Heritage Foundation has a good article on the history of the federal estate tax:
http://www.heritage.org/research/reports/2004/01/estate-taxes-an-historical-perspective
Short answer is that prior to 1916 the estate tax was levied intermittently, mainly to fund wars. The modern estate tax was part of the Revenue Act of 1916. It initially had a bottom rate of 1% with a max of 10%, and only applied to estates valued at over $50,000 ($11M in current dollars). They’ve got a nice chart showing how the rates have changed over the years.
Three cheers for the Heritage Foundation and the internet!
Three cheers for you for providing such useful information in a timely fashion!
:^)