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,■ y^w^?/V-'#vy //^e**r'»ri^y*j 


ffalt TUcattrntM pablxasitm 





I^le 'Btcemenmal i^ubUcatms 

With the approval of the President and Fellows 
of Tale University^ a series of volumes has been 

prepared by a number of the Professors and In^ I 

structorsy to be issued in connection with the 
Bicentennial Anniversary^ as a partial indica^ \ 

tion of the character of the studies in which the 
University teachers are engaged. 

This series of volumes is respectfully dedicated to 

W^t tfraouat^ of tfie WxVmiixz 








Professor of Political Economy in Yale University 

* ■f 



C^yright, 1901, 
By Yale Universh 

Piibliilmi, Junt, /fo/ 







L Thb Financial Legislation of 1861-1862 • . . . 1 

Introdnction — Organization of the Confederate govern- 
ment — Financial measures — Donations — The 15-mil- 
lion loan — Treasury note issues — Flroduce loan — Belief 
of cotton planters. 

n. Thb Financial Legislation of 1862-1868 . • . • 19 

The first Permanent Confederate Congress — Further is- 
sues of bonds and notes — Interest-beuing notes — Notes 
of small denominations — Produce loans — Cotton loans — 
Foreign supplies — Erlanger foreign loan. 

in. The Financial Legislation of 1863-1864 .... 45 

The Funding Act of March, 1868 — The Sute guarantee 
of Confederate bonds — Voluntary and compulsory fund- 
ing of notes in bonds — The taxation of notes — The Fund- 
ing Act of February, 1864 — Secretary Trenholm succeeds 
Secretary Memminger. 

IV. The Financial Legislation of 1864-1865 .... 71 

The Second Confederate Congress — The effects of the 
Funding Act of February, 1864 — The relation of the 
banks and the State treasuries to its provisions — Its 
amendments — Interest pa3rment on Confederate bonds — 
The financial measures of the last session — Specie loans 
and taxes — The final collapse. 

v. The Legal Tender Agitation 84 

Constitutional provisions — Confederate mints — Legal 
tender notes — Agitation for and against — The question 
of constitntionality and expediency — State legislation. 

VI. The SonTBEBii Debtob3 106 

State Btaj laws — The Buipeniion of debts — Sontliera 
indebtedneu U> the North, 1861 — ConfiHcatioii of Nortb- 
ern propertjr uul of debts due the North — Fedenl con- 
fiKation mcuuroB — State coaG«catioii Uwi. 

VII. Tub Solthebn Banks dcrimq the Wab .... 124 

The banks dnring 1860 and ISGl — Suapendon of ipede 
payments — Banknote inflation and iuoe of email faank- 
uotes — The banking biuineas during the war — Cotton 
banks and bank projects — The banks' attitude toward 
treasury notes — The suspension of the New Orleans 
banks — Bank loans to the goremiDent — The banks' 
specie supply — The government't specie aopply. 

\1II. The Confederate Ccboenct 146 

The alleged scarcity of currency — Fiat money notions — 
State, mnnicipal, and local treaaory notes — Corporations' 
notcB — Personal bills of credit — Hovement to suppteia 
"ghinplastcrs" — CounterfeitB — Federal "greenbacks" 
— Movement to prevent their ctrculaiktn — Foatage 
■tamp currency — Besort to barter. 

IX. SorTRBBH Prices . 

Amount of notes in circulation — llie gold premium and 
its fluctuations — Prices of commodities and their move- 
ments — Prices in currency aiid in gold — Wages and 
salaries — Legislation to limit prices — Price conventions 
— Movement to suppress extortion. 

X. The HaiTART Despotisu of tqe Confederate 


Martial law and the suspension of habea* corpm — Oppo- 
sition to the central government's war powers — Con- 
ecription — Desertions — Impressment — States rights 
sentiments — Opposition to President Davis and his 
Cabinet — The powers of the President and the Congress 
under tlie Confederate Constitutions — Hie peace parties 
in Geor^ and North Carolina. 


Chaptbb Paqb 

XI. Speculation and Trade in the South .... 229 

Speculation in gold, and the moTement to suppress it — 
Government speculation in gold and cotton — The 
Federal blockade — Blockade-running — Imports and 
exports — Import and export duties — Tariffs and pro- 
hibition of imports — Embargoes — Protectionist motives 

— Government imports and exports — Traffic through 
the military lines. 

