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GALLATIN TO LA FAYETTE. - Albert Gallatin, The Writings of Albert Gallatin, vol. 2 [1879]

Edition used:

The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.

Part of: The Writings of Albert Gallatin, 3 vols.

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GALLATIN TO LA FAYETTE.

New York, May 12, 1833.

My dear Friend,—

I have been very remiss of late in writing to you. The cholera drove us out of town shortly after the receipt of your last communications; and, since our return, my answer has been delayed from time to time under an expectation of collecting the information necessary for a satisfactory reply to your inquiries. I hope that Mr. Livingston will be able to obtain better materials than were within my reach. On an important and the most difficult branch I can offer nothing better than conjectures, and you will easily understand my reluctance to hazard a vague opinion on a subject of that kind. As I have, however, no hope of adding for the present anything to my stock of information, you have my estimate, which I give only as such, and distinguishing those items on which most reliance may be placed, I arrange them under the following heads: 1. Revenue of the general government. 2. General expenses of the State governments, or sums paid into and expended by their several treasuries. 3. Local or municipal taxes. 4. Militia charges. 5. Miscellaneous charges, generally voluntary, and neither collected as taxes nor falling on the whole community.

1. The revenue of the general government is now confined to three objects: 1, the post-office, which, as it yields nothing, is no tax, the whole proceeds being applied to the acceleration and extension of the mails, and the community paying therefore, for the benefit received, no more than the money actually expended for that purpose; 2, the proceeds of the sales of the public, viz., of uninhabited, uncultivated, and unproductive, lands. The annual amount varies from two to three millions of dollars, and is not a tax. Every purchase is voluntary, and advantageous to all the parties: to the purchaser, who, on the most easy terms, becomes a freeholder and secures for life an independent existence; to the community at large, which is enriched by the annual conversion of unproductive into most productive land; to every individual of that community, whose taxes are lessened in proportion to the amount received; 3, the customs or duties on importation, the only productive tax now raised by the general government. This, before the late reductions, amounted to 21 millions, and is by those intended to produce fifteen. The United States had never, in time of peace, expended more than thirteen millions beyond the payments on account of the public debt, and including about one million for internal improvements. It is therefore probable, and it may be assumed, that, though the existing laws should produce more than 15, the revenue will be ultimately reduced to that amount.

2. The annual memorandum of the general expenses of fifteen out of the twenty-four State governments, and amounting together to 2,912,000 dollars, may be considered as substantially correct; and the expense of all together, and of so much of that of the District of Columbia and of the three Territories as is not defrayed by the general government, calculated at the same rate, cannot exceed four millions. A portion of their expense is, in some of the States, defrayed by other funds than taxes, such as sales of public lands, dividends on bank stocks, &c.; but, on the other hand, there is a portion of debt incurred, particularly by Pennsylvania, for internal improvements, not yet provided for; and, until better informed, the excess of the interest beyond the tolls (requiring a tax for the deficiency) may be assumed as equivalent to the portion of the said four millions which is not raised by taxes.

3. The local and municipal taxes consist of the poor tax, the road tax, and such as are necessary for defraying certain portions of the expenses of the administration of justice and other lesser objects, which vary in the several States, such as the building and preservation of court-houses, jails, and offices for the safe-keeping of records, the prosecutions for public offences, the pay of jurors when they are paid, &c. In some States a certain portion of the expense of primary education is also defrayed by a tax on the town or township; and a great additional expense is incurred in all our cities for paving, lighting, watch, preservation of health, and whatever of police is necessary for the preservation of order and consistent with our institutions. There are in the United States several thousand counties, towns, townships, cities, boroughs, or other subdivisions, most of which make no report of the taxes raised in each. It is utterly impracticable for any private individual to obtain a sufficient number of returns to form, even by analogy, a correct estimate. Those which may be collected by the Secretary of State will afford materials for that purpose, provided they are digested by a competent person. This is the point on which I have but imperfect and vague notions. The maximum in our largest cities is about 3½ dollars per head. In many interior agricultural districts of the Northern, Middle, and Western States the amount does not exceed half a dollar. It is generally less in the Southern than in the other States. Their roads are not kept in as good repair; the greater part of what would, where labor is free, become a poor tax is, in a slave country, a part of the expense of supporting the slaves; and various public services which are paid for in the North are rendered gratuitously by the planters of the South. The nearest conjecture which I can form, on a view of the whole subject, is, that all the expenses under this head exceed half a dollar and cannot amount to a dollar for each free individual. The enclosed memorandum contains a condensed view of our population in June, 1830, by the last census, and also the rate of increase of each description of persons during the period of ten years,—1820-1830. Three years having since elapsed, our population for this year must be about fourteen millions, of whom less than 2,200,000 are slaves. According, therefore, to my vague estimate, the aggregate of the local taxes is more than six and less than twelve millions, and till better informed I set them down at nine millions.

