Events

The Union was running out of money. By the summer of 1861, the Civil War was consuming resources at a rate the federal government had never faced, and traditional revenue sources — primarily tariffs and land sales — could not cover the cost of raising, equipping, and feeding the largest army in American history. On August 5, 1861, President Lincoln signed the Revenue Act of 1861, which included the first federal income tax in American history: a flat 3 percent levy on all annual incomes exceeding $800. The $800 threshold was not arbitrary. It was roughly equivalent to the average annual income of a middle-class family, meaning the tax fell primarily on the wealthy. Congress was explicit about the reasoning: those who benefited most from the preservation of the Union should bear a proportional share of the cost of saving it. The practical revenue from the 1861 act was minimal, however, and it was replaced by the more aggressive Revenue Act of 1862, which introduced a graduated rate structure and established the Bureau of Internal Revenue to collect it. The income tax was understood from the start as a wartime emergency measure. Federal revenue had traditionally come from customs duties and excise taxes, and the idea of the government directly taxing citizens' earnings was considered a radical departure from American fiscal tradition. Several constitutional questions about the tax's legality simmered beneath the surface but were suppressed by wartime urgency. The tax rates increased as the war continued, reaching 10 percent on incomes over $10,000 by 1864. After the war ended, the income tax was gradually reduced and finally repealed in 1872. But the precedent had been established. When Congress attempted to revive the income tax in 1894, the Supreme Court struck it down as unconstitutional. The Sixteenth Amendment, ratified in 1913, settled the question permanently, establishing the federal government's power to tax income. Every April 15 filing traces its lineage back to the desperate fiscal arithmetic of the Civil War's first summer.

Six thousand people gathered on a small island in New York Harbor to watch the Freemasons lay a cornerstone for a monument that almost did not get built. On August 5, 1884, workers placed the foundation stone of the pedestal that would support the Statue of Liberty, a gift from the people of France that had been stalled for years by American indifference to funding its base. France was providing the statue; America was responsible for the pedestal. And America was dragging its feet. The statue itself was the vision of French political thinker Édouard de Laboulaye and sculptor Frédéric Auguste Bartholdi, conceived as a celebration of republican ideals and the Franco-American alliance. Bartholdi designed a colossal copper figure of Libertas, the Roman goddess of freedom, holding a torch and a tablet inscribed with the date of American independence. Alexandre Gustave Eiffel, who would later build his famous tower, designed the internal iron framework. Fundraising in America was the persistent problem. Congress refused to appropriate money for the pedestal. Several states declined to contribute. Many Americans saw the statue as a Parisian vanity project and questioned why they should pay to display it. The pedestal campaign was rescued largely through the efforts of newspaper publisher Joseph Pulitzer, who used his paper, The New York World, to shame wealthy Americans and solicit small donations from ordinary citizens. Pulitzer published the name of every contributor, no matter how small the gift, and eventually raised over $100,000 from more than 120,000 donors. The completed statue was dedicated on October 28, 1886, becoming an instant icon. For millions of immigrants who arrived by ship in the following decades, the statue was their first sight of America. The monument that nearly foundered on a lack of funding became the most recognized symbol of American democracy in the world.