The Revenue Act Of 1862 & Back-of-the-Book Revenue Stamps.
On July 1, 1862, President Abraham Lincoln signed the Revenue Act of 1862 into law, to help fund the Civil War. In 1861, the federal government faced a financial crisis. By June of that year, eleven Southern states had seceded and the Civil War broke out. In addition to the cost of funding a major conflict, the federal government also lost tariff revenue it had collected on goods imported by the South. Confederate victories at Fort Sumter and the First Battle of Bull Run signaled a protracted war, and it was soon apparent the conflict would also be expensive – the most spending to date in US government history. In 1861 alone, the government spent $50 million to feed its troops and another $50 million on supplies, for an amount equal to more than $8 billion in modern wages. Those costs rose as the war continued, with the final tally over $164 billion in today’s currency.
The Revenue Act of 1862 created a tax on virtually every document along with proprietary items including matches, perfume, and medicine. Each of the taxable items required a Proprietary stamp with the denomination based on the article’s retail price. To serve as proof the proper tax had been collected, the first adhesive US Revenue stamps were planned. The original Tax Act called for each taxable item to have its own specific Revenue stamp. Combined with tax rates based on retail value, this requirement established the need for several new Revenue stamps. Ultimately, 94 separate stamps were issued by the end of 1862.
Virtually every legal document was taxed under the Act of 1862. Although Documentary stamps accounted for approximately 25% of the 9 billion Revenue stamps sold, they were responsible for about 60% of the revenue collected. The majority of the taxable documents were bank checks and sight drafts, real estate transactions, insurance, bonds, and powers of attorney. The most common use was bank checks, with an initial tax of two cents for any check or sight draft over $20. In 1864, the tax was amended to include all checks.
The Civil War ended in 1865. States that had seceded and joined the Confederate States of America were now subject to the same federal tax laws as those that had not. Until the use of Revenue stamps was abolished in 1883, money raised through the tax was used to pay down the accumulated Civil War debt. Revenue stamps were brought back into use in 1898 to help fund the Spanish-American War. They were then used off and on until the 1960s for a variety of purposes.
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