Seth Kaller, Inc.

“The impost alone then can afford us relief…if established it will authorize such pecuniary negotiations as will greatly relief the national embarrassments, and in a short time fix the Faith and honor of our Country upon a solid foundation.”

Rufus King likely composed these notes in 1786, as crushing war debt, increasing sectional prejudices, and foreign intrigue—worsened by the Confederation Congress’ persistent inability to perform the most basic functions of governance—led many to fear that the experiment in liberty was about to fail. The Confederation Congress sent him and James Monroe to attempt to convince the legislature of Pennsylvania to alter its demand that all other states support both an impost and a supplementary fund tax in return for its support. While in Philadelphia in September 1786, King, an accomplished orator, made what was perhaps his best speech. Late in the nineteenth century, his biographer believed that no trace of the speech’s “nature, scope, or topics” had survived. These notes may be a long-lost outline for that speech.

RUFUS KING. Autograph Document, n.d. (ca. 1786), n.p. Titled in another, likely later, hand, “Funding a Debt Notes of Speech” and “Funding Revolutionary Debt.” Written in four columns per side; on J. Coles Britannia water-marked paper. 2 pp., 12? x 16 in.

Inventory #27902       Price: $20,000

Complete Transcript
The object of this application is the separation of the Imp. & S.F.

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1

The System of Ap. 18.1783 consists of two parts the F. & the S.F.

The first is a departure from the rule of confed: for the defraying fed. Expences-the Proposal waranted by that power wh. Authorizes Cong: to agree & propose alterations.

The 2^d part. is in near conformity with the powers of Cong: and varies only from a pd: Reg: for monies in the proposal that the collection sh^d be federal & not state

2

A statement of the compliances of the States with the system, as well with the first as the second part—and the Reason why one has been acceeded to more generally than the other—viz external and internal Taxes. The one remote and optional with the purchaser the other immediate and inevitable. the Collectors of one confined to y^e merch^ts and of the other applying to every Citizen.

3

Admitting the wisdom of the S.F. what is the probability of its adoption? The same objections lie ag^t it as formerly-if past reasonings have not been able to induce its adoption, little success will attend what may be farther urged. If only 2 states have acceeded in the course of more than 3 yrs, a period including the strongest motives in favor of its adoption, how many more years must elapse before its unanimous approbation.

            Indeed measuring by this scale, the conclusion is inevitable, that reason must reject farther expectation.

            (It may be wise then to examine the merits of this part of the system a little farther)

            Admitting a presumption that by a farther reliance on this part of the system it may eventually be agreed to, yet this Policy must be opposed by the Dangers to wh a violation of public engagemts will expose the Union.

4

But if the sup. F. must be obtained, why delay putting the Imp. In operation until that Event? Will the operation of the impost defeat the Grant of the S.F.? certainly not. Cong: will urge the grant of the S.F. The public creditors will be as numerous, as widely scattered as they now are. What one motive will be weakened? They will all remain in full force, farther they will be increased.

5

But it may be said as the States are bound to pay requisitions, no inconvenience will follow from suspend^g the Imp. until the S.F. are agreed to, especially as the state imposts go to Congress at this time in discharge of the Reqs. The small product of the Reqs, when compared with the agregate am^t of the present state Impts demonstrate the Error of this suggestion. for the last two years the whole Rects in specie under Reqs have been less than the probable am^t of the state Imp^t of Pensylvania.

            The truth is the Imp. at present is appropriated in some states solely to creditors on the proper state Debt, in most to the general object of state & federal Demands. in the first case no aid is thereby yielded to the US. In the last federal demands are postponed to state objects.

            this single remark shows why Reqs are so very unproductive. The taxes for state and fed. purposes are united. The state always has the preference & the deficiencies of the taxes fall upon the US.

6

that the deficiency and uncertainty of Reqs is not ideal [recur?] to the act of Cong. of the 15. of Feb. 86. That the public Engagements are definite and inevitable. recur to the Schedule of y^e Foreign Debt.

            In this Dilemma of the public Honor, Justice, & Integrity, what is the Relief.