4. Militia charges. The enrolled militia may amount to near 1,500,000. The muster-days are nowhere less than two, and sometimes three, a year. Taking the average at two days and a half, and that of the price of labor at two-thirds of a dollar, which is too high and will cover some incidental expense, the annual necessary charge must be about two millions and a half. The expense incurred by the uniform voluntary companies is a matter of their own choice, and cannot be considered as a tax.

5. The miscellaneous expenses, which by some persons have been considered as taxes, consist principally of that for schools and the clergy, tolls on artificial roads, and fees paid by individuals to certain officers, who are compensated in that way instead of receiving salaries. The portion of the expenses for schools which is defrayed by taxes has already been included under the head either of State expenses or local taxes. Some States have accumulated permanent funds, which defray another portion. The school fund of Connecticut consists chiefly of mortgages, and yields about fifty thousand dollars a year. The pay of schoolmasters, so far as it is not derived from those sources, is not a tax, but a spontaneous expense incurred by individuals for the benefit of their children. The compensation of the clergy (with perhaps the single exception of Massachusetts) is precisely of the same description. It is only because the clergy in France is paid by government that writers who made the comparison between the two countries have been induced to consider the voluntary offerings of the American citizens for what they believe to be an object of first-rate importance, as a tax imposed upon them. In that view of the subject, the attendance on theatres, the use of wines and spirits, and everything not necessary to sustain physical existence, might be called a tax. This is not certainly one; and those are certainly correct who, in order to institute the comparison, strike out that item on both sides.

It is otherwise with the tolls on roads, and particularly the fees to officers, which, though paid only by those, must necessarily be paid by all those who use the first and want the services of the others. But neither roads of that description nor fee officers are numerous; and, although this must also be a vague estimate, I think that I make a large allowance in rating both together at one million and a half.

Recapitulating the whole, we have:

United States government,$15,000,000
State governments,4,000,000
Local or municipal charges,9,000,000
Militia,2,500,000
Tolls and fees,1,500,000
In all,$32,000,000

Which, on our present population of 14,000,000, is less than 2 dollars, or francs 12, per head. But I am quite willing to allow 25 per cent. more to the gentlemen who may wish it, and to admit that we pay 15 francs a head. And pray what inference is intended to be drawn from that fact, supposing it could be proved? That fact alone is altogether insufficient either to establish a comparison of the relative effect of taxation on the prosperity, wealth, or happiness of two nations, or to draw any correct conclusion with respect to the influence which their respective forms of government have on the general result. The people of Russia pay much less per head than those of France, and the Turks still less in proportion than the British subjects. Would it not be absurd to infer that the Turks and Russians are less oppressed by taxation, more prosperous and happy, than the inhabitants of France and England? or that the forms of government of the two first countries were preferable to the institutions of the two others? In order to show that the weight of taxation depends on other causes than the nature of the government, it may be sufficient to observe that prior to the French revolution the two freest countries on the Continent of Europe—Holland and Switzerland—both were federative republics, and that taxes were heavier (in proportion to the population) in Holland and lighter in Switzerland than in any other country in Europe.

The magnitude of taxes is not caused by the extravagance alone of governments or by the effects of a profligate or unskilful administration. It depends in a great degree on the expenses to which nations are liable on account of their political and geographical situation. Where these do not essentially differ, the amount must necessarily be limited by the national wealth and ability to pay of the individuals. That wealth and ability to pay are always eminently increased under governments which, abstaining from the exercise of every species of arbitrary power, govern by equal laws and, without favoring or oppressing any particular class of people or species of occupation, afford complete security to persons, industry, and property. To infer, when that result has been obtained, that because the people are able to pay and may pay more than those of other countries, they are more oppressed and less happy, is an obvious absurdity. Much depends also on the nature of the taxes, which may be more or less oppressive and partial, and, which is if possible still worse, may strike at the sources of national wealth and industry; and much also on the nature of the public expenditure, on its being applied to beneficial or productive objects, or to the support and increase of the unproductive and idle members of society. All these considerations have been long familiar to those who have paid the least attention to the subject. To discuss them and to examine and compare the effects produced in that respect by the respective institutions, mode of administration, and state of society of France and the United States, would require more knowledge and labor combined than have yet been brought in the field of discussion. Having only suggested some of the elements necessary to be investigated, I will conclude this long letter with some cursory observations relating to the United States.

