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to theodore sedgwick - Alexander Hamilton, The Works of Alexander Hamilton, (Federal Edition), vol. 10 
The Works of Alexander Hamilton, ed. Henry Cabot Lodge (Federal Edition) (New York: G.P. Putnam’s Sons, 1904). In 12 vols. Vol. 10.
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to theodore sedgwick
January 20, 1797.
I received your late letter in due time. You seem to be of opinion to defer to a future period the commencement of direct taxation. I acknowledge I am inclined to lay gently hold of it now. Leaders of the opposite party favor it now, perhaps, with no good design. But it will be well to take them while in the humor, and make them share the responsibility. This will be the more easy as they are inclined to take the lead. Our external affairs are so situated, that it seems to me indispensable to open new springs of revenue, and press forward our little naval preparation, and be ready for augmenting it. But, on the whole, I have always leaned to the opinion that half a million from direct taxes was not enough to begin with, nor should I have proposed more.
What are we to do with regard to our good allies? Are we to leave our commerce a free prey to them? I hope not. It seems to me we are even beyond the point at which we were with Great Britain when Mr. Jay was sent thither, and that some thing like a similar plan ought to be pursued—that is, we ought to make a final effort to accommodate, and then resort to measures of defence. I believe erelong an embargo on our own vessels will be advisable—to last till the conduct of France changes, or till it is ascertained it will not change. In the last event, the following system may be adopted: to grant special letters of marque, with authority to repel aggressors and capture assailants; to equip our frigates; to arm a number of sloops-of-war of existing vessels to convoy our merchantmen. This may be a middle term of general hostility, though it may slide into the latter. Yet, in this case, it may be well to let France make the progress. But at all events we must protect our commerce and save our honor.
As to the balance business, the agitation has been every way unfortunate. There is not an individual in the State of New York who is not profoundly convinced that the settlement was wholly artificial, and as it regarded the rule of quoting, manifestly unjust, and consequently, that there is no justice in paying it. I never saw but one mode of getting through the business, which is for Congress to call for a certain sum of each debtor State annually, say a fiftieth part, declaring that if not paid, each instalment shall bear interest from the time it becomes due, but till then the principal to carry no interest. I believe the State for harmony’s sake would yield to such an arrangement. It may be said this will be only a nominal payment. I answer, true, but an artificial balance ought only to be nominally paid. The conduct of some gentlemen in the late question has pained me much. It is inconsistent with a tacit pledge of faith. Every New Yorker who had any thing to do with our fiscal arrangements has been personally compromised.