Funding the Civil War

1
Funding the Civil War

• North vs. South
• Myles vs. Louis

2
Early South Funding

• No Direct Taxes
• Buy Weapons, not make them
• Issued War Bonds
• Backed by Cotton
• Redeemed 2 years after Confederate Victory

3
Early South Funding

• Cotton Embargo
• Acted too late, left with much cheap cotton
• Confederate currency loses value
• Inflation takes over
• Union Blockade stops trade
• No Indirect tax revenue

4
Meanwhile in the USA
5
Union Funding

• Salmon Chase (Sec. of Treasury) and Philadelphia
  banker Jay Cooke
• War bonds
• Taxes
• Income Tax
• First in US History
• Pay large part of war debt
• Stamp Tax
• Increased over time as war went on

6
Union Funding

• National Banking Act of 1863
• Moved towards recreating national banks
• National Currency Act
• Allows US to print money
• Greenbacks
• Postage Currency
• Replaced by Fractional Currency
• Catches on with public

7
Meanwhile in the CSA
8
Late South Funding

• Deep into debt, inflation rising greatly
• Start Taxing
• Most evaded or paid in Confederate notes
• Allow South-North Smuggling
• Issue Licenses
• Blocked by North
• Only allowed payment in Treasury Notes
• Need more faith in Confederacy

9
Summary

• Union Economy relatively stable compared to
  Confederacy
• Rich Man's War, Poor Man's Fight
• 300 Could hire a substitute in Southern Draft
• Subs outlawed after increase in AWOL's
• 300 Could void one's Union draft roll
• Rolled again, if called again, another 300
• Plantation owners automatically exempt from Draft

10
Summary

• Northern Inflation 80
• Southern Inflation