Funding the American Civil War Part 1: Study Questions & Resources

Study Questions

According to Goldin and Lewis what did the Civil War cost in 1860 dollars and what percentage of GDP was this?

Including indirect costs, approximately how much did the war cost in 2012 dollars relative to GDP?

What three ways are generally used to finance a war?

On what date did Abraham Lincoln take office?

How many states seceded before March 4, 1861?

What was the national debt and how much money did the treasury have in reserve when Lincoln took office?

What was the main way the federal government generated revenue before the Civil War?

How would secession hurt tariff revenues?

How high did the Morrill Tariff raise rates?

According to tariff historian Frank Taussig what was the purpose of the Morrill Tariff?

Tariffs will finance what percentage of Civil War finance?

Who was Lincoln’s Secretary of the Treasury from 1861 – 1864?

What were some facets of a “Hard Money” economic policy?

When was Fort Sumter attacked by the Confederacy?

What was the Union’s response to the attack on Fort Sumter?

How many more Southern states seceded after the fall of Fort Sumter?

Before July 1861 what was Chase’s only revenue raising option?

In July 1861 what was Chase’s estimate of the war’s cost?

How did he propose to finance it?

How much did the National Loan raise the national debt?

Demand notes could be redeemed for gold, true of false

Between the adoption of the U.S. Constitution and the Civil War did the federal government issue paper currency?

What problem did the over printing of un-backed Continental dollars cause?

How did the U.S. Constitution limit the printing of federal paper currency?

Did the U.S. Constitution allow the federal government the privilege of printing paper currency?

Who was allowed to print paper currency?

Why did the federal government print Treasury Notes and what were they used for?

How did the federal government avoid a constitutional challenge to the usage of Treasury Notes?

What were Treasury Notes called during the Civil War and what were they used for?

How much money was the federal government prepared to borrow through interest bearing treasury bonds?

What were seven thirties?

Why were banks skeptical of purchasing federal bonds and how did Chase threaten them?

How much did the banks agree to lend the federal government and what were the terms?

In order to pay the interest on the federal bonds Chase and Thaddeus Stevens implied taxes would have to be raised, true or false?

What is an indirect tax and what does the U.S. Constitution identify them?

In order to raise revenue the U.S. government raised tariffs twice in 1861, true or false?

What is a direct tax and how does the U.S. Constitution regulate them?

What were some problems associated with a national land tax?

What did Schuyler Colfax U.S. Representative of Indiana say about a national land tax?

Why did Thaddeus Stevens say a national land tax was necessary?

Review Questions and Resources

What criticism did Representative Roscoe Conkling of New York have of the national land tax?

What kind of tax did Union lawmakers feel was more just than a national land tax?

What was Thomas Jefferson’s opinion of an income tax?

Why did the U.S. Constitution make an income tax very difficult to be instituted?

How did Union lawmakers justify an income tax philosophically and constitutionally?

Why did some senators oppose imprisonment penalties for refusing to pay the income tax?

What were the provisions of the 1861 income tax agreed to by the House and Senate and how does the exemption relate to today’s money?

What three provisions did the Revenue Act of 1861 contain?

What events led to the weakening of the bond market in the fall of 1861?

What was the Trent affair and how did it affect the bond market?

What did the weakened bond market and lending gold backed money to the federal government cause the banks to do at the end December 1861?

Did the federal government do the same?

What was the federal debt at the end of 1861?

Further Resources

Robert B. Ekelund, Jr. and Mark Thornton. Tariffs, Blockades, and Inflation: The Economics of the Civil War

Claudia Goldin and Frank Lewis. The Economic Costs of the American Civil War: Estimates and Implications

Frank Tausig. The Tariff History of the United States

John G. Nicolay and John Hay. Abraham Lincoln: A History, Volume VI.

Allan Nevins. The War for Union: The Improved War, 181-182, Volume 1

Steven R. Weisman, The Great Tax Wars