"This freedom of interior commerce ... is perhaps one of the principle causes of the prosperity of G.B.; every country being necessarily the best and most extensive mkt for the greater part of the productions of its own industry."
The new U.S. Constitution did not automatically enforce itself. In the 1790's the Federalists under Hamilton took control, and began levying excise taxes. Things came to a boil in 1794 when farmers of western Pennsylvania rebelled against a tax on their corn (maize, that is), which they concentrated in whiskey to cut down on transportation costs. Hamilton, who had Napoleonic ambitions, led Federal troops to put down this "whisky rebellion" against his revenuers.
The voters thought him either ridiculous or dangerous, and when they found him dominating the subsequent cabinet of John Adams, of which he was not even a member, and leading the country into the depression of 1798, they retired his party and installed Jefferson, whose Virginia dynasty shaped the nation for the next 36 years. (President J.Q. Adams, 1825-29, had left the Federalists in 1807, supported Madison for President, and been Monroe's Sec. of State. Andrew Jackson, 1829-37, had allied with French Jean Lafitte to fight the redcoats at New Orleans, and led Jefferson's old Party against the Whigs.)
These Virginians were heavily imbued with Physiocracy. Jefferson, Madison and Monroe had all represented the colonies or the U.S.A. in Paris, as had their friend Franklin, where they hobnobbed with philosophers and picked up their ideas (Bigelow IV:195; Sparks X:300, 345; Van Doren, p.372; Philip Foner pp.15, 24-39). They were pro-French, even as France shifted from monarchy to Directory to Empire. It was Monroe who had led the fight for the Commerce Clause, freeing internal trade from excise taxes (Norton, p. 51); Jefferson who wrote the Northwest Ordinance and bought Louisiana, and brought the Physiocrats Gallatin and DuPont into his circle, and welcomed Tom Paine back from France, and extended easy credit to small buyers of western lands; and it was Madison, with all his faults, who masterminded the Constitution, and then, in the War of 1812, used the Federal power to tax property, a power he had so carefully circumscribed (Medina). They got the new nation off to a flying start.
Appendix III: Excise taxes in the C.S.A. and Cuba
Jefferson Davis had to finance secession with excise taxes. The Confederate states, even though fighting to survive, stood on their states' rights against their own C.S.A. government, and bucked an attempted C.S.A. property tax (Eric Foner, p. 15). So Davis put a 10% tax on all farm production, paid in kind - a crushing burden on marginal farmers. Winn Parish, LA, for example, home of Huey Long, in 1863 petitioned General Grant to save them from this "oppression" (Brinkley, p.11; Williams, p.xii). The C.S.A. repudiated its bonds and currency, and lost the war catastrophically.
In Cuba, Spain imposed high excise taxes on farming and mining, and tariffs favoring Spain. Spain incurred debts on the security of these revenues from Cuba. Exiled rebel Josà © Martà was in New York when Henry George ran for Mayor, and we may assume absorbed some of the spirit. He went home to lead a revolt, which he lost in 1895, but which led to Spain's disastrous war with the U.S. and the loss of Cuba, Puerto Rico, and The Philippines. In the peace treaty, the U.S. repudiated these "odious" debts - a precedent to remember now that we are at once the world's leading collection agency (Nevins and Commager, pp.362, 366) and its leading debtor (a curious conflict of interest lying in wait to trap us ere long).
As the U.S.A. credit rating slips, and our tax systems come to resemble more and more those of France under its Ancien Regime, and Spain under Philip II, it is time to ask, "Are we next?". Past success is no guarantee against future disaster, with learned fools preaching false doctrines to credulous fools at the helm.
[1] Technically the GA tax was on gross business income. Most economists see that as functionally a sales tax.
[4] I have not sought nor stumbled on direct evidence or study of the matter, but trust that some scholar has done or will do so.
[5] The Clergy and the Hereditary Aristocracy, respectively.
[6] Ironically, Marie's brother, Joseph II of Austria, embraced Turgot's reforms as enthusiastically as he did the music of Mozart, and would have led Austria into primacy in Europe had he not, like Mozart, died young.
[7] Malcolm Hill (1999-b) contrasts Smith unfavorably with Turgot. Of course, Turgot had the advantage of independent wealth, while Smith had to placate wealthy benefactors.
[8] These included a tax on tea imports, now revived in memory by the American Astroturf "Tea Party" movement. In fact, the original "Boston Tea Party" was more a protest against the monopoly of the British East India Company than against Townsend's minimal tax.
[9] "Relatively" is a necessary word. Godwin the idealist 20 years later deplored the growth of taxes on "consumption" (read retail trade). The glass that Smith saw as half full, Godwin saw as half empty.
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