Like Pete Hegseth, the early Americans were strong boozers

 

"ED: What’s one thing you wish everyone knew about American history?

"SY: I first came across W. J. Rorabaugh’s Alcoholic Republic as a graduate student, and it completely changed the way I thought about early American history. From 1790–1840, average alcohol consumption in America peaked at 7.1 gallons of distilled liquor per capita, over three times today’s consumption rate. When I share this fact with my students, it helps explain two important developments: first, the pervasiveness of violence in antebellum America. Alcohol fueled the mobs, riots, lynchings, vandalism, and duals that threatened the nation’s growing urban areas and the often lawless frontiers. Second, the appeal of the temperance movement. My students often scoff at the 18th Amendment and the failures of Prohibition, but temperance had broad popular appeal as a social cause precisely because alcohol was a pressing problem in the nineteenth century. Most Americans knew someone whose drinking had led to domestic violence, suicide, or poverty."

More.

Methodism Remains A Grandmother Of Bolshevism

Jewish Lutheran Atheist

Mark Tooley says as much here for The American Spectator:

Methodism, rather than stepping back to reflect on its 30 year initially successful but ultimately failed Prohibition crusade, instead accelerated its political activism. The Methodism Building became the headquarters of America's Religious Left in Washington, D.C., housing radicals of every cause especially from the 1960s onward. It still clung to an uncompromising perfectionism that insisted evil could be banished, and the New Jerusalem established, with the passage of just a few more laws.

Of course, presidents and congressmen no longer "tremble and gobble" before Methodism and its lobbyists, who are largely ignored. Banning handguns, even after 40 years of endorsement by Methodism, will never happen. But maybe other uncompromising idealists and utopians, who believe human nature can be transformed at the stroke of a pen, will heed the lessons of Methodism and Prohibition. 

Federal Revenues Came From Tariffs and Land Sales in First Half of 1800s, From Tariffs and Excises in Second Half

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!

Explaining Property Taxes Then and Now

Critical listeners to recent remarks I made here on The Newsmaker Show with Kevin Doran will have wished that I had done a better job of explaining property taxes in the late 19th century and how their burden on property owners helped create the conditions which led to the tax reform which gave us the Income Tax in 1913.

So do I. Regrettably one can't say everything one needs to when trying to explain something else, especially like Herman Cain's 999 Plan.

If anyone gets the impression that I intended to say that the federal government routinely and directly taxed homeowners then, for example, in the same way homeowners are so taxed today on their property, that would be a mistake, but one which could easily be inferred. The federal government did do that sort of thing three times in the 19th century, but only for very brief periods and only to fund wars: in 1798, 1812 and 1861. Which is not to say there weren't other attempts, notable in the Pollock decision in 1895.

To a considerable extent, however, I have found that the terms "property tax," "excise," "tariff," "ad valorem" and the like get used interchangeably, and confusingly, in discussions about taxes both then and now. We would be better served if we were all more precise in these matters, but even supposed experts talk about this period with such imprecision sometimes that it is difficult to know exactly what people really do mean.

For example, "ad valorem" today gets used, as at usgovernmentrevenue.com, as a category under which to list excise taxes, tariffs, property taxes, etc., as opposed to income taxes, corporate taxes and social insurance taxes. In truth, however, its specific meaning has been more complicated than that.

From that characterization would not know that tax historians often distinguish personal property taxes in the first half of the 19th century as "in rem" from real property taxes in the second half as "ad valorem."

In the case of the former, as in 1798, slaves, for example, were taxed for war preparations with France as personal property. It didn't matter, however, how much one had invested to purchase the slave. Each one was simply taxed at 50 cents. Similarly a tax assessor would count the windows on your house, your horses, your cows, chickens etc. (unless you hid them well) and total them up by kind and assess the appropriate tax, which inhered in the thing, "in rem," not in the value, "ad valorem."

The latter is how the federal government in the 19th century was able to get around the onerous requirements of apportioning direct taxation of property equally according to state population. Instead of the arduous task of trying to tax the whole general sum of an individual's wealth in every state on an equal basis, the value of beer, wine and liquor, for example, produced anywhere could thereby be taxed everywhere the same, proportionally according to its value. In this way there was no need to divide the necessary revenue to be raised according to the population of the individual state, since the basis was the same everywhere beer was sold.