Xn. The Industries of the South 267 

Salt works — The manufacture of arms and ammunition 

— Iron works — Textile and other manufactures — The 
profits of the manufacturers — The railroads — The 

i crops — The Umitation of the cotton crop — The distil- 

< ling industry — The moral decadence of the South. 

XUI. Confederate and Local Taxation 284 

The direct war tax of August, 1861 — Its apportionment 
and collection — The tax act of April, 1863 — Taxes in 
kind — Tax acts of February and June, 1864, and of 
March, 1865 — State and local taxation — The suspen- 
sion of taxes and the postponement of their collection — 
The State loans — The city finances — Conclusion. 

APPENDIX I. Table of Monthly Currency Prices of 
. Twenty-two Coboiodities apposite 812 

APPENDIX II. List of Authorities 818 

INDEX 825 





Intbodugtioh — Ohoanization of thb Confbobratb Govbbxhbnt — 


— Trbastirt Notb Issubs — Produob Loan — Rblibf or Cotton 

The Civil War is to the student of our country's history 
primarily the inevitable culmination of a g^eat political move- 
ment, a turning-point in the development of our form ^^%df^4.i^W€^ 
government; or it is the subject of an important chapter i^^^w, -^^ i. 
the science of warfare, and treats of the great tactical and ^i, 

technical problems worked out in that memorable conflict. 
This book neglects both of these points of view almost en- 
tirely. It aims to treat the war primarily as a chapter in the 
economic history of our countiy, aa four years during which 
the financial and industrial phenomena, affected by the ab- 
normal conditions of the war, were peculiar and worthy of 
study in throwing light on the working of social forces under 
similar and also under normal circumstances. 

No claim of originality is made for such a mode of treatr 
ment. Others have written the history of the finances and 
industries of the North during the war. The South has 
heretofore been neglected, owing to the paucity of reliable 
material upon which to base the complementary story. Paper 
and ink were scarce in the South during the war, and con- 
temporary records are correspondingly rare. The meagre 



meana of commumcation prevented the newspapers from be- 
coiuiQg the storehouse of authentic information that those in 
the North became. Moreover, the memory of surviving 
Southerners, especially of those at the time in positions of 
authority, to whom we turn for enlightenment, leans to re- 
calling the military events of the war. 

The following pages are based on an examination of all the 
accessible material. This consists of the published and un- 
published records of the Confederate government, especially 
the correspondence of the various executive departments in 
Richmond and the proceedings of the Congress. To these 
should be added the similar but much less complete material 
covering the action of the individual State governments. 
For a knowledge of current events in the legislative assem- 
blies as well as in the markets, we turn to the files of the 
newspapers, of which those published in Richmond, Charles- 
ton, and the otber centres are the fullest and most trust- 
worthy. The lai^ number of existing memoirs, diaries, 
biographies, and similar publications helps considerably to fill 
the gaps that must always perplex the student of Confederate 

To an economist the history of the Confederate States cen- 
tres about the government's attempts to secure the material 
means with which to carry on the war. The wealth of the 
South consisted chiefly of laud and slaves, and its industries 
were almost exclusively agricultural. Mines and manufac- 
tures hardly existed. Its means of transportation were far 
behind those of the North, and its cities, with the exception 
of New Orleans and Charleston, of comparatively slight im- 
portance as trade centres. The States against which the 
South waged war comprised, roughly speaking, two-thirds of 
the country's population. The North was industrially much 
more advanced, its manufactures were vastly more extensive, 
its urban population was more numerous, its trade more 
advanced, its transportation system more highly developed, 
— in a word, its resources were far superior to those of 
> See liat of antborities ia Appendix IL 


the South, and were the cause of the final overthrow of the 
Confederate government. We shall leave untouched the 
question of how much of the South's industrial weakness as 
compared with the North was due to the adoption and per- 
petuation of the slavery regime and the consequent discour- 
agement to a more advanced industrial organization. 