            For the purposes of the F Debt only before the expiration of the year 87 it is necessary to provide (see the Req. of this year) The interest on the dom. Debt must likewise by discharged. Will you expect to acquire this sum by Reqs? No, observe the Objects important and equally indispensable which depend on Reqs. The Civil Govmt. The support of your Troops, the Redemption of your fellow Citizens in Captivity.

            the Impost alone then can afford us relief. although its immediate product would be insuffici^t to all the public Demands in actual money, yet if established it will authorize such pecuniary negotiations as will greatly relief the national Embarrassments, and in a short Time fix the Faith and honor of our <2> Country upon a solid foundation

7

the Impost is proposed to operate for 25 yrs or until the N Debt is paid Admit its product to be annually 900,000 Dollars. the For. Debt is estimated at ab^t 9 Mils of Dollars at an int. say of 4½ prCent. if the product of this Imp. is app^d wholly to the for. Debt it will wholly extinguish it in less than 14 years not to suppose better loans

The whole product of it will be afterwards vigorous[ly] applied to the D. Debt

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8

But there may be objections of a less general nature and applying particularly to Pen. ag^t the separation proposed. the condition of the federal Debt in that state is peculiar and they differ in this particular from any other state. Here I presume truly is the difficulty. to illustrate this subject examine the situation of Pen. relative to the Creditors of the Union wh. are her Citizens, relative also to her own proper Creditors, and the Funds of this state as originally [formed?] & since altered.

On the 16 Mar. 85 the Fund. Bill pas this provided for the payment of the full Quota of the int^t on the wh. Fed Debt in the mode [therein?] established to the Citz of Pen. C^rs of the US.

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The Funds were the Taxes levied for the 2^d moiety of the 8 Mils. And the Req. for 2 mil. Of Dols

2

The various Impost passed at divers Times (say three Times)

&3

an annual Tax of 76,945.17. 6 equal to the Quot. of Pen. of the SF.
the appropriation was 123,932t annually for Fed. purposes.
the payment of the int. of the proper state Debt except Depreciation Notes & more funded on the excise
and the arrears of 130 t [W^y?]to the Heirs of the Penn Family.

On 1 Mar. 86 the act for the Relief of Pub. C^rs or commutation act passed
On 8 Mar 86 the act complying wit the Requsit. of 27 Sep. 1785
On the 8. Ap 86, the act being a supplement to the act granting the Impost- & restrains the Operat. of the Im. & S.F. by providing that the US pay one yrs interest on all the Debt of the US in y^e Hands of the Comptroler of Pen. These were the Objects of the Fund. Bill.

Estimating the Debt as stated in Ap. 1783 it is thus
For. Debt          7,885,085
Dom. Debt      34,115,290

                                                42,000,375

Int on F. Debt at 4 or 5 pC.       369,038.6
Int on D Debt at 6 pC.            2,046,917.2

                                                2,415,956

Deduct SF                               1,500,000

Balance for y^e Imp^t                    915,956

Pen. Quota of ye aggregate    £123,932.0.0

Quot. Sup. Funds                       76,945.17.6

Quot. of Imp^t                              46,986. 2.6

 

            The Fund. Bill proposes an anual tax of a sum equal tot the Quotas of the S.F. viz — £76,945.17.6

By a report of the committee of ways & means in Dec^r 1784 preceding the Fund^g Bill the product in common years, or one year with another, of the 20 Yr state Impost is stated at —

£ 83,232.__

Deduct so much thereof as is stated as the Quota of

Pensyl on the 5 pC^t Imp -         46,986.26

and it leaves a balance             36245.17.6

of 36,245.17.6 wh. Pen gains by making a State C^r instead of a General C^r on her Impost.

Historical Background
In the 1780s, the newly independent states ignored the Articles of Confederation’s yearly voluntary requisitions, leaving the national government insolvent. Their conflicting policies and the lack of a circulating currency through much of the nation made a descent into competing sectional confederacies, or even a return to British-style rule, seem possible, if not likely.

The Confederation Congress attempted to remedy this situation in 1781 by passing a tax on imports, but it failed after one state, Rhode Island, refused to cast the necessary vote to pass the bill unanimously. By mid-1786, a new impost bill, with an added Supplementary Fund tax, was headed for a similar fate. It called for a 5 percent tax on all imports and an additional $1.5 million in supplemental funds apportioned based on population to be earmarked for wartime debts. For three years, this bill remained mired in debates. While serving in the General Court of Massachusetts only two years earlier, Rufus King led the opposition against the impost and any increase in federal power, but his short time in the national Congress exposed him to its inability to act. Recognized as an expert in financial and commercial matters, King chaired a committee tasked with assessing the government’s finances and lobbying to pass a new tax bill.

In mid-February 1786, King’s committee submitted resolutions, urging the state legislatures to approve both the impost and the supplementary fund and warning that if the states failed to pass the impost again, Congress would not be “responsible for those fatal Evils which will inevitably flow from a breach of Public faith, pledged by solemn contract, and a violation of those principles of Justice, which are the only solid Basis of the honor and prosperity of Nations.”[1] Six months later, almost all of the states—with the notable exception of New York—had heeded this warning and agreed to the impost, but only five states had agreed to the supplementary fund, because it was deeply unpopular.

