temporary, but on permanent causes of expense; our attention would be directed to a provision in favour of the state governments, for an annual sum of about 1,000,000 of dollars; while the exigencies of the union could be susceptible of no limits, even in imagination. In this view of the subject, by what logic can it be maintained, that the local governments ought to command, in perpetuity, an exclusive source of revenue for any sum beyond that which has been stated? To extend its power further, in exclusion of the authority of the union, would be to take the resources of the community out of those hands which stood in need of them for the public welfare, in order to put them into other hands, which could have no just or proper occasion for them.

Suppose, then, the convention had been inclined to proceed upon the principle of a repartition of the objects of revenue, between the union and its members, in proportion to their comparative necessities; what particular fund could have been selected for the use of the states, that would not either have been too much or too little; too little for their present, too much for their future wants? As to the line of separation between external and internal taxes, this would leave to the states, at a rough computation, the command of two thirds of the resources of the community, to defray from a tenth to a twentieth of its expenses; and to the union, one third of the resources of the community, to defray from nine tenths to nineteen twentieths of its expenses. If we desert this boundary, and content ourselves with leaving to the states an exclusive power of taxing houses and lands, there would still be a great disproportion between the means and the end; the possession of one third of the resources of the community, to supply, at most, one tenth of its wants. If any fund could have been selected, and appropriated, equal to, and not greater than, the object, it would have been inadequate to the discharge of the existing debts of the particular states, and would have left them dependent on the union for a provision for this purpose.

The preceding train of observations, will justify the position

which has been elsewhere laid down, that "A CONCURRENT JURISDICTION in the article of taxation, was the only admissible substitute for an entire subordination, in respect to this branch of power, of state authority to that of the union." Any separation of the objects of revenue that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the union, to the POWER of the individual states. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident, that it has at least the merit of reconciling an indefinite constitutional power of taxation in the federal government, with an adequate and independent power in the states, to provide for their own necessities. There remain a few other lights, in which this important subject of taxation will claim a further consideration.

PUBLIUS.

THE FEDERALIST.

NUMBER XXXV.

NEW YORK, JANUARY 8, 1788.

HAMILTON.

THE SAME SUBJECT CONTINUED.

BEFORE we proceed to examine any other objections to an indefinite power of taxation in the union, I shall make one general remark; which is, that if the jurisdiction of the national government, in the article of revenue, should be restricted to particular objects, it would naturally occasion an undue proportion of the public burthens to fall upon those objects. Two evils would spring from this source-the oppression of particular branches of industry, and an unequal distribution of the taxes, as well among the several states, as among the citizens of the same state.

Suppose, as has been contended for, the federal power of taxation were to be confined to duties on imports; it is evident that the government, for want of being able to command other resources, would frequently be tempted to extend these duties to an injurious excess. There are persons who imagine that this can never be the case; since the higher they are, the more it is alleged they will tend to discourage an extravagant consumption, to produce a favourable balance of trade, and to promote domestic manufactures. But all extremes are pernicious in various ways. Exorbitant duties on imported articles, serve to beget a general spirit of smuggling; which is always pre

judicial to the fair trader, and eventually to the revenue itself: They tend to render other classes of the community tributary, in an improper degree, to the manufacturing classes, to whom they give a premature monopoly of the markets: They sometimes force industry out of its most natural channels into others, in which it flows with less advantage. And in the last place, they oppress the merchant, who is often obliged to pay them himself, without any retribution from the consumer. When the demand is equal to the quantity of goods at market, the consumer generally pays the duty; but when the markets happen to be overstocked, a great proportion falls upon the merchant, and sometimes not only exhausts his profits, but breaks in upon his capital. I am apt to think, that a division of the duty, between the seller and the buyer, more often happens than is commonly imagined. It is not always possible to raise the price of a commodity, in exact proportion to every additional imposition laid upon it. The merchant, especially in a country of small com. mercial capital, is often under a necessity of keeping prices down, in order to a more expeditious sale.

The maxim, that the consumer is the payer, is so much oftener true than the reverse of the proposition, that it is far more equitable that the duties on imports should go into a common stock, than that they should redound to the exclusive benefit of the importing states. But it is not so generally true, as to render it equitable, that those duties should form the only national fund. When they are paid by the merchant, they operate as an additional tax upon the importing state; whose citizens pay their proportion of them in the character of consumers. In this view, they are productive of inequality among the states; which inequality would be increased with the increased extent of the duties. The confinement of the national revenues to this species of imposts, would be attended with inequality, from a different cause, between the manufacturing and the non-manufacturing states. The states which can go furthest towards the supply of their own wants, by their own manufactures, will not, according to their numbers or wealth, consume so great a pro

portion of imported articles, as those states which are not in the same favourable situation; they would not, therefore, in this mode alone, contribute to the public treasury in a ratio to their abilities. To make them do this, it is necessary that recourse be had to excises; the proper objects of which are particular kinds of manufactures. New-York is more deeply interested in these considerations, than such of her citizens, as contend for limiting the power of the union to external taxation, may be aware of. New-York is an importing state, and from a greater disproportion between her population and territory, is less likely, than some other states, speedily to become in any considerable degree a manufacturing state. She would of course suffer, in a double light, from restraining the jurisdiction of the union to commercial imposts.

So far as these observations tend to inculcate a danger of the import duties being extended to an injurious extreme, it may be observed, conformably to a remark made in another part of these papers, that the interest of the revenue itself would be a sufficient guard against such an extreme. I readily admit that this would be the case, as long as other resources were open; but if the avenues to them were closed, HOPE, stimulated by necessity, might beget experiments, fortified by rigorous precautions and additional penalties; which, for a time, might have the intended effect, till there had been leisure to contrive expedients to elude these new precautions. The first success would be apt to inspire false opinions; which it might require a long course of subsequent experience to correct. Necessity, especially in politics, often occasions false hopes, false reasonings, and a system of measures correspondently erroneous. But even if this supposed excess should not be a consequence of the limitation of the federal power of taxation, the inequalities spoken of would still ensue, though not in the same degree, from the other causes that have been noticed. Let us now return to the examination of objections.

One which, if we may judge from the frequency of its repetition, seems most to be relied on, is, that the house of repre