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Inflation in the Confederacy


INFLATION IN THE CONFEDERACY began in May 1861 with an issue of $20 million of non-interest-bearing treasury notes. The Confederate congress continued to issue treasury notes throughout the remainder of the year so that it had $105 million in such notes outstanding at the end of 1861.These paper dollars depreciated almost immediately, setting off a spiral of rising prices that, over the next four years, threatened to undermine the Confederate cause.

The principal methods available to finance the war were taxation, borrowing, and printing money. The Confederacy was able to raise little of its wartime revenue from taxes, and usually Confederate bonds found but a meager market. Consequently, the government met most of its expenses by issuing ever-increasing amounts of treasury notes. By the end of 1862, treasury notes outstanding plus issues by the various southern states totaled $500 million and were worth only one-third that amount in gold. A year later this amount had increased to more than $700 million, and gold was quoted in paper notes at 20 for 1.By the end of 1864, the amount of currency had risen to $1 billion, and the gold quotation was 40 for 1 before that year-end.

The Confederate government was not the only one issuing notes in the South. States, counties, cities, and private businesses also issued their own money. Banks, which had been freed from the compulsion to redeem notes in specie early in the war, issued large quantities. And counterfeit notes swelled this sea of paper. As a consequence, the South experienced runaway inflation. During the war, prices in the Confederacy rose more than 9,000 percent. The inflation rate in the North was only about 80 percent.

Although the collapse of the currency came with the loss of the war, it would have occurred shortly in any event. The inflation in the Confederacy ended in a complete loss of value of Confederate issues and exacerbated the burdens of the war upon southerners.


Ball, Douglas B. Financial Failure and Confederate Defeat. Urbana: University of Illinois Press, 1991.

Donald, David Herbert, ed. Why the North Won the Civil War. New York: Touchstone Books, 1996 (

McPherson, James M. Battle Cry of Freedom: The Civil War Era. New York: Oxford University Press, 1988.

Frederick A.Bradford/c. p.

See alsoCivil War ; Confederate States of America ; Inflation ; Prices ; Taxation .

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