Title: The High Cost of the U.S. Civil War | Barron's
Headings: The High Cost of War
The High Cost of War
Fort Sumter's shelling ignited a war that made the U.S. government the first to spend over $1 billion in a year.

Content: Before the war, the federal government had relied principally on the tariff for revenue. But the South, dependent on manufactures imported from elsewhere, had always fought for the lowest possible tariff. With the South out of the Union, the tariff reached unprecedented heights, not only producing revenue, but protecting Northern industries that were prospering as never before, thanks to the conflict. The government also began to tax legal documents, gross receipts, liquor, advertising and even income. In August 1861, a graduated income tax, starting at 3% on incomes exceeding $800 a year (a middle-class income at the time) and rising to 5% on those over $10,000, was instituted. In 1864, the upper rate was doubled, to 10%. Altogether, the federal government was able to get 21% of its revenue from taxation. The South, with its less developed and cash-poor agricultural economy, was able to raise only 6% that way. Fully two-thirds of federal government revenue came from bond sales, thus throwing most of the cost of the war onto the future. In 1860, the national debt had amounted to a relatively paltry $64 million.