Chapter

Revenue or Reciprocity?

Douglas A. Irwin

in Founding Choices

Published by University of Chicago Press

Published in print January 2011 | ISBN: 9780226384740
Published online February 2013 | e-ISBN: 9780226384764 | DOI: http://dx.doi.org/10.7208/chicago/9780226384764.003.0004
Revenue or Reciprocity?

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This chapter studies import duties as the key method by which the new federal government raised revenue to fund its operations and pay the national debt. The national government had no authority over trade policy so it could not retaliate against other countries for discriminating against U.S. exports. According to this chapter, Hamilton was aware that the American public would resist many domestic excise taxes, so he had to rely on import taxes as the principal revenue-raising device for the government. By funding the debt, Hamilton improved the country's creditworthiness; by nationalizing the debt, Hamilton allowed states to reduce the burden of their local taxes, thus increasing support for the Constitution. Keenly aware of the country's financial fragility, Hamilton desperately wanted the United States to remain neutral in any European conflict.

Keywords: import duties; federal government; revenue; national debt; Hamilton; funding; U.S. exports

Chapter.  14654 words.  Illustrated.

Subjects: Economic History

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