Sketch of a Plan of American Finance

George Washington

October 1789

Preliminary. Consider all requisitions heretofore made by Congress on the states, as if they had never been made. This gets rid of the adjustment of quotas for the past. The contributions in money, provisions &ca. made by each State to the Union, become a debt from the Union to the respective State, deduct from this all monies advanced to that State by the Union; the balance will constitute the debt of the Union to the State. Let that debt bear an interest of 6 pr Ct. With that interest each state may pay annually the interest of the debts they owe, and the annual expenses of their Government. They will then have no occasion for Taxes and consequently may abandon all the subjects of taxation to the Union.

I. Let the Union lay an Impost of 5 pr Cent on Importations. Suppose it worth from 1 1/2 to 2 millions of Dollars. Open a loan in Europe sufficient to pay the foreign debts, and to support the government a year or two. Suppose this to be 12 millions of dollars at 5 pr Cent interest. 600,000 Dollars a year.

Appropriate this Impost

1. to pay the interest of the New loan, suppose about 600,000 Dolrs a year

2. the surplus to form an aggregate fund.

II. Lay a direct tax of 1/20 of all produce, payable in kind, but commutable for half its worth in money. Should this produce more than the State’s quota, let the Surplus belong to the State. The State Legislature may then be entrusted with fixing the objects on which it is to fall, their value, the places of delivery, Sale of the produce, conduct of the receivers &ca:

Appropriate it

1. to the Military and Naval establishments

2. to pay the interest of the debts of the Union to the respective States.

3. the surplus to form an Aggregate fund

III. Postages and a Tax on Civil Process may form a third fund.

Appropriate it

1. to the Civil list.

2. the Surplus to the aggregate fund.

The aggregate fund thus formed of the residuary parts of all Taxes.

Appropriate it

1. to pay the interest of the Domestic Debt

2. to contingencies.

3. to be applied as a sinking fund to pay off the capitol of the general debts of the Union. Fix such an order of payment as will retire the sinking the whole Capitol in time. But leave a portion of the sinking fund free, to be employed by the Executive at their discretion in buying up the general debts at their market price.

 

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