Lawyers, Guns & Public Monies: The U.S. Treasury, World War One, and the Administration of the Modern Fiscal State

Abstract

The First World War was a pivotal event for American political and economic development, particularly in the realm of public finance. For it was during the war years that the federal government ended its traditional reliance on regressive import duties and excise taxes as principal sources of revenue and began a modern era of fiscal governance, one based primarily on the direct and progressive taxation of personal and corporate income. Like other aspects of war mobilization, this fiscal revolution required an enormous infusion of national administrative resources. Nowhere was this more evident than within the corridors of the U.S. Treasury Department – the executive agency responsible for creating, managing, and defending wartime fiscal policies. This article examines the vital role that Treasury department lawyers played in constructing, administering, and defending the emerging fiscal polity during the Great War. It contends that these attorneys relied on their social and professional networks, their technical legal skills and their practical experiences as social and economic intermediaries to shape the administrative foundation of the rising modern American fiscal state – a state that contained significant limits as well as achievements.

Keywords: American legal history, tax policy, World War I, fiscal policy, state-formation

JEL Classification: N4, E62, H23, H30, H50, K34