The Southern Confederacy was rapidly organized ; its Con- 
stitution was adopted, and the machinery of its government > ^ 
was in full working order, before the North had been aroused • * 
to the meaning of the movement, and before the XXXVII. 
Federal Congress had met and taken any measures in view 
of the impending conflict. Six weeks after the election of 
President Lincoln the State of South Carolina seceded from 
the Union ; Mississippi, Alabama, Florida, Georgia, and Lou- 
isiana followed suit in January, 1861 ; Texas, on February 1 ; 
Virginia, Arkansas, Tennessee, and North Carolina held back 
till later. ^ 

On February 4, 1861, the Provisional Congress of the Con- 
federacy met in Montgomery, and in a few days drew up and 
adopted a Provisional Constitution. On February 9 Jeffer- 
son Davis of Mississippi was elected President, and Alexan- 
der H. Stephens of Georgia, Vice-President, and on the 18th 
they were inaugurated. .^ . i 

, /' AH the States of the prospective Confederacy were repre- Id T/ >(tj (^« 
I ' sented at the opening of the Montgomery Convention, except J^.,l^l^ 
Virginia, Arkansas, and Tennessee. The delegates included 
many who had been prominent in Washington, and who 
later took a leading part in the fortunes of the Confederacy. 
Among them were C. J. McRae and J. L. M. Curry of ... 

Alabama, Robert Toombs, Howell Cobb, A. II. Keenan, ) ^^^^ ^ 
B. H. Hill, and A. H. Stephens of Georgia, C. M. Conrad 
and D. F. Kenner of Louisiana, W. W. Boyce, R. B. Rhett, 
R. W. Barnwell, and C. G. Memminger of South Carolina, 
J. A. P. Campbell of Mississippi, J. H. Reagan and J. Oldham 
of Texas.^ 

^ The personnel of the Confederate Congresses, 1861-5, and of their com- 
mittees, also the names of the leading government officials, are given in OjSTl Rec^ds 


The Convention was at once organized with R. W. Bam- 
well as temporary, and Howell Cobb as permanent chairman. 
On February 12, the Provisional Constitution having been 
adopted, Congressional committees w6re annoimced. The 
Finance Committee comprised Robert Toombs (chairman), 
R. W. Barnwell, D. F. Kenner, W. S. Barry of Mississippi 
and C. J. McRae ; the Military Committee, F. S. Bartow of 
Georgia (chairman), W. P. Miles of South Carolina, G. S. 
Sparrow of Louisiana and A. H. Keenan of Georgia; the 
Committee on Foreign Affairs, R, B. Rhett, E. A. Nesbit of 
Georgia, James Perkins, Jr., of Louisiana, R. W. Walker of 
Alabama, and L. M. Keitt of South Carolina. 

The election of Davis and Stephens had been unanimous, 

though the latter, as well as Howell Cobb, Rhett, and Toombs, 

were mentioned as possible candidates for the Presidency.^ 

The President at once appointed his Cabinet. Rhett and 

- Barnwell were mentioned as available for the treasury port- 

^Jkn'f iKihy'^^' folio. ^ Barnwell was the President's choice for the position, 

J; ^^i'lfy^'-' but he yielded to the wishes of the South Carolina delegation 

• Jti^n^i^^'^^^and appointed C. G. Memminger Secretary of the Treasury. 

/^4h.^^!J^*T^* Mr. Memminger, a German by birth, had been brought up 

wi//,^'*^"^'^' in the family of Governor Thomas Bennett of South Caro- 

iiftM fU •«K'^^Y* lina, and had studied and practised law in Charleston. For 

*fiW?* ^ ^ many years a member of the State legislature, he had inter- 


47/7iA'«/t^i'^ ested himself particularly in questions of popular education, 

and had also given some attention to financial and banking 

^/v. /#f7^ Y '^ matters. He had displayed no peculiar fitness for the posi- 

lU^ii^^k^^tiS ^^^ ^^ organizer and head of the Confederate finances; and, 

f^j[jrt(.dIirtiSc/ it must be said, while holding that position, his leadership 

TuRu^^^^A evoked much hostile criticism and little commendation. His 

rival in the management of the Federal finances, Salmon P. 

lfj» Wi^^ ^^ Rebellion, 4th S., HI, 1183 & bs. ; N, Y. Herald, Feb. 4, 1861 ; Charleston Courier, 
1!^!^!^ML Aifwt^' ^^^' ^^* ^^' ^®^^' ^®^* ^^' ^^' ^^' ^®^^' ^*y ^^ ^®^' Capers, Memminger, 


301-2 (^ passim) ; Moore, Rebellion Record, IV, 191 ; Moore, Hisfy N, C, II, 
247 ; N, C Standard, Jan. 19, Jane 10, 1864 ; Richmond Examiner, Dec 8, 1863 ; 
Jones, Diary (passim). 

