Secretary of the Treasury Alexander Hamilton Gathers Information for His Report to Congress on America’s First Revenue Acts

The first such analysis of the functioning of the U.S. first revenue system, prepared just months after taking his role as America’s first Secretary of the Treasury.

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In an increasingly uncommon letter as Treasury Secretary, he will place complete confidence in his Collectors, writing "I shall take it for granted that the information I may receive on this head will be such as I may place absolute reliance upon."  He cites the "advancement of the public service" On July...

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Secretary of the Treasury Alexander Hamilton Gathers Information for His Report to Congress on America’s First Revenue Acts

The first such analysis of the functioning of the U.S. first revenue system, prepared just months after taking his role as America’s first Secretary of the Treasury.

In an increasingly uncommon letter as Treasury Secretary, he will place complete confidence in his Collectors, writing "I shall take it for granted that the information I may receive on this head will be such as I may place absolute reliance upon."  He cites the "advancement of the public service"
On July 4, 1789, Congress passed the first of the Revenue Acts, referred to as Hamilton’s Tarrif Act, which states at the start its intent: ”Whereas it is necessary for that support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures, that duties be laid on goods, wares and merchandise…”  On July 31, Congress passed “An Act to Regulate the Collection of Duties…”  This was the institution of the revenue collection system, then the main form of revenue generation in a country needing badly to pay back war debts and establish itself.  Section 29 of this act set the pay and further compensation to be given out to the Treasury Secretary’s men on the ground: the collectors, surveyors and naval officers. These would be the men who would track the shipments and monitor the goods and revenues at the ports themselves.  Essentially, the collectors would be paid a percent of the fees brought in at their ports, and revenues paid in to the central Treasury. 
 
In practice, this allowed for a certain expenditure for these men to maintain their ports and operations. However, these expenses were uncertain and the amount allowed for one port might be deficient for another, since the costs of living and the amount of imports varied greatly up and down the seaboard.   
 
In September 1789, the same month that Hamilton took over as Secretary of the Treasury, the House of Representatives, considering “an adequate provision for the support of the public credit, as a matter of high importance to the national honor and prosperity,” had directed Hamilton to prepare a report on the state of the public credit. During the succeeding months Hamilton obtained extensive information on the current financial situation of the United States, but the final report went far beyond the original intentions of Congress. Drawing heavily upon precedent and writings on public finance, Hamilton included a sweeping and controversial plan for the reestablishment of public credit by providing for funding the public debt through an orderly system of collecting duties on imports and tonnage—implemented by duties on imported wines, spirits, coffee, and tea, and on domestically distilled spirits. The plan also included federal assumption of debts contracted by the states during the Revolution. Hamilton’s “Report Relative to a Provision for the Support of Public Credit” was presented to Congress on January 14, 1790.  This included a list of the expenses of the various departments, including Treasury. 
 
Hamilton then turned to a directive from Congress, which instructed him on January 19, “That the Secretary of the Treasury be directed to report to this House such information as he may have obtained respecting any difficulties which may have occurred in the execution of the several laws for collecting duties on goods, wares, and merchandises, and on tonnage, and for regulating the coasting trade, together with his opinion thereupon.”
 
The next day, Hamilton wrote a circular to his Collectors, seeking a Treasury-wide accounting of the variable expenditures required to run his revenue-collecting operation.
 
Letter signed, on Treasury Department letterhead, New York, January 20, 1790.  “Sir, Motives friendly to the interests of the officers of the customs, as well as to the advancement of the public service, induce me to desire that I may be as soon as possible furnished with a statement of the amount of the emoluments, which have accrued to them respectively under the existing regulations, up to the first of January.  As this letter will only be addressed to the collector of each District it will be proper that a communication should be made to the Naval Officer and Surveyor.  I shall take it for granted that the information I may receive on this head will be such as I may place absolute reliance upon.  A Hamilton"
 
He got back in return the responses from his collectors, with some complaining about the inadequate amount of their emoluments.  
 
On April 23, 1790, Hamilton gave his formal report to Congress, which included what he learned.  “The Secretary considering it as an essential rule, that emoluments of office should not be extended by construction or inference beyond the letter of the provision, lest a door should be opened to improper exactions; has instructed the Officers of the Customs to govern themselves by a literal interpretation of the several clauses of this section; the consequence of which, however, is, that equal services are unequally recompensed.”

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