In April, King wrote in frustration to his friend Elbridge Gerry and predecessor as representative of Massachusetts in the Confederation Congress, “Resolves have been passed upon Resolves--and letter after letter has been sent to the deficient States, and all without the desired effect. We are without money or the prospect of it in the Federal Treasury; and the States, many of them, care so little about the Union, that they take no measures to keep a representation in Congress.... Where, my dear friend, will the evils consequent to this inattention in the States terminate? The people of the States do not know their dangerous situation; this torpor and inactivity should alarm the Guardians of the People; but indeed the Legislatures seem the least attentive.”[2]

The Pennsylvania legislature tied their approval of the impost to the stipulation that all other states approve both taxes, a highly unlikely outcome. Facing the imminent collapse of the government, the Confederation Congress determined to separate the supplementary tax from the impost, in hopes that the impost alone might pass. In mid-August, Congress appointed King and James Monroe as a committee to travel to Philadelphia to convince the Pennsylvania legislature to alter its stance.

An inscription in another hand at the top of the first page indicates that King drafted these notes in preparation for a speech. King, an impressive orator, was slated to give a speech to the Pennsylvania legislature during his visit with Monroe. He typically studied carefully, consulted authorities on the subject, and took copious notes. He then reduced them to a short brief or list of points he wanted to make and spoke from those brief statements. Because of the gravity of the situation, King prepared “with great care and diligence” and, for the first time in his life, wrote out his entire speech and memorized it. It did not go well. He soon struggled to remember what he had memorized and in frustration turned to Monroe to continue the argument. After Monroe made a “calm, sensible, logical address,” King discarded his attempt to recite his memorized speech and delivered a speech “which he himself has often said was possibly the best and most effective he ever made.” According to his grandson and biographer, “no trace remains of the nature, scope, or topics of the speech.”[3] This manuscript may be that missing trace.

At the top of the first page, King notes that this memo’s “object…is the separation of the imp(ost). & S(upplementary). F(und).” Then, in eight numbered sections, he spells out arguments regarding the two taxes, and their effects on the national revenue and debt. For this task, he calculates foreign and domestic debt, interest, and their repayment under the proposed tax plans, noting that the impost’s adoption will relieve the “national embarrassments, and in a short time fix the Faith and honor of our Country upon a solid foundation.” The larger part of the second page is devoted “particularly to Pen(nsylvania)” and provides calculations based on their debts, funding bills, and quotas.

King and Monroe ultimately failed to convince the legislature to alter their stance; the Pennsylvania legislators resolved to postpone action until their next session. Their lack of success in Philadelphia became moot when New York also refused to approve the taxes.

In King’s home state of Massachusetts, one of the two largest states to agree to the supplementary tax, that tax and a direct tax passed by the state in March 1786 contributed to the outbreak of Shays’ Rebellion in the summer of 1786.

The prospect of national collapse led to the Annapolis convention, and then the Constitutional Convention. In 1787, at age 32, King was one of the youngest of the delegates in Philadelphia, and one of the Constitutional Convention’s most capable orators. He came unconvinced that major changes should be made in the Articles of Confederation but underwent a startling change during the debates. With Madison, he became a leading figure in the nationalist caucus.

Rufus King (1755-1827) was born in Massachusetts (now Maine) as the son of a prosperous merchant and graduated from Harvard College in 1777. He began reading law but volunteered for militia duty in 1778. He served as an aide to General John Sullivan with the rank of major. He returned to his legal study, gained admission to the bar in 1780, and began a practice in Newburyport, Massachusetts. From 1783 to 1785, he served in the Massachusetts General Court, and Massachusetts sent him to the Confederation Congress from 1784 to 1787. He was a delegate to the Constitutional Convention in 1787 and served on the Committee of Style and Arrangement with Alexander Hamilton in preparing a draft of the United States Constitution, which King signed. At Hamilton’s suggestion, King moved to New York City and won election to the New York State Assembly in 1789. He was soon elected to the U.S. Senate, where he served from 1789 to 1796 and later from 1813 to 1825. In 1796, President George Washington appointed King as U.S. Minister to the United Kingdom, a position he held from 1796 to 1803 and again from 1825 to 1826. Though he had been a slaveholder as a young man, King became a prominent opponent of slavery.

Condition: Creasing from old folds; scattered ink smudging; uneven offsetting on first page.