I find two striking illustrations of what I have said respecting a beneficial or productive [expenditure] in our own recent history. From the accession of Mr. Jefferson to the Presidency to this day, the United States have applied from seven to ten millions of dollars a year to the payment of the interest and principal of the public debt. They have been thereby enabled to discharge the whole of the principal, amounting to 160 millions of dollars, the aggregate expenditure of the Revolutionary war and that of 1812-1815. This payment having set free a revenue of ten millions, the taxes have been reduced six millions, reserving four millions for internal improvements, a more rapid increase of our navy, or some other useful purpose. Had that revenue of seven to ten millions, or so much of it as was not necessary to pay the interest, instead of being applied to the discharge of the principal, been expended on an unnecessary expansion of our military establishment in time of peace, or any other useless and unproductive object, the people of the United States would to this day remain burdened with ten millions of annual taxes for the payment of the interest alone, and with the prospect of an indefinite increase of the principal whenever emergencies rendered a resort to loans necessary. The other instance is found in the State of New York. That State borrowed about eight millions, and applied the money to those splendid and eminently useful and productive works, the Erie and the Champlain Canals. Those are completed, and the tolls alone are sufficient to pay the interest and discharge [the capital] in a few years, whilst the expense of transportation has been reduced to one-third of what it was, and an inland water communication has been opened from this city to the St. Lawrence, to the further extremity of the great Western Lakes, and (through the Ohio Canal, undertaken on the same principles and now completed) to New Orleans and the Gulf of Mexico. If, instead of being applied to an object so useful, so productive, so highly calculated to shorten distances and to cement our Union, the money borrowed had been lavished in unnecessary pensions, high salaries, sinecures, or even on ill-digested and unproductive plans of improvements, there would have been so much capital actually destroyed, and the people of the State would have now half a million of additional taxes to pay for the interest, without receiving the least compensating benefit.

The combined effect of the state of society in the United States and of their democratic institutions on the public expenditure and the system and extent of taxation, may be traced in many particulars.

The price of manual labor, and the compensation of what is purely mechanical, such as the salary of ordinary clerks, is much higher than in Europe. This is the simple result of the comparative state of supply and demand for those objects, arising principally from the superabundance of land compared with the present population. On the other hand, our democratic institutions prevent the salaries of the higher offices from being paid more than, on that same principle, they are worth, and in some instances keep them below that point. There is still a great difference between the salaries of the several occupations, but a much greater equality than in Europe. The common laborer earns three hundred dollars a year in our large cities, one hundred and fifty in the country; a common transcribing clerk in the public offices at Washington receives eight hundred dollars; the Minister of Foreign Affairs, or that of one of the other great Departments, six thousand. Thus we have none of the abuses generally complained of in Europe, no civil pensions, no sinecures, no extravagant salaries given to courtiers or officers of a high grade; but the privates in all our several establishments, military or civil, in our army, navy, and public offices, cost much more in proportion to their number. So far as respects civil employments at least, I may assert that, on the other hand, we perform the same labor with a much less number of persons, whether officers or clerks, than in France.

