Skip to main content

Inflation in the Confederacy

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.

BIBLIOGRAPHY

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 (orig.pub.1960).

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 .

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Inflation in the Confederacy." Dictionary of American History. . Encyclopedia.com. 12 May. 2019 <https://www.encyclopedia.com>.

"Inflation in the Confederacy." Dictionary of American History. . Encyclopedia.com. (May 12, 2019). https://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/inflation-confederacy

"Inflation in the Confederacy." Dictionary of American History. . Retrieved May 12, 2019 from Encyclopedia.com: https://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/inflation-confederacy

Learn more about citation styles

Citation styles

Encyclopedia.com gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).

Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.

Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, Encyclopedia.com cannot guarantee each citation it generates. Therefore, it’s best to use Encyclopedia.com citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:

Modern Language Association

http://www.mla.org/style

The Chicago Manual of Style

http://www.chicagomanualofstyle.org/tools_citationguide.html

American Psychological Association

http://apastyle.apa.org/

Notes:
  • Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most Encyclopedia.com content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
  • In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.