1 Davis, Davis, 42-3; Pollard, Dams, 98-9; Rhodes, Hist*y U, S,, Ul, 

\.i^ * » 


Chase, entering upon his office with a like lack of prepara- 
tion, rose to greater eminence as a financier, notwithstanding 
his blunders. Other Southern statesmen might have been 
selected for the i^psponsible position, but judging from the 
financial history of the United States since Colonial days, 
and from the peculiar conditions that prevailed in the South, 
it is doubtful whether any other Secretary of the Treasury 
would have handled the Confederate finances in any very 
different or more successful way.^ The financial history of oL L • 1 
the South, which it is the purpose of this work to set forth, ^ * 
we are confident will bear out this conjecture. 

The first session of the Provisional Congress lasted till 
March 16, 1861. Various acts were passed to organize a 
Confederate army by calling out 100,000 volunteers to serve ^ 
one year unless sooner discharged. The State militia forces 
were called upon for six months' service ; and, in general, the . 
machinery of the State governments was relied upon. As 
early as March 6, 1861, the term of enlistment was length- 
ened to at least three and at most five years, — a strikingly 
far-sighted measure, — and the organization of a navy pro- 
vided for.* 

The financial measures concern us more directly. At the 
outset the Congress was confronted with the necessity of pro- 
viding ways and means. The newly established Confederacy 
was about to begin a war the dimensions of which none 
could foresee. However, the need of a large revenue was 
patent to all. The individual States could not be expected 
to supply it. An independent Confederate revenue system 
had to be devised by providing for foreign and domestic 
loans and for taxes. It will be seen that, in keeping with 
the practice during most wars, the latter means of securing 
funds was pushed into the background, and the usual em- 
phasis was put upon public loans. We shall attempt in this 

* Capers, Memminger; Craven, Dnvis^ 138 ; DeLeon, Rehd CapitaU, 34; Pol- 
lard, Davis, 175 ; Alfriend, Davis^ 246, 375, 481 ; Richmond Examiner^ Aug. 8, 
24, 1864 ; Feb. 15, 1865 ; Cfuirleston Courier, Nov. 27, 1861 ; Mch. 6, July 12, 

* Acta Feb. 28, Mch. 6 (ch. 26, 29), Mch. 11, 14, 16, 1861. 


chapter to give a concise accoTint of the financial le^lation 
of 1861 and 1862. By a resolation passed on February 8, 
1861, the Congress accepted the gift or rather the loan of 
the State of Alabama, amonatiog to half a million dollais. 
Other States donated considerable funds to the Confederate 
treasury. In the case of Louisiana over half a million was 
offered,^ which represented the amount of United States 
funds seized by the State government in New Orleans. 

Numerous donations by individuals, corporations, and 
churches are mentioned during 1861, consisting of money, 
food, and clothing for the army. These continued during 
the war, and were particularly frequent during its closing 
months. Women figured prominently among the contribu- 
tors. One of these patriotic Southern women even proposed 
that the entire Confederate debt be paid by securing the 
donation of the hair of all women in the South. This, it 
was calculated, could be sold abroad for forty millions of 
dollars in specie, — equal at the time, March, 1865, to two 
billions of dollars in paper currency. It is interesting to 
recall that one instance, at least, of women's selling their 
hair and devoting the proceeds to the support of the govern- 
ment when in distress actually occurred, — during the War 
of Liberation in Prussia.' 

Of course, no great dependence was put upon donations as 
a source of government revenue. The Provisional Congress 
at once authorized the first Confederate loan, the so-called 
15-million loan of February 28, 1861. This act authorized 
the Secretary of the Treasury to issue bonds to that amount 
bearing 8 % interest, payable in ten years, and redeemable 
in five at the discretion of the government by giving three 
months' public notice. After August 1, 1861, an export 
duty of ^ of 1 cent a pound was levied upon cotton, payable 
in specie or in the interest coupons of this loan, the proceeds 

i Tlesol'n Mch. 14, 1S61. 

