71. The Drive for a Federal Tariff

0:00Volume 4, Chapter 71, The Drive for a Federal Tariff Until a federal taxing system could be established by constitutional amendment, however, the conservatives had to confine themselves to establishing a federal taxing power within the confederation framework. That power, after all, was the critical linchpin of the entire counter-revolutionary program. The haphazard requisition system, leaving power in the hands of the several states, could never supply the firm basis for centralized sovereignty. In early 1781, they proposed a federal impost or import duty of 5% on all goods imported into the U.S.

0:50The import revenue was to go to repay interest and principal on the federal debt contracted during the revolution, both domestic and foreign. The imposed power was to continue as long as there was a public debt, that is, permanently. The states were asked to agree to this power as vested in Congress, implicit was to be the collection of this tax by federally appointed collectors. The imposed would only yield about $500,000 a year, no more than $1 million in peacetime, and this did not suffice to pay even the interest on the public debt that Morris had assumed before the end of the war. But Morris envisioned it as an entering wedge to be eagerly followed by taxes on poles, property and commodities.

1:44Indeed, Morris considered this Impost proposed and adopted by Congress before his accession to office the key to the success of his entire program. Referring to the Impost, he declared, the political existence of America depends on the accomplishment of this plan. The Impost concept had previously been proposed in Congress by Gouverneur Morris and by none other than Thomas Burke, of Work, who by 1780 had shifted drastically rightward. But the 1781 plan was basically steered through Congress by Robert R. Livingston and John Sullivan of New Hampshire. It passed Congress on February 3, 1781.

2:30Originally, some conservatives wanted to present the imposed plan as a simple revenue measure which would become effective after ratification by the legislatures of nine states, but it was clear to the dullest that the creation of a federal taxing power was a fundamental amendment to the Articles and therefore had to be ratified by every state. The right, firmly in control of every state, was optimistic and Morris threatened, bullied and cajoled the state legislatures. He pulled out every stop. First, the tax was supposedly absolutely essential to obtain foreign loans and therefore for winning the war.

3:16With the war over, except for the formalities, his harangues reached the height of absurdity in early 1782 as he ranted that he, who opposes the grant of such revenue, labors to continue the war and, of consequence, to shed more blood, to produce more devastation, and to extend and prolong the miseries of mankind. He was embarrassed by obtaining foreign loans without the tax, but he relieved his embarrassment simply by keeping information of the French loan from the states in order to keep up the pressure for the impost. When the war argument had become nonsensical to everyone, he shifted his tune to bellow about the sacredness of the public debt and the payment of the creditors. He went so far as to refer to the existence of a large public debt as an inestimable jewel. So sacred did the cynical Morris regard the public debt contract that he deliberately stopped all interest and his payments on federal loan certificates in 1782 in order to prod the public creditors

4:26into the pressure campaign we have noted at the end of the last chapter. He exalted to Benjamin Franklin about his well-grounded expectation that the claims of the public creditors would induce the states to adopt the imposed cajolery, threats, pressure, Only Rhode Island remained, and it seemed inconceivable that this little state could refuse to ratify when all the others had agreed.

5:15And Georgia, too, had not yet agreed, but Georgia had been, until recently, occupied by the British. Under restored royal government and unrepresented in Congress, it did not count. Furthermore, Rhode Island Congressman General James M. Varnum was one of the leaders of the Nationalist, and he and his fellow conservative, Congressman Daniel Mowry, had had been in control of the politics of that state. Congress confidently demanded an immediate decision from Rhode Island, and Morris declared that the imposed may be considered as being already granted. The left was demoralized, fragmented, its leadership ousted or gone.

6:01There seemed to be no force in the entire country that could stop the nationalist-conservative juggernaut. Even Tom Paine had already literally sold out radical principles by secretly hiring out his eloquent and renowned pen to conservative, moneyed interests, first to the briber and master French intriguer, La Lucerne, and then to the land speculators. Almost miraculously, an unknown David to slay the Philistine Morris and his well-constructed nationalist machine was somehow found. David Howell of Rhode Island. A political upheaval in Rhode Island in the spring of 1782 had ousted General Varnum and his colleagues from the Continental Congress and replaced them by liberals allied with commercial interest in Providence. The war and British invasion had all but wrecked Newport and shifted its prosperity to Providence, Now and he was chosen for Congress along with his Providence colleagues Dr. Jonathan Arnold and John Collins.

7:43It is characteristic of a man such as Howell that he romantically signed his able anti-imposed articles in the Providence Gazette in the spring of 1782, a farmer, and characteristic of all too many historians to be misled into thinking that the Rhode Island anti-tariff movement was basically agrarian. Upon arriving at Philadelphia in early June, Howell began virtually a one-man campaign against the Impost and attacked other centralizing measures as well. Emboldened by his efforts, the Rhode Island legislature postponed considering the Impost in early September, September, leading the Congress to make its pre-emptory demand for Rhode Island's acceptance.

8:35At that point, Howell and Arnold advised the state legislature to reject the impost, which, if granted, would bring about a huge permanent federal machine with ever larger expenditures and taxes. Bureaucrats would multiply, a numerous train of officers concerned in the collection and After Management of the Revenue, the Tribes of Half-Pay Officers, Pensioners and Public Creditors. This program, eloquently warned the two Rhode Island delegates, would indeed complete the Bond of Union, in the favorite phrase of Morris and his supporters, but we will add the yoke of tyranny fixed on all the states and the chains riveted.

9:22They reminded the Rhode Island Legislature that the object of the seven years of revolution has been to preserve the liberties of the country and not to assume into our own hands the power of governing tyrannically. To counter the howl forces, Morris and his group organized a heavy pressure barrage upon Rhode Island. Thus, with only the knowledge of Livingston, Washington and Gouverneur Morris, Robert Morris secretly hired Tom Paine to write articles attacking Rhode Island opposition to the Impost. The Conservatives organized a hysterical campaign of vilification of Howell, which led to his censure by Congress, unanimously, but for Rhode Island, for disclosing important facts about the progress of foreign loans that Congress had deliberately kept secret in order to build up pressure for an Impost.

10:20Just as Congress prepared to send a commission to Rhode Island to put pressure upon it, it received the stunning news at the end of December that Virginia had repealed its ratification of the Impost. The critical plank in the nationalist program, the Federal Impost, had failed. The repeal by the Virginia Legislature occurred so quickly and quietly that such conservative leaders as Edmund Randolph and Governor Benjamin Harrison could not understand what had happened. But with the English invasion of Virginia over, an imposed past as an emergency war measure had now been considered more soberly. As in the case of the public creditors, Morris's arguments had backfired, and Virginia balked at Allowing Federal Tax Officials to Levy a Tax that Could Be Retained Permanently, the Impost Plan Was Dead and the Right-Wing Joggernaut Had Been Stopped Almost at the The Last Minute