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Institutional Reality in the Age of Slavery: Taxation and Democracy in the States

  • Robin L. Einhorn (a1)

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On August 13, 1782, Alexander Hamilton complained to Robert Morris about the deplorable condition of politics in the state of New York, and especially the condition of taxation. Morris had appointed Hamilton as receiver of continental taxes for New York, meaning that Hamilton was in charge of collecting New York's share of the “requisitions” of Congress. Under Article 8 of the Articles of Confederation, Congress could raise the tax revenue it needed for the ongoing Revolutionary War only by making “requisitions” on the states—that is, by asking each state to raise a specified sum. Like other states, New York was falling short; four years later, an aggressive tax levy in Massachusetts (to pay requisitions and fund the state debt) would provoke the armed insurrection known as Shays's Rebellion. The decentralized regime that Congress had established under the Articles of Confederation made the national treasury depend on the productivity of the state tax systems. Ironically, this very decentralization invited national officials like Hamilton to tackle the problem of tax reform within the states.

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1. Hamilton, Alexander to Morris, Robert, 13 08 1782, in The Papers of Alexander Hamilton, ed. Syrett, Harold C., 27 vols. (New York, 19611987), 3:132143. On the requisition system, see Ferguson, E. James, The Power of the Purse: A History of American Public Finance, 1776–1790 (Chapel Hill, 1962), and Brown, Roger H., Redeeming the Republic: Federalists, Taxation, and the Origins of the Constitution (Baltimore, 1993). The best treatment of the financial dimension of Shays's Rebellion can be found in Hall, Van Beck, Politics Without Parties: Massachusetts, 1780–1791 (Pittsburgh, 1972), and Richards, Leonard L., Shays's Rebellion: The American Revolution's Final Battle (Philadelphia, 2002). See also Edling, Max, A Revolution in Favor of Government: Origins of the U.S. Constitution and the Making of the American State (New York, 2003). For more detail about many of the issues in this essay, see Einhorn, Robin L., American Taxation, American Slavery (Chicago, forthcoming, 2006).

2. Hamilton, to Morris, , 13 08 1782, Hamilton Papers, 3:135, 137–40.

3. Ibid., 3:135–37; Alexander Hamilton,“The Continentalist No. VI,” ibid., 3:104.

4. Countryman, Edward, A People in Revolution: The American Revolution and Political Society in New York, 1760–1790 (New York, 1981), 255257; Brown, Redeeming the Republic, 134–37.

5. Cooley, Thomas M., A Treatise on the Law of Taxation (Chicago, 1876), iv. Cooley's Treatise is a catalogue of the legislative and administrative lapses that lawyers could exploit to help wealthy litigants (including corporations) challenge tax laws and tax levies that state legislatures and local governments had imposed. Whether or not Cooley was an elitist has been debated. For his egalitarian credentials, see Jones, Alan, “Thomas M. Cooley and ‘Laissez-Faire Constitutionalism’: A Reconsideration,” Journal of American History 53 (03 1967): 751771, and Carrington, Paul D., “The Constitutional Law Scholarship of Thomas McIntyre Cooley,” American Journal of Legal History 41 (07 1997): 368399. Less laudatory is Paludan, Philip S., “Law and the Failure of Reconstruction: The Case of Thomas Cooley,” Journal of the History of Ideas 33 (10 1972): 597614. Most Cooley scholarship concentrates on his Treatise on the Constitutional Limitations Which Rest Upon the Legislatures of the States of the American Union (Boston, 1868). The scholar who takes his Taxation most seriously is very critical: Jacobs, Clyde E., Law Writers and the Courts: The Influence of Thomas M. Cooley, Christopher G. Tiedeman, and John F. Dillon upon American Constitutional Law (Berkeley, 1954). Jacobs stresses Cooley's elaboration of the “public purpose doctrine,” which empowered judges to declare a tax unconstitutional if it had not been levied for what the judges regarded as a “public purpose.” Monkkonen, Eric, The Local State: Public Money and American Cities (Stanford, 1995), presents evidence that tends to cast Cooley's “public purpose doctrine” in a more favorable light. Monkkonen explores situations in which such judicial interventions could have promoted majoritarian goals. Even so, the “public purpose doctrine” was only part of the antidemocratic agenda that Cooley set forth in his Treatise on the Law of Taxation. For a suggestive discussion, see Horwitz, Morton J., The Transformation of American Law, 1870–1940: The Crisis of Legal Orthodoxy (New York, 1992), 2027.

