The financial history of Pennsylvania from 1776 to 1826 may be roughly divided into three periods. The first, from 1776 to 1793, is characterized by heavy expenditures for war, by the creation of a large war debt, and by unsuccessful attempts on the part of the state to levy direct taxes. *3 These years are also characterized by strict economy in state affairs and by only unimportant instances of expansion of state functions.

The second period extends from assumption of the state's debt by the national government to the enactment of the tax on banks in 1814. During these years the state rapidly reduced that portion of the debt for which the national government had not assumed responsibility. This was made possible by the increasing revenue from land sales and from the state's investments in banks and other enterprises. So prosperous did it become, in fact, that expenditures for other purposes were also considerably augmented. The receipts from investments amounted, in 1802, to $90,000; in 1810 to $134,868; and in 1814 to $197, 788. *4 Receipts from land sales varied greatly, as might have been expected. In 1795 they amounted to about $120,000; *5 in 1802 to $44,922; *6 and in 1809 to $287,354. *7 Considerable revenue was also derived from auction duties and license taxes. This was essentially a period of prosperity for the state treasury.

During the third period, 1814 to 1826, the significant features of the state's financial policy were the introduction of the bank tax in 1814, *8 the enactment of a law taxing dealers in foreign merchandise in 1821, *9 the act of the same year commissioning auctioneers,10 and the heavy investments of the state in bridge, turnpike, and bank stock. In 1826 the state held $2,108,700 of stocks in various banks, and $1,835,512 in turnpike companies, $577,923 in bridge and navigation companies. *11 The dividends on these stocks amounted in that year to $132,154. *12 These subscriptions had, in part, been made from the proceeds of loans.

4 Register General, Report (1802); Aud. Gen. Reports (1810), and (1814), Summary Statement.

5 Register General, Report (1795).

6 Aud. Gen. Report (1802), Summary Statement.

7 Idem (1810), Summary Statement.

8 Act 21 Mar., 1814, Sec. X, P.L. p. 169. On the date given the act was passed over the veto of the governor.

9 Act 2 April, 1821, P.L. pp. 244-246.

10 Idem, pp. 259-261.

11 Aud. Gen. Report (1826), Appendix, p. iii.

12 Idem, p. 5.