Federalist 12 Summary Written by Donald Mellon
The Federalist Papers No 12 Summary: Hamilton
November 27, 1787
Having demonstrated the positive effects of a Union upon the commercial prosperity of the States in the last paper, this one shows that the Union also favors the enhancement of revenue for the United Government. The ability to pay taxes is proportional to the quantity of money in circulation and commerce which contributes to this “must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury”. Further, from experience it is known that for the states acting independently “that it is impracticable to raise any very considerable sums by direct taxation” because state governments prefer to remain popular and there is a scarcity of money to be had. At that time the only taxes collected were excise taxes on products made within the borders and duties on imported goods which were considered consumption taxes. Personal property was considered too difficult to find and tax.
Duties on imported goods would be very difficult for individual States to administer given the ease with which goods could be smuggled into the State to avoid the duty. It would take an army to patrol the borders and rivers just as it does in France which maintains an army of twenty thousand necessary to protect their borders from goods escaping fiscal regulations. However, if there is just one Government then there is just one side to guard, the Atlantic Coast. Vessels arriving from foreign countries would have to choose great hazard to avoid bringing goods ashore at our ports. Not only could a single Government more easily collect duties, it could also collect higher duties. The individual States collect a duty of about three percent while France about fifteen percent and even more in Britain.
“What will be the consequences if we are not able to avail ourselves of the resource in question in its full extent? A nation cannot long exist without revenue. Destitute of this essential support, it must resign its independence and sink into the degraded condition of a province.” This would happen of course if the States were not united. Hamilton does not even consider a country going into debt in this paper but it seems apparent that if he believes a country would lose its independence if revenue was inadequate then similar or worse would befall nations in debt such as ours.