6. Brown, Richard H., “The Missouri Crisis, Slavery, and the Politics of Jacksonianism,” South Atlantic Quarterly 65 (Winter 1966): 69.

7. Chernow, Ron, Alexander Hamilton (New York, 2004); Lynd, Staughton, Class Conflict, Slavery, and the United States Constitution: Ten Essays (Indianapolis, 1967), esp. chap. 10; Rodgers, Daniel T., “Republicanism: The Career of a Concept,” Journal of American History 79 (06 1992): 1138.

8. Morgan, Edmund S., “Slavery and Freedom: The American Paradox,” Journal of American History 59 (06 1972): 28. Morgan compared the Virginians primarily with British elites, leaving the comparison with northern elites mostly implicit. Ellis, Joseph J., Founding Brothers: The Revolutionary Generation (New York, 2000), 1415, is absolutely right to contend that “historians have essentially been fighting the same battles, over and over again, that the members of the revolutionary generation fought originally among themselves.” The stunning part is that the Jeffersonian bias in political history has barely been dented by what has been a massive reorientation of American historical writing to emphasize the social, cultural, and economic realities of slavery. As Ellis's comment suggests, one problem is a historiographical logic that poses a false choice: historians too often assume that a criticism of Jefferson requires an embrace of Hamilton—or John Adams. The solution for historians is not to pick the right founder to admire, but to reject this cult of personality altogether. For Jefferson's protean legacy in politics and popular culture, see Peterson, Merrill D., The Jefferson Image in the American Mind (New York, 1960). For evidence that the Virginia elites actually felt quite threatened in the revolutionary era, see Holton, Woody, Forced Founders: Indians, Debtors, Slaves, and the Making of the American Revolution in Virginia (Chapel Hill, 1999).

9. A partial exception to this generalization is recent scholarship on the history of the suffrage. See, in particular, Keyssar, Alexander, The Right to Vote: The Contested History of Democracy in the United States (New York, 2000).

10. On local government in the South, see especially Wooster, Ralph A., The People in Power: Courthouse and Statehouse in the Lower South, 1850–1860 (Knoxville, 1969); Wooster, Ralph A., Politicians, Planters, and Plain Folk: Courthouse and Statehouse in the Upper South, 1850–1860 (Knoxville, 1975). Changes in the structure of local government can also be traced in the state constitutions, which are available in Ben. Poore, Perley, ed., The Federal and State Constitutions, 2d ed., 2 vols. (Washington, D.C., 1878); Thorpe, Francis Newton, ed., The Federal and State Constitutions, 7 vols. (Washington, D.C., 1909); and John Wallis, ed., The NBER/Maryland State Constitutions Project, accessible via http://www.nber.org/data/ (“State Constitutions Project”).

11. The term “flat-rate tax” in this essay is unrelated to current proposals for a “flat” federal income tax. Flat-rate taxes were taxes that were enumerated regardless of the value of the item being taxed—for example, $1 per acre of land, $2 per gold watch, $10 per bowling alley. Taxes on slaves usually were flat-rate taxes, typically described as being levied “by the poll ” and described in the federal Constitution as “capitations.” Current proposals for a “flat tax” envision a federal income tax with only one tax bracket and without any targeted credits or deductions—for mortgage interest, charitable contributions, and the rest.