It is sufficiently obvious that the other general expenses, either of the general or State governments, are on a very moderate scale. The local taxes alone can be considered as heavy in many places in proportion to the value of the property which is taxed. The tax in this city solely for local purposes was nominally 46 cents per hundred dollars of the nominal valuation, which was equal on the real property to about per cent. of the actual value. For this year it will be about ½ per cent. on the real value. I pay about the same rate for houses in Baltimore, and I understand that the rate in Philadelphia, where there is hardly any tax on personal property, is still higher on the actual value of the real estate. But that city is better administered than this, and the people get the worth of their money. They have provided much more ample funds for common schools, and an ample supply of water. The tax on personal property is here, on account of its inequality, on a still worse footing. No one, indeed, can be made to pay more than his rate; but the assessment is left to the caprice and arbitrary decision of ignorant assessors, and three-fourths of the wealthy inhabitants pay much less than their share, which falls on others less fortunate or skilful. Whatever is arbitrary is odious, and this, much more than the amount, is objectionable. I have before me the precise amount of purely local taxes for twelve years on property in Fayette County, Pennsylvania, which I have since sold for twelve thousand dollars. The average is 55 dollars a year, or about ½ per cent. on the real value. I compared carefully, whilst living there, the rate of my assessment with that of the other lands in the same township, and found it perfectly equitable and that this was the general rate. I have found nearly the same result (of ½ per cent. a year, on the actual value of improved real estate, for local charges) in my taxes in the State of Ohio; and I have already observed that about the same rate is paid for the same purposes in the cities of New York, Philadelphia, and Baltimore. But this tax is in reality much heavier in the country than in the cities. For the net rent of land in Pennsylvania is less than 3 per cent. on the value, whilst that of houses is on an average 6 per cent. here and in Baltimore, and more than 5 in Philadelphia. The local taxes in the country, at least where I am acquainted, amount to at least one-sixth of the income, and that on houses here to not more than one-twelfth part.

This, merely for local disbursements, is certainly a heavy charge, particularly in the country, and arises partly from local wants, which for some objects, such as roads, are very great in proportion to our wealth. But it is also due in a great degree to our democratic institutions; and the burden, which was extremely light, specially in the country, fifty years ago, has been gradually and is still increasing. The reason appears to me obvious enough; government is in the hands of the people at large. They are an excellent check against high salaries, extravagant establishments, and every species of expenditure which they do not see or in which they do not participate. But they receive an immediate benefit from the money expended amongst themselves, either as being employed in opening roads, the erection of buildings, &c., or as being more interested in the application of public money to schools, the payment of jurors and other petty offices, and even prospectively in the provision for the poor. They in fact pay little or no portion of the direct tax (occasionally enough in towns, but indirectly by the increase of rents), and receive the greater part of its proceeds.

You perceive that I do not disguise what I think to be the defects, and I know no other of any importance, in our system of taxation. I do not know any remedy for it here but in the exertions to obtain the best men we can for our municipal officers. But where institutions are yet to be formed, I may say that I have not discovered any evil to arise from universal suffrage in the choice of representatives to our legislative bodies, but that for municipal officers who have no power over persons, but only that of applying the proceeds of taxes, those who contribute to such payment ought alone to have the privilege of being electors.

I have neither paper nor time left to write to you on a far more absorbing subject, that of our unfortunate Southern difficulties. This will be the subject of another communication. I have only room to convey to you and to your family the most affectionate remembrances of every member of mine. We are all well. Frances has two children, James still but one, Albert still unmarried, my wife always enjoying excellent health. I am growing old and weak. So long as life remains I will be, with equal respect and sincere attachment, your old affectionate friend.

GALLATIN TO EDWARD EVERETT.

New York, January 5, 1835.

Dear Sir,—

I had the honor to receive your letter of the 30th ult., and give without hesitation, whether as to time, manner, or matter, an answer to your two first questions.

Since it has been decided that no measures should be adopted in reference to France which should take effect before the decision of the legislative body of that country, during its present session, on the treaty should have been ascertained, any declaration, still more any legislative act, announcing what, under certain contingencies, the United States intend to do, is equally unwise and unprecedented.

The declaration that they will, if a prompt execution of the treaty shall be refused, take redress into their own hands, can have no possible effect towards obtaining an affirmative decision, unless it is considered as a threat; and, if thus viewed by France, it will afford a pretence, if not a real motive, for suspending a decision until the threat is withdrawn.

But if the object is to show our spirit without regard to consequences, it should not, at least, be announced to the adversary that, if within a certain time he shall not comply, reprisals will take place. With this knowledge of what we will do, he will make his preparations, select his own day, and, on that on which a negative decision takes place, anticipate our intended reprisals.

In every case, particularly when hostilities are contemplated, or appear probable, no government should commit itself as to what it will do under certain future contingencies. It should prepare itself for every contingency,—launch ships, raise men and money, and reserve its final decision for the time when it becomes necessary to decide and simultaneously to act.

