President Abraham Lincoln's Economic Policy After The Civil War

The hostility between the industrious North and agricultural South reached its peak in 1861 when the Civil War began at Fort Sumter in Charleston, South Carolina (Adams 333). During the progression of the war, the amount of money acquired from the selling of bonds and tariffs was not enough to keep the national debt from increasing (Brownlee 61). The year before the war began, the federal defense budget was approximately thirty-seven percent of the overall federal budget of $78 million. In 1865 the federal budget rose to $1.31 billion, and from 1862 to 1865 the federal government spent roughly ninety percent of the budget on defense. The $64.8 million debt from 1860 increased to $2.68 billion in 1865 with a $963 million deficit. In order to lower the debt burden, President Abraham Lincoln established the United States’s first income tax in 1862. …show more content…
In 1864, the income tax increased to five percent on incomes ranging from $600 to $5,000; seven and one-half percent on incomes ranging from $5,001 to $10,000; and ten percent on higher incomes (graduate.norwich.edu/civil- war). Towards the end of Civil War in 1865, approximately ten percent of all Union households were paying a tax on their income and produce about $61 million for tax revenue. After the end of the war revenue from the income tax declined and political opposition increased. Therefore, the income tax was allowed to expire in 1872 (Brownlee 68, 70). Congress once again adopted the use of high tariffs as their primary source of revenue, and the defeated Southerners were once again left to pay these high tariffs to support the