A largely forgotten fact when discussing the history and meaning of US tax policy.
Gary M. Anderson and Dolores T. Martin examined the role of land sales in considerable detail in 1987 here.
I provide a few excerpts:
[F]rom 1800 until the beginning of the Civil War, proceeds from the sale of public lands constituted a major source of revenue for the federal government, accounting for 48 percent of net receipts in 1836. ...
After 1820, receipts from land sales became a major component of federal revenues. During 1836, for example, receipts from land sales exceeded 48 percent of total federal revenues. From 1820 to 1860, receipts from land sales averaged 10.8 percent of total federal receipts per annum.
From the program’s beginnings in 1796 until 1862, privatization of the public lands via sales to the private sector scored several major successes. By 1862, acreage equaling about 67 percent of the public domain in 1802 had been sold, and land sale receipts provided a significant, although fluctuating, fraction of total federal revenues. ...
Before the Civil War, proceeds from land sales and tariff revenues were the two major components in federal receipts. The proceeds from these different sources were highly substitutable; one dollar of revenue from land sales could replace one dollar from a tariff and vice versa. There is strong evidence to suggest that this substitutability may have been a significant factor in the demise of the system of revenue-maximizing land sales.
Of course the rise in reliance on excises from 1862 onwards could also explain why reliance on land sales declined to almost nothing by century's end, quite apart from the so-called rent-seeking aspects of tariff politics which the authors explore. But they seem not to notice the role of excises.
Excises on alcohol and tobacco ramp up dramatically to $100 million to $150 million per year from 1862, from next to nothing beforehand, while tariffs move up and down around a trendline of $200 million in revenues per year starting also at the same time, having been in the $50 million and below range per year for most of the century prior to the War Between the States.
The importance of alcohol, and tobacco, in the social and economic history of America should not be underestimated, as Daniel Okrent's important recent book on Prohibition has reminded us.
Gotta go. Time to light up and have a drink!
