State Taxes, Wealth, and Public Debt after the American Revolution, 1783–1815

Sunday, January 4, 2015
2nd Floor Promenade (New York Hilton)
Frank Garmon Jr., University of Virginia
In a recent series of articles and working papers, Peter Lindert and Jeffrey Williamson have investigated early American wealth levels and distribution.[1] This paper uses a comprehensive survey of property tax records to test Peter Lindert and Jeffrey Williamson’s wealth estimates for the Early American Republic. The study measures changes in wealth levels and wealth distribution for more than 30,000 taxpayers at ten year intervals between 1785 and 1815, and presents preliminary results from my dissertation, “State Taxes, Wealth, and Public Debt after the American Revolution, 1783-1815.” The paper confirms Lindert and Williamson’s conclusion that national real wealth fell between 1785 and 1795, but argues that wealth levels rose significantly between 1795 and 1815. Wealth distribution grew more unequal with each successive decade, but wealth levels and wealth distribution exhibited significant regional variation. The paper argues that differences in social structure and agricultural production account for much of the variation. These results contribute to our understanding of the structure of the Early American economy, and reveal the benefits of economic growth.

As Cathy Matson has observed, “in the face of mounting evidence that standards of living rose during the colonial era, we still do not know much about who enjoyed the benefits of economic maturation or how the rates of growth compared from place to place.”[2] Tax records provide an ideal source for measuring changes in the early-American economy, as property taxes provide annual assessments on taxable wealth. Wealth levels and distribution reveal the consequences of economic growth, the benefits of productivity, and are a reflection of income. Compared to many other periods of American history, our understanding of wealth levels and inequality in the Early Republic is incomplete. Two of the important studies of wealth distribution include Alice Hanson Jones’s work on probate inventories for 1774 and Lee Soltow’s investigation of the 1798 Direct Tax. Recently, Lindert and Williamson have attempted to reconcile these two interpretations by arguing that American wealth levels fell between 1774 and 1798, and suggesting, in an earlier version of the paper, that inter-regional inequality “demands further scrutiny.”[3] While Lindert and Williamson compare existing data on wealth inequality, this paper presents a new, larger, and more-representative dataset that facilitates comparisons of wealth levels and inequality across time and region in the Early Republic.

[1] Peter H. Lindert and Jeffrey G. Williamson, “American Colonial Incomes, 1650-1774” NBER Working Paper 19861 (January 2014); Lindert and Williamson, “American Incomes Before and After the Revolution” Journal of Economic History 73, no. 3 (September 2013), 725-765; Lindert and Williamson, “American Incomes Before and After the Revolution.” NBER Working Paper 17211 (July 2011)

[2] Cathy Matson, “A House of Many Mansions: Some Thoughts on the Field of Economic History” in Cathy Matson ed. The Economy of Early America: Historical Perspectives & New Directions (University Park, PA: Pennsylvania State University Press, 2006), 19.

[3] Lindert and Williamson, “American Incomes Before and After the Revolution,” NBER Working Paper 17211 (July 2011), 30.

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