WHAT DISPOSITION SHALL BE MADE OF THE MONEY?
AFTER FOCUSING on economic growth in the early nineteenth century, the states increasingly turned their attention to social spending. In this area, too, the experience of the Empire State of the South resembled that of the Empire State of the North. In 1836 and 1837, New York and Georgia made initial appropriations to establish state insane asylums; in 1842 and 1843, both institutions opened. New York took a major step toward securing tuition-free elementary schooling when it levied a state property tax to raise $800,000 for common schools in 1851.1 Relying on profits from the Western and Atlantic Railroad, Georgia quintupled its spending on elementary schools from $30,000 in 1859 to $150,000 the following year.
In the late 1850s, Georgia came within reach of its longtime financial utopia. In 1854 the Western and Atlantic began to contribute to the state treasury; by 1860 the railroad's profits led to a doubling of state revenue with no increase in taxes. At the same time, rising per capita wealth permitted cuts in tax rates without reductions in tax revenue. As in the 1810s and the 1830s, the surplus income allowed Georgians to choose between further tax cuts or increased spending.
The 1855-56 general assembly was the first to face the flow of new revenues. Legislators at that and subsequent sessions had to decide, as Governor Joseph E. Brown put the question in 1858, "What disposition shall be made of the money?"2 Rather than cut tax revenue, Georgians chose to spend more, and they began to divert their investments from transportation to social welfare. By the late 1850s, as in the 1830s, the state cut its tax rates and yet expanded its support of education and welfare institutions, as nontax revenue facilitated a much more active state government.
Until the advent of railroad revenue in the 1855-56 session, legislative behavior patterns on spending issues in the 1850s echoed those on taxes in the previous decade. Representatives from black-belt and urban counties had tended to seek greater tax revenue in the 1840s. In the following decade they resisted efforts to reduce tax revenue and, often despite opposition by North Georgia legislators, managed to increase state spending. But as nontax reve-