Show STUDENT LIFE only three banks in the thirteen colonies with a combined capital of two million dollars Hamilton laid down two maxims as the foundation of his financial policy which have become classic in national finance First : the creation of a debt must always be accompanied by means for its extinSecond : the govern guishment ment is bound to a literal fulfillment of its contracts The public debt consisted of two parts domestic and foreign The first proved to be the most troublesome The foreign debt was definite as to amount and no question arose as to its payment But the domestic debt was by no means certain either as to amount or creditors It consisted of three branches : Expenses for the continental congress for the war of the Revolution and for maintaining the government A large share of the domestic debt consisted of evidences of various kinds in the hands of creditors which had been obtained at considTwo questions erable discounts arose concerning them : Should the government pay more than the holder paid for them? and if it should pay more ought it not to pay the difference to the original holder? Hamilton contended that the government should pay the full value and to the present holder In the discussion that followed the announcement of these principles Jefferson and Adams differed from Hamilton but his views prevailed Having ascertained at least a close 183 approximation of the public debt and estimated the probable expenditures of the government the next and more difficult task was to inaugurate a system of taxation which would yield a certain and steady income Hamilton was the father of the His American Protective Tariff be summed views on taxation may up in the following principles : America must for a long time depend for means of revenue on import duties the genius of the people would resent excise laws and taxes on real estate and no other method of taxing personal property is feasible than by the imperceptible agency of taxes on consumption In his twelfth letter “To the people of the State of Xew York” in the Federalist he not only lays down these broad principles which lie at the foundation of our system of federal taxation but he outlines with remarkable clearness in what manner the revenue should be colHe makes the question of lected public revenue one of his strongest arguments for Union “Tax laws” he says “have in vain been multiplied by the individual states new methods for enforcing tax collection have been tried and failed and the treasuries have remained empty And unless all the states unite to control all sources of revenue public and private distress will keep pace with each other in gloomy concert and unite in the infatuation of those counsels which led to dis- - i i ! h t 5 t s i i j s 1' j I union” His success as Secretary of the I t a 1 5 |