The proposed transfer by Congress of its constitutional powers to the Executive, in a case which necessarily embraces the question of war or no war, appears to me a most extraordinary proposal, and entirely inconsistent with the letter and spirit of our Constitution, which vests in Congress the power to declare war and to grant letters of marque and reprisal. No one can at this moment anticipate, if the treaty should not promptly be executed, under what circumstances this will take place, and whether there may not happen some, either arising out of the case itself, or of an extraneous nature, sufficiently cogent to induce on our part a suspension of the measures which may now be contemplated. If the Act transferring the authority to the President should be so precisely defined as to make him a mere instrument without any discretion, it would be an untimely and most improvident measure. If he is vested with any discretion whatever in the case, it is a most illegitimate transfer of the constitutional powers of Congress. If our Representatives are for war, let them declare it, and neither attempt to conceal their views under the name of reprisals, nor throw on another branch of government the responsibility which belongs exclusively to them.

The President has recommended a law authorizing reprisals upon French property; and he speaks of this measure as a seizure and sequestration of such property. Such property can be captured or seized only on the high seas or within our own jurisdiction.

Whether he means a seizure of vessels, goods, debts, or stocks in our ports, or anywhere within the United States, which may belong to French citizens, or letters of marque and reprisal at sea, I do not understand.

The British, in case of war, seize every vessel in their ports belonging to the enemy. With this single exception, the relic of an age of barbarism and piracy, and which makes part of the King’s droits of admiralty, I am not aware that any civilized nation does at this time, even in case of war, seize the property of private individuals which in time of peace had been trusted to the hospitality and good faith of the country. I am certain that the United States never were guilty of such an act as a nation, neither in 1793, when the British were plundering without notice our West India trade, and when an unsuccessful motion to that effect was made, never to be again repeated, nor in 1798, at the time of the greatest excitement and quasi-war against France, nor when war was declared against England, in 1812. Since the motion of 1793, which, if brought to the test, would have been indignantly rejected, during the various periods when our trade was exposed to the depredations of one or both the belligerents, amongst all the devices and expedients proposed in order to avoid war, never was the iniquitous proposal of seizing property confided to the protection of our laws again suggested. And I trust that, whilst so much is said of what is due to the honor of the nation (how applicable to the present state of things is another question), such truly dishonorable act is not in contemplation.

The preceding observation is strictly correct with respect to seizures in time of peace, and is intended to show the gross impropriety of supposing that such seizures are a peace measure. I admit that they have sometimes taken place in time of war. Such was the sequestration by several of the States of the British debts during the war of independence. Russia also suspended the payment of the interest on a loan formerly contracted in Holland whilst she was at war with France, of which Holland had become a province. Yet these are not examples for imitation. The seizure without violence of property belonging to the offending government and not to individuals would, I think, be legitimate in some cases.

With respect to letters of marque and reprisal, if we were to judge of the act on the immutable principles of justice and in conformity with those which regulate the conduct of nations by land, private war of every description must be disallowed altogether. But we are compelled, in this as in many other instances, to recur to the practice of nations, to their actual practice at this time, and not to what it was in Grotius’s time, or even in that of Vatel; who has, by the by, often copied the first writer without attending to changes which had since taken place, and asserted doctrines which in practice were already obsolete. The change in this case has been produced by the progress of civilization, and may in fact be considered as an amelioration.

It is undeniable that at present general letters of marque and reprisal are war to all intents and purposes, that they are never granted but in consequence of an existing war, or as a way of making war without a formal declaration. Both the Seven Years’ War and that of 1778, between France and England, commenced in that way, and were long so continued before war was actually declared.

It is equally true that special letters of reprisal granted to injured individuals and authorizing them to capture at sea an equivalent for their losses from subjects of the offending country, have fallen into entire disuse. Some cases may have escaped my notice; I recollect no one instance (in time of peace) since Cromwell. In short, the present practice or law of nations admits private war by sea (privateering) in time of war, never in time of peace, any more by sea than by land.

I must, therefore, say, in answer to your first queries, that at present nothing should be done; that when the time comes to act, the plan suggested by the President is inadmissible, and that we must then select between open and fair war or peaceable modes of obtaining redress. This leads to the consideration of your two last questions, which I am not so well prepared to answer. Yet there are some considerations connected with the subject, arising from my knowledge of France and of French affairs, which may, if I find time, be the topic of another letter.

I am, with the highest regard, dear sir, your most obedient servant.

Pray to remember me affectionately and respectfully to Mr. Adams.