12. Although the idea that tax burdens should be based on each taxpayer's “ability to pay” is very old—it was Adam Smith's canon of tax equity—it has always been difficult to operationalize in practice. Wealth and income are the traditional proxies for “ability to pay.” For an influential discussion, see Blum, Walter J. and Kalven, Harry Jr., The Uneasy Case for Progressive Taxation (Chicago, 1963 [1953]).

13. Although the legal doctrines elaborated to protect slaveholders were problematic precedents for a free society, Cooley mixed pre–Civil War legal precedents from slave states and free states without noticing the radically different political contexts out of which they emerged. Cooley's refusal to recognize context is exemplified by his gloss on O'Byrne v. Savannah, 41 Ga. 331 (1870). Referring to a Georgia tax levied during the Civil War, this decision blocked an effort to collect a tax “after the government by which it was imposed has ceased to exist.” Cooley raised euphemism to high art: “So held of a government set up in an attempted revolution which failed.” Cooley, Taxation, 5n. Cooley's reliance on prewar southern case law was emphasized by legal historian Morton Horwitz, who noted Cooley's reliance on a pre–Civil War Kentucky case, Lexington v. McQuillan's Heirs, 39 Ky. 513 (1839), to support the argument that judges could enforce “implied” constitutional restraints on the taxing power even in states that had either failed or refused to adopt explicit ones. Horwitz, Transformation, 22.

14. New York, Laws of the State of New York Passed at the Sessions of the Legislature Held in the Years [from 1777 through 1801], 5 vols. (Albany, 18861887), 1:223 (quotation), 227–28; Hamilton, to Morris, , 13 08 1782, Hamilton Papers, 3:135.

15. Ibid., 3:135, 142.

16. On the Fries Rebellion, see Newman, Paul Douglas, Fries's Rebellion: The Enduring Struggle for the American Revolution (Philadelphia, 2004); Elkins, Stanley and McKitrick, Eric, The Age of Federalism: The Early Republic, 1788–1800 (New York, 1993), 696700. See also Bouton, Terry N., “A Road Closed: Rural Insurgency in Post-Independence Pennsylvania,” Journal of American History 87 (12 2000): 867876. On the direct tax that provoked it, see Einhorn, Robin L., “Slavery and the Politics of Taxation in the Early United States,” Studies in American Political Development 14 (10 2000): 177182.

17. A tax is “progressive” when it imposes a higher rate on—takes a larger fraction of—higher incomes than lower incomes. A tax is “regressive” when it imposes a higher rate on lower incomes than higher incomes. A tax is “proportional” when it imposes the same rate regardless of income. Current “flat tax” proposals aim at proportionality, and draw popular support from the mistaken suspicion that our current income tax structure—progressive rates plus credits and deductions that favor the wealthy—is more regressive than a flat, or proportional, tax would be. On this point, see especially Ventry, Dennis J., “Equity versus Efficiency and the U.S. Tax System in Historical Perspective,” in Tax Justice: The Ongoing Debate, ed. Thorndike, Joseph J. and Ventry, Dennis J. (Washington, D.C., 2002), 5658.

18. For a survey of the existing data on nineteenth-century tax revenue, see Sylla, Richard, “Long-Term Trends in State and Local Finance: Sources and Uses of Funds in North Carolina, 1800–1977,” in Long-Term Factors in American Economic Growth, ed. Engerman, Stanley L. and Gallman, Robert E. (Chicago, 1986), 819862; Sylla, Richard, Legler, John B., and Wallis, John J., “Banks and State Public Finance in the New Republic: The United States, 1790–1860,” Journal of Economic History 47 (06 1987): 391403; Legler, John B., Sylla, Richard, and Wallis, John J., “U.S. City Finances and the Growth of Government, 1850–1902,” Journal of Economic History 48 (06 1988): 347356; Sylla, Richard and Wallis, John Joseph, “The Anatomy of Sovereign Debt Crises: Lessons from the American State Defaults of the 1840s,” Japan and the World Economy 10 (07 1998): 267293; and Richard E. Sylla, John B. Legler, John Wallis, “State and Local Government Sources and Uses of Funds, City and County Data, Nineteenth Century,” data set 6305 (1985–), Inter-University Consortium for Political and Social Research, University of Michigan, accessible via http://www.icpsr.umich.edu/access/index.html.