Such taxation is often called an excise, generally understood to fall on domestic produce. We still pay excises to this day, for example everytime we fill up the gas tank, 18 cents on the gallon to the feds. In truth excises are just a special kind of sales tax. A tariff is similar, but taxes foreign imports.

When it comes to the problems of farmers in the late 19th century, who eventually made league with Prohibitionists to install the Income Tax in 1913, theirs was a two-fold problem. Not only did the cost of financing state government fall heavily on them because of property taxation in the state in which they lived, federal excises on their produce represented a double "property tax" whammy. Think tobacco excises.

Viewed from this perspective, government at all levels, it seemed, got them coming and going.

To his credit, Herman Cain is trying to imagine a world in which government gets it for a change, instead of the taxpayer. His way of trying to make that happen is to play human desire to consume off of human desire to avoid paying taxes, by making what we consume each and every day the scene of a skirmish in the battle for limited government, which cannot exist without self-restraint.

The 1913 Income Tax Enabled Stark Increases to Government Revenues to Pay for WWI

Revenues went up by a factor of 6 in three short years, and dramatically reversed federal reliance on tariffs, excises and other taxes of one kind or another to finance the preponderance of government spending. Note the overnight reversal between 1917 and 1918 in the income tax share of the federal revenue. The analogy today would be like going from $3 trillion in revenues to $18 trillion.

Excises on alcohol started disappearing in 1920 with enactment of Prohibition. Such taxes had routinely accounted for 20-40 percent of all federal revenues from the War Between The States until that time. Over the course of a decade from 1920 through 1932 alcohol excises dropped in the end by a factor of 10, but instantly surpassed their 1920 levels with Repeal in 1933, a year in which everyone desperately needed a drink.

By 1875 One Third of Federal Revenues Came From Taxes on Alcohol

According to Daniel Okrent's Last Call: The Rise and Fall of Prohibition:

After lapsing in 1802, the alcohol excise was reimposed under James Madison to pay for the War of 1812, suspended in 1817, and then brought back by Abraham Lincoln in 1862 to finance the Civil War. This time the tax did not fade away . . . For most of the next thirty years the impost on alcohol annually provided at least 20 percent of all federal revenue, and in some years more than 40 percent. By the time the excise was doubled to cover the cost of the Spanish-American War, the brewers had finally realized that the tax they had once so strongly opposed might be their salvation, and they patriotically (and shamelessly) declared that they had financed 40 percent of the war's cost.

By way of comparison, tariffs in 1875 funded 55 percent of the federal budget. Seven years after the passage of the Income Tax, tariffs in 1920 funded barely 13 percent of the federal budget.

The significance of Daniel Okrent's recent history of Prohibition is not in the least that it shows how much federal government had depended on liquor taxes in addition to tariffs and property taxes to fund itself.

The perfidy of Prohibition is that it was brought to us by the same folks who gave us the Income Tax in the first place. They knew something would be needed to replace the federal revenue which would be lost when alcohol sales were finally banned. But when Prohibition got the boot, the Income Tax did not.

So the flipside to the Temperance movement is its Intemperance toward the original intent of the constitution, which was to prohibit direct taxation without apportionment by population in favor of tariffs, excises and ad valorem taxes.

Prohibition: An Alliance Between Evangelical Christians and Criminals

So said George Will last year in his review of Daniel Okrent's book which details how the women's war on men's drinking inspired a chain of constitutional and social changes ills:

Women's Prohibition sentiments fueled the movement for women's rights -- rights to hold property independent of drunken husbands; to divorce those husbands; to vote for politicians who would close saloons. ...

Women campaigning for sobriety did not intend to give rise to the income tax, plea bargaining, a nationwide crime syndicate, Las Vegas, NASCAR (country boys outrunning government agents), a redefined role for the federal government and a privacy right -- the "right to be let alone" -- that eventually was extended to abortion rights. But they did.

Now the "darkly hilarious" story has been immortalized by none other than Ken Burns on none other than PBS.

Don't miss it.

You can watch it online, here.