The Warfare State

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The military activism of the Federalists peaked in 1798 with the quadrupling of the Regular Army after the XYZ Affair raised tensions with France. During the Quasi-War that followed, several events—passage of the Alien and Sedition Acts, the struggle between President Adams and Alexander Hamilton over command of the new Army, and rising opposition to defense spending—culminated in a split in the Federalist party, the election of Jefferson, and the demise of Hamilton’s vision of a state strengthened by open war with France. The triumph of the Jeffersonian vision of a limited state based on republican ideals, rather than on military and bureaucratic power, meant the rapid demise of the Federalist party. Jefferson’s one concession to Federalism was the founding of the military academy at West Point in 1802. Otherwise the U.S. military establishment remained much as Adams had left it: an officer corps of fewer than 500 men, a civilian bureaucracy of less than 100, a few widely scattered forts and armories, and a small navy—in a country that in 1803 would nearly double its territorial expanse.

During the War of 1812 the federal bureaucracy burgeoned and the size of the Army quintupled, but the growth was short-lived. Invaded by a foreign army for the last time in its history in 1814, the United States a year later faced no serious threats to its security from abroad. The Army turned to fighting Indian tribes; by 1821 it had been slashed to only 5,775 men. Andrew Jackson’s Presidency was the apex of the long peace that prevailed from 1815 to 1846. Though a war hero elected by men who won the franchise in part through military service, he disdained professional soldiers, and the Army suffered from neglect and even open hostility throughout the era. Jacksonian Democrats in Congress even tried to close West Point in 1837, while the militia degenerated into social clubs of marginal military utility.

By any measure, the federal government remained small and weak until the Civil War. While civilian employment in the Executive Branch increased eightfold (from 4,479 to 36,106), more than 85 percent of the growth was in the postal service. The federal bureaucracy, it seems, was overwhelmingly dedicated to the single objective of delivering the mail. Thousands of post offices provided patronage for the spoils system while constituting neither a centralized state apparatus nor a source of effective federal power. A state so weak in internal sovereignty was a free state but also an inherently fragile one. Given that by 1850 American territory had tripled in fifty years, the real historical question is not why the Civil War took place ten years later but how such a vast state, decentralized and demilitarized, held itself together at all until the war.

Heading off from Springfield for Washington, Lincoln told an Army officer, “I must run the machine as I find it.” In truth, there was not much of a machine to run. There were some 16,000 men in the U.S. Army in 1860, a federal budget of $63 million, and a mere 2,199 federal employees in Washington, D.C. The notion that such a diminutive state could hang on to a territory larger than France, Britain, and Germany combined, whose entire population was in mass rebellion, appeared ludicrous to outside observers. Yet four years after the attack on Fort Sumter, a sweeping transformation had occurred: the national budget had soared to over $1.2 billion, and the Union fielded an army of more than a million men, the largest, best-equipped, best-fed, and most powerful war machine thus far in the history of the world. The federal bureaucracy had mushroomed into a centralized apparatus of more than 53,000 people, despite losing thousands of employees in the South. Behind both army and bureaucracy stood a revitalized Presidency wielding authoritarian power over almost every aspect of Union life.

Prior to 1861 the national government had been a minor purchaser in the American economy. During the war it became the largest single purchaser, a catalyst of rapid growth in such key industries as iron, textiles, shoe manufacturing, and meat-packing. In Philadelphia industrialists built 180 new factories between 1862 and 1864. Iron mills proliferated in New York, Pennsylvania, and New Jersey, with 6 mills erected in Pittsburgh in just one year. Also, the urgent pressure to procure war-related items led the federal government to establish and operate its own manufacturing plants, something it had never attempted outside the armaments industry. There were federal clothing factories in Cincinnati and Philadelphia; pharmaceutical laboratories in New York, Philadelphia, and St. Louis; meat-packing facilities in Knoxville and Louisville.

The Civil War also spawned a revolution in taxation that permanently altered the relationship of the government to the economy. On August 5, 1861, the first income tax in U.S. history came into effect, followed by the Internal Revenue Act of 1862, which levied a cluster of new taxes: stamp taxes, excise taxes, luxury taxes, gross receipts taxes, an inheritance tax, and value-added taxes on manufactured goods. It also created the Bureau of Internal Revenue, undoubtedly the single most effective vehicle of federal power ever created—and one that, now as the Internal Revenue Service, has starkly affected the lives of ordinary citizens ever since. Before 1861 internal revenues rarely accounted for more than one percent of federal income; after 1865 they never once dropped below 32 percent, despite the abolition of the income tax in the 1870s.