19. The clarion call to apply this approach to the early United States was issued in John, Richard R., “Governmental Institutions as Agents of Change: Rethinking American Political Development in the Early Republic,” Studies in American Political Development 11 (Fall 1997): 347380.

20. Fehrenbacher, Don E., The Slaveholding Republic: An Account of the United States Government's Relations with Slavery (New York, 2001), chaps. 4–5; Richards, Leonard L., The Slave Power: The Free North and Southern Domination, 1780–1860 (Amherst, 2000); John, Richard R., Spreading the News: The American Postal System from Franklin to Morse (Cambridge, 1995); John, Richard R., “Affairs of Office: The Executive Departments, the Election of 1828, and the Making of the Democratic Party,” in The Democratic Experiment: New Directions in American Political History, ed. Jacobs, Meg, Novak, William J., and Zelizer, Julian E. (Princeton, 2003), 5084; Hadden, Sally E., Slave Patrols: Law and Violence in Virginia and the Carolinas (Cambridge, 2001); Majewski, John, A House Dividing: Economic Development in Pennsylvania and Virginia before the Civil War (New York, 2000). Taken together, this scholarship has raised our understanding of the political impact of slavery to a whole new level, superseding such long-standard works as Robinson's, Donald L.Slavery in the Structure of American Politics, 1765–1820 (New York, 1971).

21. The three-fifths clause of the federal Constitution is commonly misunderstood to have insulted enslaved African Americans by granting them the representation of “three-fifths of a person.” In reality, its effects were far more pernicious, since it denied enslaved African Americans any representation at all. Intended to injure rather than merely to insult, the three-fifths clause increased the power of slaveholders in order to guarantee that the slaves' interests—in the abolition of slavery—would never prevail. The electoral college compounded its antidemocratic effects by basing each state's vote for president on the sum of its Senators (two per state) and number of seats in the House of Representatives (allocated by the three-fifths rule). This antidemocratic arrangement gave the slave states disproportionate political power, and led directly to the election of Thomas Jefferson in 1800. On this issue, see especially Richards, Slave Power; see also Wills, Garry, “Negro President”: Thomas Jefferson and the Slave Power (Boston, 2003). The 1800 election was not a triumph of American democracy. After two hundred years, one might think we could stop repeating the partisan claim that it was.

22. For the story at the national level, see Einhorn,“Slavery and the Politics of Taxation”; Einhorn, Robin L., “Patrick Henry's Case Against the Constitution: The Structural Problem with Slavery,” Journal of the Early Republic 22 (Winter 2002): 549573.

23. Thornton, J. Mills III, Power and Politics in a Slave Society: Alabama, 1800–1860 (Baton Rouge, 1978), chap. 5. See also Thornton, , “Fiscal Policy and the Failure of Radical Reconstruction in the Lower South,” in Region, Race, and Reconstruction: Essays in Honor of C. Vann Woodward, ed. Kousser, J. Morgan and McPherson, James M. (New York, 1982), 349394. Local taxes seem to have been much higher than state-level taxes in the North, but not in the South. Several southern states capped their local tax rates at or below state tax rates. Einhorn, American Taxation, chap. 6.

24. DeBow, J. D. B., Statistical View of the United States (Washington, D.C., 1854), 142143, is the most complete local-level data set for the period.

