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Musings of a Philadelphia Physician who has served the community for six decades

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Robert Morris: Think Big
Robert Morris wasn't born rich, or especially poor, but he was probably illegitimate. He had no recollection of his mother; his father, a tobacco trader in England, emigrated to Maryland and died rather young. It didn't take long for young Robert to become one of the richest men in America.

Robert Morris and America
Robert Morris was an energetic problem-solver. In solving those problems he devised some innovative solutions which have become such axiomatic principles of a republic and its economics, that his name is seldom associated with them.

..Tax and Fiscal Issues in the Constitution
For some founding fathers, monetary issues were all that mattered.

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New topic 2013-02-05 15:24:06 description

Limits of Leverage

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Continental Congress

PHILADELPHIA was the seat of the Continental Congress, hence the nation's capital, from 1774 to 1790, with two periods of abandonment. After the ratification of the Articles of Confederation in 1781, it became the Confederation Congress. When the British had occupied the city in 1777-78, "the Congress" fled to Baltimore, then to York, Pennsylvania, but returned as soon as the British left. The second period of flight was occasioned by the near-mutiny of the Pennsylvania Line for lack of pay in 1783, when Congress fled, in succession, to Annapolis, Trenton, Princeton, and New York, leaving General Washington's loyalties torn between sympathy for his starving troops, and firm loyalty to law and order. The chaotic situation suited the British, who dragged out peace negotiations after the Battle of Yorktown, and came close to winning by stalling what they had been unable to achieve by arms. The finances of the French government were already stretched beyond what was prudent in view of their intention to invade the British Isles. The much more solvent British began to see India as a more attractive colony than America, particularly if the lucrative trade with Jamaica and other Caribbean islands could be maintained without the expenses of the rebellion. Eight years is a long time for any nation to continue a war without generating significant unrest at home.

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The Constitution did not change taxation much; it changed the people who control our borrowing. {bottom quote}
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Revolutionary War

So, although the Revolutionary War was primarily started by British bungling which incited intemperate colonial hotheads into rash behavior, it was going to require a new Constitution and a realistic agreement about everybody's future, to achieve a workable peace. At the beginning of hostilities, only Robert Morris and John Dickinson talked as though they had done some clear long-term thinking, and they both opposed declaring Independence. They were shouted down and forced to go along or be banished. After eight years of fighting however, a great many people could see that Dickinson may have been right to question the dubious unity of thirteen colonies, while a smaller group could even see that Morris might have been right to focus on Constitutional Liberty rather than regime change. Washington, although he was afraid of little else was fearful about his lack of education beyond grammar school; but at least he knew a country which would not feed its soldiers must be doomed to be no country at all. James Madison was scholarly and knew about Constitutions back to Aristotle, although events proved he had offered himself as a constitutional technician without clear personal goals for the product. Alexander Hamilton and Gouverneur Morris were adventurers, quite willing to shrug off the slogans of war and establish a king, that one form of government they were sure was workable. Only Benjamin Franklin among the colonists had stood before five kings, and of course before Vergennes and Wedderburn, where he could observe that all forms of government were in the hands of agents and intermediaries. But Robert Morris was a businessman who probably wanted little more than a workable set of rules, a level playing field, where he had every confidence that he would win, regardless of other rules for the game. Those rules at a minimum must include an equitable means for the government to pay its debts. As the richest delegate, in his own city, he was encouraged to act as host for the convention. As host, he felt constrained to speak only about finance, his main concern anyway. Once this point was established fairly early at the Constitutional Convention, Morris had little else to say, even though he personally had many irons in the fire. Everything else, as politicians say, was for sale. Besides which he was accompanied by his personal lawyer but no relation, Gouverneur Morris, who was by far the most elegant speaker and persuasive advocate in the group.

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Robert Morris

Or perhaps the true flavor of his approach was, One Thing at a Time. Robert Morris was elected U.S. Senator from Pennsylvania in the first Congress under the new Constitution. He was in the center of almost every major debate, member of more than forty committees, often described as running on and off the floor, marshaling votes. The assumption of state Revolutionary War debts was perhaps part of his central drive to establish the full faith and credit of the United States. But the location of the new capital was quite a separate issue. Morris had bought huge acreage across the Delaware from Trenton, in the area now known as Morrisville, and he lobbied hard and long to have the Capital located in Trenton, just as Senator Maclay lobbied to have it settle on his own land near Harrisburg. The New York congressional delegation, led by Alexander Hamilton, fought for a New York location, although Gouverneur Morris attempted to favor his own estate, Morrisania, in the Bronx. And of course it was the Virginia delegation which finally won the prize, on the Potomac opposite George Washington's estate at Mt. Vernon. The location of the capital was important to Robert Morris, but as a realist he then bought up large tracts of land in the District of Columbia. Owning two sites for a national capital at the same time was a major overextension of Morris' debts which helped lead to his final bankruptcy, although he was involved in so many affairs it is hard to say which was most significant. And indeed, his lobbying from debtors prison was the main source of a new bankruptcy law, which released him from prison. When Morris was seated in the Constitutional Convention, a large number of ideas must have been running through his head. But as far as we can tell, he largely held his peace, apparently content with the significant achievement of establishing federal taxation. Robert Morris had more ideas than anybody, and more energy than was good for him.

Over the centuries, the Constitution has been seen as a marvel of concise prose. Events have reversed the position of the political parties many times, but the Constitution does not change, so much as its meaning evolves. In the case of the federal ability to tax, however, almost nothing matches its malleability. The Revolutionary War was begun in large part because of a two-cent tax on tea, which was in fact a lowering of the tax rate. By the time of the Presidency of James Monroe, the federal debt had been extinguished by national prosperity. By the time of the Presidency of Barack Obama, the economy of the whole world, not just this one nation, is threatened by excessive indebtedness. The brilliant insights of Morris and Alexander Hamilton thus leveraged the industrial world into a situation which was unimaginable in the Eighteenth century. We are today nearly forced into economic recession, in order to pay down the national debt which computers concealed from us. If our creditors lose the faith we can reduce the debt, they will raise interest rates beyond the point where even the present debt can be sustained. The Constitution did not change taxation much; it changed the people who control our borrowing. The borrower is on a long leash, but creditors hold the other end of it.

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Tax References in the 1787 Constitution:

Article 1, Section 2: Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.

Section. 7. All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

Section. 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow Money on the credit of the United States; To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States; To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

Section. 9. The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person. The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it. No Bill of Attainder or ex post facto Law shall be passed. No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken. No Tax or Duty shall be laid on Articles exported from any State. No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another. No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

Section. 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility. No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

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