The Property Tax as a Coordinating Device: Financing Indiana's Mammoth Internal Improvement System, 1835 to 1842

John Joseph Wallis

NBER Historical Working Paper No. 136
Issued in November 2001
NBER Program(s):   DAE

The state of Indiana set out to build a Mammoth system of canals, railroads, and turnpikes in 1836, after a decade of intense debate in which sectional rivalries prevented any state action. This paper investigates the role played by the adoption of an ad valorem property tax in ameliorating the sectional rivalries and coordinating the costs of financing the transportation system with the taxes levied to finance it. It also traces the rise and fall of land values in the state between 1835 and 1842, estimating the effect of internal improvement projects on land values.

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