STATE FINANCE in Civil War Georgia must be viewed in the context of Confederate national finance. As in state and county finance, Southerners voiced the prevalent values and ideas regarding the extractive role of government. Taxation, as Confederate Secretary of the Treasury George A. Trenholm observed, provided "the machinery by which the general contribution is distributed and equalized."1
The Confederacy, like Georgia, found it increasingly essential to levy taxes. Taxation absorbed funds from the wealthy, who could most afford to have a portion of their purchasing power diverted. It enabled governments at all levels to control the supply of money, and with it the rate of inflation, at least a bit, by taking in some of the currency they distributed to purchase goods and services.
Like the states, however, the Confederacy obtained its funds less by levying taxes than by creating various forms of public indebtedness. Though it imposed a war tax in 1861, not until April 1863, halfway through the war, did it enact a comprehensive tax law. During its four years, the Confederate government derived from taxes only 7 percent of its total revenue.2
In fact, much more than Georgia, the Confederacy violated Secretary Trenholm's justification of taxes. Georgia's state and county governments more closely approximated the ideal of taxing citizens "in proportion to the value of their property." In contrast to the Confederacy, Georgia derived half its wartime revenue from either taxation or public investments.3
Because the Confederate government did not tax more heavily, it had to borrow funds or seize supplies. Sales of bonds, particularly in the first years of the war, produced one-fourth of total Confederate revenue. Another half came from the issue of treasury notes. When the Confederacy levied taxes insufficient to retrieve the treasury notes from circulation, it created an enormous inflation, and it turned to impressment to obtain provisions and other supplies for the military. Impressment contributed 17 percent of total Confederate receipts -- and it often resulted in the war's being a poor man's fight in financial as well as military terms.4
Before the summer of 1861, the Provisional Congress of the Confederate States levied no direct taxes. Members anticipated no war, or only a short one, and respected what they sensed to be a widespread aversion
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Book title: From Slave South to New South:Public Policy in Nineteenth-Century Georgia. Contributors: Peter Wallenstein - Author. Publisher: University of North Carolina Press. Place of publication: Chapel Hill, NC. Publication year: 1987. Page number: 121.