had been compelled not only to spend its
accumulated surplus on current needs, but to borrow heavily. The tariff
duties, collected at the custom-houses, were, as they always had been,
the mainstay of the revenue. But these had not met the needs of the
three lean years before the war.

Had there been no war, the disordered finances of the United States
might, in 1861, have called for corrective measures and new taxes, and
these could not have become effective before 1862 or 1863. As it was,
loans were resorted to for first-aid. In 1862 they alone were more than
six times as great as the total receipts of 1861; in 1865 they were
nearly three times as great as in 1862. Taxes were authorized more
reluctantly than loans, they became profitable more slowly, and did not,
until the last year of war, reveal the fiscal capacities of the United
States.

The favorite national tax of the United States had always been the
tariff. Supplemented by miscellaneous items which included no internal
revenue after 1849, and no direct tax after 1839, it carried most of the
financial burdens. Whether parties preferred it high or low, or levied
it for protection or for revenue, they had continued to cherish it as a
fiscal device, and had acquired no experience with alternate sources of
supply. Like the army of the United States, which in time of war had to
break in its volunteer levies before it could win victories, the
Treasury and Congress had to learn how to tax before they could bring
the taxable resources of the United States to supplement the loans.

The tariff was revised and increased several times between 1861 and
1865, and yielded its greatest return, $102,000,000, in 1864. The result
was due to both the swelling volume of imports and the higher rates.
Like all panics, that of 1857 had lessened the buying capacity of the
American people. In hard times luxuries were sacrificed and treasury
receipts were thereby greatly curtailed. A return to normal conditions
of business would have been visible by 1861 had not war obscured it.
Steadily through the war a prosperous North and West bought more foreign
goods regardless of the price.

The rate of tariff was based upon the probable revenue, the protective
principle, and the tax burdens already imposed upon American
manufacturers. Not until 1863 were the internal or direct taxes
noticeable, but in 1864 these passed the tariff as a source of revenue,
with a total of $116,000,000. In 1866 t