July 24, 1861 – The House of Representatives began considering a new form of direct taxation. In addition, Congress retroactively endorsed President Lincoln’s executive orders and approved recruiting one million three-year volunteers. Meanwhile, the War Department reluctantly accepted some 30,000 two-year volunteers from various states.
The predominantly Republican Congress opened debate on the loyalty of its members. The Senate approved measures expelling U.S. senators from Virginia, North Carolina, Arkansas, and Texas, along with one of the two senators from Tennessee. The House of Representatives approved the expulsion of Congressman John Clark of Missouri by a vote of 94-45. These measures were just a formality because those congressmen had already left to join the Confederacy.
The Senate retained the second senator from Tennessee–Andrew Johnson, who hailed from the predominantly Unionist region of eastern Tennessee. The Senate also seated two senators from “Unionist” Virginia who had been elected by the puppet legislature of the state’s northwestern counties. This legislature, elected by delegates to the Wheeling convention, declared allegiance to the U.S. and was recognized as legitimate by the Lincoln administration, despite its lack of support from most non-northwestern Virginians. The House of Representatives also admitted three congressmen elected by the Unionist Virginians.
To raise revenue for war, President Lincoln signed into law “An act to provide for the collection of duties on imports, and for other purposes.” This authorized the president to regulate trade with the Confederacy. Section 5 empowered Lincoln to allow trade with parts of Confederate states under Federal military occupation. This sanctioned the seizure of southern cotton for cotton-starved northern businesses. Section 9 authorized Federal courts to review claims on confiscated Confederate property.
Opponents of this law argued that it unconstitutionally regulated commerce within a state. Had the Lincoln administration considered the Confederacy to be a foreign nation, this bill could have been legally imposed under international law. However, Lincoln insisted that the Confederacy was merely a rebellious section of the U.S., and as such, under the Constitution the Federal government could not interfere with commerce within a state.
Lincoln also signed a bill into law authorizing a $250 million loan in bonds and treasury notes to the Federal government. According to Treasury Secretary Salmon P. Chase, this was needed to meet war expenditures, but it was not enough. The rest of the money needed to come from direct taxation.
The House Ways and Means Committee, chaired by Radical Republican Thaddeus Stevens of Pennsylvania, began consideration of a new kind of bill that provided for two forms of taxation: direct real estate taxes apportioned among the states based on population, and excise taxes on certain items such as liquor or bank notes. However, the bill met strong opposition from midwesterners, many of whom were farmers who would pay much more in real estate taxes than eastern merchants.
After rejecting several other proposals, committee members drafted a bill that would levy an income tax on individuals and corporations. This marked the first time that the Federal government drafted legislation to directly tax Americans, and many argued that it was unconstitutional. Proponents asserted that the revenue it would generate was badly needed during this wartime emergency.
Other major bills involved raising troops for the war. Lincoln signed two bills into law authorizing the recruitment of 500,000 volunteers each. The second bill offered each volunteer a $100-bonus if they served two years; this aimed to counter this month’s expiration of many 90-day enlistments. Another measure authorized the creation of military boards to inspect officers and remove those unqualified for command. Minimum criteria for competency were adopted, although some officers continued to be elected by their men or appointed by their home state governors.
Lincoln also endorsed confiscating “rebel” property without due process, improving the U.S. Marine Corps, creating the office of assistant secretary of the navy, and providing “for the temporary increase in the navy.” A law indemnified the states for war-related expenses. Another law defined what constituted conspiring to overthrow the Federal government and imposed penalties for such activity. The Republicans rejected bills proposing a peaceful settlement with the Confederacy.
Davis, Jefferson, The Rise and Fall of the Confederate Government: All Volumes (Heraklion Press, Kindle Edition 2013, 1889), Loc 17547-82; Denney, Robert E., The Civil War Years: A Day-by-Day Chronicle (New York: Gramercy Books, 1992 [1998 edition]), p. 56-57; Fredriksen, John C., Civil War Almanac (New York: Checkmark Books, 2007), p. 43-44, 50-51; Long, E.B. with Long, Barbara, The Civil War Day by Day (New York: Da Capo Press, Inc., 1971), p. 93-96, 101-03; Longacre, Edward G., Historical Times Illustrated Encyclopedia of the Civil War (New York: Harper & Row, 1986, Patricia L. Faust ed.), p. 380; McPherson, James M., Battle Cry of Freedom: The Civil War Era (Oxford History of the United States Book 6, Oxford University Press, Kindle Edition, 1988), p. 298, 322, 327, 348; Pollard, Edward A., Southern History of the War (New York: The Fairfax Press, 1990), p. 98-99; Ward, Geoffrey C., Burns, Ric, Burns, Ken, The Civil War (New York: Alfred A. Knopf, 1990), p. 62-69