“To regulate the collection of duties”

As the U.S. House of Representatives discussed its first significant law, establishing import tariffs, the members took up two closely related challenges:

• how to actually collect those duties.
• a “tonnage” tax on ships entering American harbors.

On 21 April the House took up the latter question as a committee of the whole with James Madison proposing “a duty of six cents per ton on all vessels built in the United States” or owned by U.S. citizens as “necessary for the support of light-houses, hospitals for disabled seamen, and other establishments incident to commerce.”

That was a pretty low tax, but the legislators went on to consider vessels owned or partly owned by foreigners, whether those foreigners were from countries allied to the U.S. of A., and so on. These ships were to be charged five to eight times more. A bill was proposed on 7 May and approved on 29 May.

As to collecting the new taxes, the House as a committee started discussing that on 18 May. Members noted that the federal government’s approach had to be equal in all states. The next day, Elias Boudinot proposed establishing executive branch departments including a “Secretary of Finance,” soon changed to a Treasury. By British precedent, the collection of duties would fall under that department.

On 27 May, Rep. Thomas Fitzsimons of Pennsylvania presented his committee’s proposal “to regulate the collection of duties.” The House got down to details on 2 June, listing U.S. ports of entry (skipping Narragansett Bay since Rhode Island wasn’t yet participating in the federal government). A week later, the House agreed that the government should appoint a collector, naval officer, and surveyor for the nine biggest ports.

On 29 June Rep. Benjamin Goodhue (1748–1814, shown here) of Massachusetts reported that the committee had “prepared an entire new bill” to incorporate all the proposed changes.

On the first day of July, the House voted 31–19 in favor of the tonnage bill. The Senate concurred on 7 July. The House approved the bill on collecting duties on 14 July, the Senate two weeks later. Those bills went to President George Washington, who signed them on 20 and 31 July, respectively.

Disregarding the initial law that established oaths of office, those were the second and fourth laws of the new U.S. government. (The third established a Department of Foreign Affairs.)

Thus, the collection of revenue from goods imported into the U.S. of A. was the first substantive action of the first Congress, the first meaningful law signed by the first President. The U.S. government has been collecting tariffs on imported goods for over two centuries. There’s a system in place.

The current President appears ignorant of that history, ordering that three Cabinet officers “investigate the feasibility of establishing and recommend the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.”

Of course, that current President has long shown ignorance of how tariffs work. As the New York Times reported, “Trade experts said that, despite the name ‘external,’ the bulk of tariff revenue would continue to be collected from U.S. businesses that import products.” The members of the first U.S. Congress, having gone through a war with its roots in a conflict over tariffs, understood how those taxes worked.