25. In political science, the antidemocratic power I am describing is often called “agenda-setting.” It is the power to prevent a political debate, as opposed to the power to win one. The classic works are Bachrach, Peter and Baratz, Morton S., “Two Faces of Power,” American Political Science Review 56 (12 1962): 947952; Crenson, Matthew A., The Un-politics of Air Pollution: A Study of Non-decisionmaking in the Cities (Baltimore, 1971); and Lukes, Stephen, Power: A Radical View, 2d ed. (London, 2005 [1974]). On the debate from which this concept emerged, see Polsby, Nelson W., Community Power and Political Theory: A Further Look at Problems of Evidence and Inference, 2d ed. (New Haven, 1980). See also Stone, Deborah, Policy Paradox: The Art of Political Decision Making, rev. ed. (New York, 2002 [1988]).

26. See Einhorn, American Taxation, chaps. 1–3.

27. Hoadley, Charles J., ed., The Public Records of the Colony of Connecticut, 15 vols. (Hartford, 18501890), 4:334335, 8:131–33.

28. Einhorn, American Taxation, chap. 3; Wolcott, Oliver Jr., “Direct Taxes,” 14 12 1796, in American State Papers: Documents, Legislative and Executive of the United States, ed. Lowrie, Walter and Clark, Matthew St. Clair, 10 vols. (Washington, D.C., 1832–61), 3d ser., Finance, 1:414–65 (quotation on 437). On state taxes during the Revolution, see also Brown, Redeeming the Republic; Becker, Robert A., Revolution, Reform, and the Politics of American Taxation, 1763–1783 (Baton Rouge, 1980).

29. New York, Revised Statutes, 3 vols. (Parker, Wolford, Wade 1859), 1:905–15, 2:646; New York, Laws, 1823, 390–97. An “ad valorem” tax is a tax that is levied at a percentage of the taxed item's value. In the case of a property tax, it is a tax levied at a percentage of the assessed valuation of the property—which is almost always a lower figure and usually a much lower figure. The tax rate is expressed in cents per $100 or mills per dollar of value (valuation).

30. Pessen, Edward, Riches, Class, and Power: America Before the Civil War (New Brunswick, N.J., 1990 [1973]), chaps. 2–3; Sowers, Don C., “The Financial History of New York State: From 1789 to 1912” (Ph.D. diss., Columbia, 1914), 118.

31. Einhorn, American Taxation, chap. 6.

32. On the tax provisions in the Tennessee constitution, see Einhorn, Robin L., “Species of Property: The American Property-Tax Uniformity Clauses Reconsidered,” Journal of Economic History 61 (12 2001): 981, 993, 997–98.

33. Thornton, “Fiscal Policy”; Wallenstein, Peter, “‘More Unequally Taxed than any People in the Civilized World’: The Origins of Georgia's Ad Valorem Tax System,” Georgia Historical Quarterly 64 (1985): 459487.

34. Mississippi, Revised Code (Sharkey et al. 1857), 71–78. See also ibid., 87–89. The flat 40-cent slave tax was much lower than the ad valorem rates on other assets. For example, if one assumes the average slave price to have been $774, this tax was equivalent in 1860 to an ad valorem tax of only 5 cents per $100 (actually slightly less because of the exemption of elderly slaves). Although the legislature almost doubled the rate to 75 cents in 1860, this tax remained, at 9.7 cents per $100, lower than any of the state's ad valorem rates. The slave price is based on an estimate in Ransom, Roger and Sutch, Richard, “Capitalists Without Capital: The Burden of Slavery and the Impact of Emancipation,” in Quantitative Studies in Agrarian History, ed. Rothstein, Morton and Field, Daniel (Ames, 1993), 148.

35. In Mississippi, most plantation wealth was, in practice, exempted from the ad valorem tax system since slaves were taxed at a flat rate, while real estate was handled in a peculiar way. Although assessors had the authority to verify the taxpayers' estimates of most assets, they were forbidden to challenge taxpayers' estimates of the value of their real estate. Mississippi, Revised Code (Sharkey et al. 1857), 74–77. For a similar self-assessment rule in Georgia, see Thornton, “Fiscal Policy,” 358.

