Confederation by duties on imports, which then was not permissible, was blocked by the refusal of the State of Rhode Island to concur in it, the Legislature of that State unanimously rejecting the measure for three reasons—one of which was that it would bear hardest on the few commercial States, particularly Rhode Island, which in virtue of their relations with foreign commerce monopolize imports, and lightest on the agricultural States, that directly imported little or nothing. Congress appointed Alexander Hamilton to draft a reply to Rhode Island, and in his answer he relied mainly on what he regarded as an incontrovertible fact, that duties on imports would not prove a charge on an importing State, but on the final consumers of imports, wherever they may be located.
If the theory and assumption so confidently and generally asserted are to be accepted as correct, that the foreigner pays the protective taxes which a country levies on its imports, and that they do not fall upon or are not paid by its people who consume them, then it must follow that to the extent that a country taxes its imports it lives at the expense of foreign nations; and that, as Great Britain is the country with which the United States has the largest foreign trade, it must pay the largest share of the customs taxes of the United States, or a good share of its annual revenue from all sources. Attention is further asked to the exact practical application of this theory. Thus, the United States in 1895 imported $36,438,196 worth of woolen manufactures, on which it assessed and collected duties (taxes) to the amount of $20,698,264, or 56.80 per cent of the value of such imports. Certainly this was a pretty heavy tax on foreign nations in respect to the sales of only one class of these commodities; but it represented but a tithe of what the tariff taxes of the United States, if paid by foreigners, cost them. Thus they had to sell their woolens to the people of the latter country at less than half their value in order to compensate for the 56.8 per cent tax. But a nation engaged in foreign trade can not as a rule have two prices for the product of its industries; or one price for what it sells at home and another and different price for what it sells to foreigners. So the fifty-six per cent deducted from the cost of the woolens sold by foreigners to the United States necessarily had to be deducted not only from so much of their product consumed at home, but also from what they sent for sale to all foreign countries. A further practical application of this theory is worthy of consideration. As Great Britain imposes no protective duties or taxes on its imports, it evidently can not collect anything from other nations by the system of taxation under consideration. On the other hand, the aggregate value of its exports sent to foreign nations during the year 1892 was $1,135,000,000, and if these several nations taxed this value at the average