During the American Civil War, Congress inaugurated the system of national taxation that Americans ‘enjoy’ to this day. Throughout the antebellum era, tariffs provided the federal government with most of its revenue. The United States had not levied internal duties since the War of 1812, so representatives in neither the House nor the Senate had experience in formulating national tax policy. Yet the overwhelming costs of feeding, supplying and moving armies across the country forced Congress to develop new revenue sources quickly. To expedite the process, the lawmakers relied upon English tax precedents.

As we saw earlier, Secretary Chase determined to finance the war by adopting the system of ‘Dutch finance’. He planned to borrow for the ‘extraordinary’ expenses of war while taxing for the ‘ordinary’ operations of government, the means by which England funded her ‘Long Century’ of warfare from the Glorious Revolution through the final defeat of Napoleon. Historians of Civil War finances have derided Treasury Secretary Chase's decision to finance the war in this manner but this strategy followed a long, successful precedent for absorbing the overwhelming costs of war. The income ‘duty’ adopted by the emergency session of the Thirty-seventh Congress followed the example of the British income tax levied during the Napoleonic Wars; additionally, the Civil War internal revenue measures were also based on the British example. This becomes important when examining the structure of the tax measures and trying to determine how the burden of these taxes fell on Americans. Because the Civil War legislators decided to follow the example of levying ‘diffuse’ taxes on manufacturers, Congress agreed to provide greater tariff protection for these industries, and this set the course of tariff legislation for the remainder of the nineteenth century.

The current literature on taxation in the United States in the early Republic and Civil War eras suggests that an ‘exceptional’ system emerged based on the accommodation to slavery or because of the unique Republican ideology. While aspects of these arguments have validity, neither appreciates the deep historic traditions upon which nineteenth-century Americans based their tax policy. Americans based their system of public finance on the English revenue model.