36. Sylla, Legler, and Wallis, “Banks and State Public Finance,” 401.

37. Tennessee, , Public Acts (1836), 5866. Note that the Tennessee Constitution of 1834 (art. 2., sec. 28) required the exemption from taxation of all slaves under 12 and over 50. Although most southern states set similar age limits—Mississippi, for example, exempted slaves over 60—the age limit mandated in the Tennessee constitution was unusually generous to slaveholders.

38. State law instituted the valuation of slaves in Kentucky, Arkansas, and Missouri throughout the pre–Civil War period, and in Louisiana from 1846 to 1856. Tennessee, , Code (Meigs, Cooper 1858), 172, 179–80; Kentucky, , Statute Law, 5 vols. (Littell 18091819), 5:110; Kentucky, , Revised Statutes (Wickliffe, Turner, Nicholas 1852), 558559; Arkansas, , Revised Statutes (Ball, Roane 1838), 673, 675; Arkansas, , Digest of the Statutes (Gould 1858), 930; Missouri, , Laws, 2 vols. (Charless 1825), 2: 663664; Missouri, , Revised Statutes, 2 vols. (Hardin 1856), 2:1322, 1334; Louisiana, , Revised Statutes (Phillips 1856), 464; Louisiana, Acts, 1856, 180.

39. Tennessee Constitution (1796), art. 1, sec. 26.

40. Tennessee Constitution (1834), art. 2, sec. 28.

41. For details, see Einhorn, “Species of Property,” and Einhorn, American Taxation, chap. 6. The inclusion in southern constitutions of emancipation bans and slave representation provisions challenges the traditional view that early nineteenth-century constitutional reforms in the North and the South were comparably democratizing. For this traditional view, see Green, Fletcher M., The Constitutional Development of the South Atlantic States, 1776–1860: A Study in the Evolution of Democracy (Chapel Hill, 1930), and Fehrenbacher, Don E., Sectional Crisis and Southern Constitutionalism (Baton Rouge, 1995).

42. Einhorn, “Species of Property,” 980. Although no northeastern state constitution included a uniformity clause in the pre–Civil War period, the Massachusetts constitution of 1780 and the New Hampshire constitution of 1794 contained the vague requirement that taxes be “proportional and reasonable.” In the late nineteenth century, the courts would redefine these clauses as uniformity clauses. Newhouse, Wade J., Constitutional Uniformity and Equality in State Taxation, 2d ed., 2 vols. (Buffalo, 1984).

43. Einhorn, “Species of Property,” 999–1003. For a more extensive discussion of the sometimes poorly thought-out appropriation by western constitutionalists of eastern constitutional provisions, see Fritz, Christian G., “The American Constitutional Tradition Revisited: Preliminary Observations on State Constitution-Making in the Nineteenth-Century West,” Rutgers Law Journal 25 (Summer 1994): 945998.

44. For the late-nineteenth century political struggles over the income tax, see especially Stanley, Robert W., Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861 to 1913 (New York, 1993). See also Brownlee, W. Elliot, Federal Taxation in America: A Short History (Cambridge, 1996). For a journalistic account that suggests a revival of popular interest in this topic, see Weisman, Steven R., The Great Tax Wars: Lincoln to Wilson—The Fierce Battles over Money and Power That Transformed the Nation (New York, 2002).

45. Pollock v. Farmers' Loan and Trust Company, 157 U.S. 429 (1895); 158 U.S. 601 (1895); Johnson, Calvin H., “Apportionment of Direct Taxes: The Foul-Up in the Core of the Constitution,” William and Mary Bill of Rights Journal 7 (12 1998): 1103; Ackerman, Bruce, “Taxation and the Constitution,” Columbia Law Review 99 (01 1999): 158; Crane, Charlotte, “Reclaiming the Meaning of 'Direct Tax,” unpublished manuscript, 2003; Einhorn, American Taxation, chap. 5.

46. Marx, Karl, The German Ideology (Amherst, N.Y, 1998 [written in 1845–46]), 7071.

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Institutional Reality in the Age of Slavery: Taxation and Democracy in the States

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