Institutional Reality in the Age of Slavery: Taxation and Democracy in the States

On August 13, 1782, Alexander Hamilton complained to Robert Morris about the deplorable condition of politics in the state of New York, and especially the condition of taxation. Morris had appointed Hamilton as receiver of continental taxes for New York, meaning that Hamilton was in charge of collecting New York's share of the "requisitions" of Congress. Under Article 8 of the Articles of Confederation, Congress could raise the tax revenue it needed for the ongoing Revolutionary War only by making "requisitions" on the states—that is, by asking each state to raise a specified sum. Like other states, New York was falling short; four years later, an aggressive tax levy in Massachusetts (to pay requisitions and fund the state debt) would provoke the armed insurrection known as Shays's Rebellion.¹ The decentralized regime that Congress had established under the Articles of Confederation made the national treasury depend on the productivity of the state tax systems. Ironically, this very decentralization invited national officials like Hamilton to tackle the problem of tax reform within the states.

Hamilton's August 13 letter to Morris is most famous for its jaundiced portraits of New York politicians. The popular governor George Clinton—later Hamilton's nemesis in the struggle over the ratification of the U.S. Constitution—was "a man of integrity and passes with his particular friends for a statesman," though "his passions are much warmer, than his judgment is enlightened." Hamilton was more critical of John Lansing and Abraham Yates Jr., who later would join him as delegates to the Philadelphia convention in 1787 and then join Clinton as leading Antifederalists. Hamilton's main grievance against Lansing and Yates was that they had exacerbated the tax problem. Lansing was a "good young fellow and a good practitioner of the law; but his friends mistook his talents when they made him a statesman": "He thinks two pence an ounce upon plate a monstrous tax." Yates, meanwhile, was a man whose "ignorance and perverseness are only surpassed by his pertinacity and conceit." With a demagoguery so damaging to the revolutionary cause that he "deserves to be pensioned by the British Ministry," Yates "assures [the people] they are too poor to pay taxes." Hamilton's letter also contained a famously elitist analysis of the problem of government in New York. "Here we find the general disease which infects all our constitutions, an excess of popularity," he complained. "The inquiry constantly is what will please not what will benefit the people. In such a government there can be nothing but temporary expedient, fickleness and folly."²

Hamilton applied the same critique of excessive democracy to the New York tax system. This system, Hamilton thought, was constantly undermined by its inappropriate reliance on democratic politics. The problem began with the fixing of county tax quotas by the elected state legislature: "The members cabal and intrigue to throw the burthen off their respective constituents." It continued with the fixing of local tax quotas by the elected county supervisors, who "play over the same game, which was played in the Legislature." Matters deteriorated further at the local level. Elected local assessors allowed their "personal friendships, or dislikes" to determine the burdens they imposed on individual taxpayers and also granted "some popular characters [the opportunity] of skreening themselves by intriguing with the assessors." Then, there was the collection process, managed lackadaisically by county supervisors who had "little disposition to risk the displeasure of those who elect" by demanding payment. Hamilton deplored this endless political jockeying as an invitation to favoritism, incompetence, and corruption. A month earlier, he had gone even further, arguing in a newspaper essay that New York could levy equitable taxes only by abolishing local assessments altogether:

Wherever a discretionary power is lodged in any set of men over the property of their neighbours, they will abuse it. Their passions, prejudices, partialities, dislikes, will have the principal lead in measuring the abilities of those over whom their power extends; and assessors will ever be a set of petty tyrants, too unskillful, if honest, to be possessed of...