes.

Both seem to have in common the advantage, that they apportion themselves to the revenue of those who pay them. It is chiefly on this account, that they are so much extolled by the writers on political economy.

Their claim to preference in this respect would be perfect, if the expenditure of people were always in exact, or nearly in exact proportion to their revenue. But, though it is true that, generally speaking, people will not spend more than they earn, and very seldom all that they earn, yet, it does by no means follow, that they will always increase their expenditure, progressively with the increase of their income. On the contrary, most men who acquire fortunes, persevere in the original habits of frugality, often of parsimony, which led to the acquisition. The authors on this subject seem to have been much more solicitous, that all taxes should be defrayed out of individual revenue, than concerned that all the individual revenue, which the state assures, should pay its due premium.-Even in Europe, where decency and fashion have prescribed a certain style of living, to people of a certain income and rank, consumption is far from keeping an even pace with the individual means of consuming. It is infinitely less the case in * Ganilh, same work. vol. I, p. 411.

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this country, where, comparatively speaking, great economy prevails among the wealthy, and great profusion among those in moderate circumstances. Many rich farmers, in the interior, rich enough to suffer their wheat to be eaten by the rats rather than be sold under a certain price, hardly consume any commodities, not produced, or manufactured, on their own premises. Consequently, under our present system of taxes, they pay nothing to the state. In our cities, the greatest number of those, whose revenue exceeds six thousand dollars per annum, spend no more than those whose revenue does not quite reach this sum.

In a country like England, of moderate extent, of a compact population, of a similarity of condition,-with regard to soil and climate, approaching to equality; of the same manners, the same habits, and the same prejudices throughout, taxes on consumable commodities may operate with some degree of fairness. But it is vastly different in the United States, comprising within a single empire-all the physical and moral diversities of the whole continent of Europe.

What is the consumption of woollens, in the states of Mas sachusetts and New York, compared with the consumption of the same kind of goods in South Carolina, Georgia and Tennessee, making allowance for the difference of population! What the consumption of sugar, coffee and tea, absorbed by a given amount of individual revenue in the northern states, where young and old, rich and poor, are in the habit of using these articles, when compared with the consumption of the same commodities caused by the same quantum of revenue in the slave states? And may not the same remark be extended to all others? Do not greater sterility of soil, and greater se verity of climate, multiply wants of every description? Is not the unequal operation of such taxes, arising from difference of soil and climate, still further increased by the prevalence of slavery in the states of the south? Yet, the exportation of cotton-which is the produce of the southern states alone-exceeded, a few years ago, in value, by nearly three millions of dollars, that of any other species of produce exported from the Union!

But, if this inequality of operation may already be animadverted upon with propriety, though taxes on consumable commodities are now only paid on such as come to us from abroad, how much more would they not become obnoxious to censure if they were generally extended to those, which may be called domestic! There is hardly a consumption of magnitude which is not more or less local, more or less confined to

a certain description of people alone, and the value of the domestic commodities in particular, which are consumed by the more wealthy classes, is far from bearing a just proportion to their revenue, though the amount of them consumed generally, may be considered as within the revenue of those who

use them.

What a mistake, for instance, would it not be to think of laying a tax on houses, when even the day-labourer to the northward must have a good one, while thousands to the South may be said to live almost in the open air. Malt and beer are articles of consumption, almost peculiar to a few of the states. Ardent spirits, distilled at home, are never used by the rich. Hardly a carriage rolls in Georgia and Louisiana, though in the latter country proprietors whose income exceeds ten thousand dollars per annum, may be counted by hundreds. Even salt, leather, candles, soap-deemed articles of the most general consumption-could not be taxed in this country, without affecting individual revenue differently in almost every state. The one last mentioned, of which the consumption with us is so great, is hardly thought of by the population on the banks of the Mississippi, on account of the superior softness of the water of that river.

Indirect taxes, therefore, viewed in reference to equality of operation, and a just distribution of the public burthens, are every where liable to the objection, that they leave a great proportion of the revenue of the wealthy unaffected, who, consequently, receive their ample share of security, protection, and national blessings of every sort, at a reduced price. Taxes of this description would, in the United States-were this system extended, and relied on as the principal, and permanent basis of public revenue-present such insurmountable difficulties to the paying a suitable degree of regard to the important considerations just mentioned, that a secretary of the treasury, though unremittingly in search of information over the whole continent, and employed in modifying and multiplying his taxes accordingly, could not, with all his pains and labour, avoid a constant recurrence of gross and flagrant violations, of the most essential principle of a good financial system.

Viewed in reference to cheap and easy collection, there is a remarkable difference between the two kinds of taxes on consumable commodities-duties on commodities imported, and domestic duties.

The former certainly present no difficulty on this score, and are, so far, justly recommendable. The business of the customhouses is neither expensive, nor annoying, nor does it

prove injurious to circulation. Commodities, once entered, may afterwards be dispersed in every direction. The credit, given to the importers for the amount of the duties, prevents heavy advances on their part, and the regulations with regard to drawbacks, secure the interests of the carrying trade. The customhouses also become the means of important, and accurate information respecting the commercial relations of the country with other nations. For this, and for some other reasons, which will be mentioned in their place, it is desirable, that moderate duties on importations, should be retained, whatever taxes may be adopted besides, as a more permanent reliance.

On the other hand, the collection of internal, or domestic duties, on consumable commodities, is not only attended with great expense and inconvenience, but with formidable embarrassments, and they are again, for this reason, liable to the most serious objections.

The difficulties which occur in the levying of taxes, arising from an unavoidable interference with private pursuits, must, necessarily, increase in proportion with the extent of territory, over which the population is spread, from which the contribu tions are to be obtained, and with the diffusedness of that population.

In England, distilleries, breweries, tanneries, and manufac tories of every description, are mostly large, and conspicuous establishments, which cannot escape the observation of the revenue officers, and at which the proceeds of the taxes imposed are received in considerable sums. A single officer is adequate to an extensive collection, and the highly improved state of the country, makes the accumulation, and transmission of the sums received, safe as well as easy.-In France, and other parts of the European continent, the circumstance of the popu lation, belonging to extensive tracts of territory, being con. densed in villages, which form so many detached spots, where the pursuits of industry centre, must infinitely facilitate the business of the taxgatherers. Yet, so great is in this respect the advantage of England over France, that the expenses of collection in the former country do not exceed six per cent., though in France they amount to upwards of sixteen:* A difference, which to Ganilh appears so inconceivable, that he is disposed to ascribe it to the possession of some particular art,

* Sir F. D'Ivernois, whose authority is to be relied on, estimates them at 20.