Civil War and Reconstruction in Alabama

by Walter L. Fleming

Sec. 2. The Cotton Tax

Another heavy burden imposed on the prostrate South was the tax levied by the United States government on each pound of cotton raised. An act of July, 1862, imposed a tax of one-half cent a pound on cotton, but this tax could be collected only on that part of the crop that was brought through the lines by speculators. January 30, 1864, the tax was increased to two cents a pound, collectible on all cotton coming from the Confederate States. This was raised to two and a half cents a pound on March 3, 1865, and to three cents a pound, or $15 a bale, on July 13, 1866.[790] After the war the tax bore with crushing weight on the impoverished farmers.[791] On March 2, 1867, in anticipation of Reconstruction, the tax was reduced to two and a half cents a pound, or $12.50 a bale, to take effect after September 1, 1867. A year later, partly because of the decided objections of those carpet-baggers, scalawags, and negroes who had small farms and whose remonstrances had more influence than those of the planters, the tax was discontinued on all cotton raised after the crop of 1867. The tax was a lien on the cotton from the time it was baled until the tax was paid, and was often collected in the states to which the cotton was shipped.

The collections in the South amounted to the following sums:—

For the year ending June 30, 1863		$351,311.48
For the year ending June 30, 1864		1,268,412.56
For the year ending June 30, 1865		1,772,983.48
For the year ending June 30, 1866		18,409,654.90
For the year ending June 30, 1867		23,769,078.80
For the year ending June 30, 1868		22,500,947.77
Total,		$68,072,388.99	[792]

Of this tax Alabama paid within her borders $10,388,072.10,[793] and since she was one of the three great cotton states, her share of the tax paid in northern ports must have been several million dollars more. Of the other cotton states,—Georgia, Louisiana, Mississippi, Texas, Tennessee, and Arkansas,—all except Georgia, which paid about a million dollars more than Alabama, suffered in less degree.

From April 1, 1865, to February 1, 1866, Alabama paid in other taxes, into the United States Treasury, $1,747,563.51, of which $1,655,218.31 was internal revenue, and from September 1, 1862, to January 30, 1872, $14,200,982 internal revenue.[794] The former sum was much more than the Federal government spent in Alabama during that year for the relief of the destitute, both black and white. The cotton spirited away by thieves and confiscated by the government would have paid several times over all the expenses of the army and the Freedmen’s Bureau during the entire time of the occupation. Many times as much money was taken from the negro tenant in the form of this cotton tax as was spent in aiding him. The most crushing weight of the tax came in 1866 and 1867, and it was much heavier than the taxation imposed by the Confederate and state governments even in the darkest days of the war. Had the price of cotton remained high, the tax would not have borne so heavily on the people; but with the decline of the price the tax finally amounted to a third of the net value of the cotton, while the amount raised in these years was about one-fifth of the value of the farming lands.[795] The tax absorbed all the profits of cotton planting and left the farmer nothing.

A letter from the Secretary of the Treasury in reference to the propriety of refunding the money received from the cotton tax stated some of the arguments of the opponents of the tax. It was claimed (1) that the tax was unconstitutional because it was not uniform and because it was virtually a tax upon exports; (2) that the tax was unequal and oppressive in its operations because it fell entirely upon cotton producers; (3) that it was levied without the consent of the people and when they were not represented in Congress; and (4) that in addition to the cotton tax the producers of the cotton were subject to all taxes paid by citizens of other states.[796] These objections were answered by the Secretary, who said that the tax was added to the price of cotton and was borne by the consumer, not the producer, and that it was the fault of the cotton states that they were not represented. He asserted that the tax on cotton was an excise like that on tobacco and whiskey.[797]

In 1866 an effort was made in Congress to raise the tax to five cents a pound. Such a tax, they said, would raise $66,000,000, or, at the least, $50,000,000 a year, of which Alabama’s share would be about $12,000,000 to $15,000,000. The Committee on the Revenue reported that such a tax “will not prove detrimental to any national interest.” The testimony of experts was quoted to prove that the tax would fall upon the consumer, though most of the experts, who were manufacturers from New England, said that on account of the great demand and excessive prices of cotton goods the tax would fall upon the manufacturer for the present time. Nevertheless, they were all in favor of the proposed tax, except one manufacturer and one planter from Georgia, who objected on the ground that the producer would have the burden to bear.[798]

The business men of New York and other northern cities opposed the tax and defeated the extra levy. The New York Chamber of Commerce, when the measure to raise the cotton tax to five cents a pound was proposed, memorialized Congress against the injustice of the tax. The memorial stated that the North and the West must not take advantage of the South in the days of her weakness; that the cultivation of cotton should not be thus discouraged. It was shown that the manufacturer would be protected by the drawback of five cents a pound allowed on cotton goods exported, while the cotton farmer would pay a five-cent tax. By the operation of such a tax, they stated, the rich would be made richer, and the poor made poorer. That in the proposed law “there is a want of impartiality which is calculated to provoke hostility at the South, and to excite in all honest minds at the North the hope that such a purpose will not prevail.”[799]

By the people who had to pay the tax it was considered an unjust and purely vindictive measure, which was the more exasperating because they had no voice in the matter and because no attention was paid to their remonstrances. They complained that it was levied as a penalty, that it was confiscation under color of law. They felt that it was a blow of revenge aimed at them when there was no fear of resistance or hope of protection, as no other part of the country had its exports taxed.[800] The fact that the tax was removed because of the objections of the carpet-baggers, scalawags, and negroes, instead of pleasing the whites, was a source of irritation to them. The respectable people had asked for justice and it was refused them, but was granted to those who were of opposing politics. Those who paid the tax never believed that the mass of the people at the North were in favor of such a measure, and they hoped that favorable elections would reverse the policy of Congress, which, then recognizing the unconstitutionality of the tax, would refund it, if not to individuals, at least to the states in proportion to the amount raised in each, or, that Congress would give it to the states as a long-time loan.[801] For years there was a belief among the farmers that the unjust tax would be refunded, and the cotton tax receipts were carefully preserved against a day of reimbursement, but, like the negroes’ “forty acres and a mule,” the money never came.[802]