' Newapnper filei ; Confed. ArcAi'wt.' Memmtuger toCoQKreM, Jaly24, IB6I; 
Joaea, Diary. I, 81,84, 114 ; Resal'n, 3a\j 30, 1861 ; Mch. 13, 1865; Act Ang. 
31,1861; May 19, 1864; Pollard, firrt Ytar of War,2\9; Lynchiurg Vtt^inion, 
Mch. 2b, 1865; OuckSD, ZeitaUtr der ReeBCn, II, !>Bl-2 (not«). 


of this tax being specifically pledged to the payment of the 
interest and the principal of the issue, and the tax was to 
expire when the bonds were eventually cancelled. The Sec- 
retary was also authorized to create a sinking fund. This 
last provision was presumably not carried out; the other 
provisions, however, were faithfully adhered to. The small 
revenue from the export duty was not diverted to other pur- 
poses, and, partly as a result, these 15-million bonds were 
consistently quoted at a higher figure than those of later 
issues. Another and a paramount reason why these bonds 
were preferred by investors was that they were issued before t_ 
any treasury notes had been authorized, and no subsequent 
issues of notes were made exchangeable at par for the bonds, 
which " funding " provision we shall see was applied to later 
loans, and helped to keep the quotations of such bonds near 
par in currency, or far below that figure in specie as the gold 
premium increased. The bonds of the IS-million loan were 
quoted at par, in currency, till the middle of 1862; then 
they rose to 200, and ranged between 125 and 200 till 
January, 1865. In specie, the quotations were between 80 
and 90 till the second quarter of 1862 ; then they fell to 33 
by the winter of 1862-3, and to 20, 17, 10, 7, and 6 during 
successive quarters. 

The Secretary at once arranged to float the 15-million 
bonds at par and obtain specie in payment. Commissioners 
were appointed in each State to stimulate subscriptions. 
Intending subscribers were assured that the export duty 
would supply a sufficient revenue to meet the interest charge 
and supply one million dollars annually for the sinking fund. 
Subscriptions were opened in all the large cities, and met 
with a hearty response, especially in New Orleans and 
Charleston, where over $5,000,000 were taken in the first 
day. A serious difficulty, however, soon arose. Subscribers 
could not easily obtain the specie with which to meet the 
6 % payment called for at the time of subscription and 
the 95 % due on or before May 1, 1861. The general 
suspension of the banks, especially in South Carolina, called 


for action by the Secretary, At the end of March he directed 
the CoDunissionerB to accept banknotes at Uieir specie value. 
This ooiild not have helped matters. On the other hand, he 
could not allow the acceptance of banknotes at their face 
value for fear that the large subscriptions by parties in New 
Orleans and Mobile, where the banks were still solvent, 
would be made in the depreciated banknotes of other States ; 
nor could he refuse to accept payment of sahecriptions in the 
notes of suspended banks. 

Fortunately for the success of the loan the snspended 
Charleston I»nks early in April agreed to redeem in specie 
as many of their outstauding notes as were used in paying 
for the bonds. Other banks followed suit, and the Secretary 
continued to accept such banknotes, which he then redeemed 
for specie at the banks' counters. 

On the whole the loan was a success. Some of the sub- 
scriptions most have been allowed to lapse before the 95 % 
fell due; but by November, 1861, practically the entire 
amount had been subscribed, half indeed during the months 
of May and June, and over 8 millions before July 19, 
1861. Of the entire amount, nearly two-fifths were sub- 
scribed in New Orleans, less than one-fourth in South 
Carolina, less than one-fifth in Georgia, and less than one- 
tenth each in Virginia and Alabama.^ 

Beside offering to redeem such of their notes as were 
presented to the government in payment of the bonds, the 
banks materially assisted the loan by themselves subscribing 
for large amounts. In either case, as a result of the loan, 
the banks lost a large part of their specie to the government, 
as did the Northern banks under Secretary Chase's financial 
rigimt. The specie was presumably sent abroad, or soon 
found its way there as the gold premium increased. 

I Act Mfty 11, 1S61 i Coaftd. ATduvet; Memmiuger'e letten, Mch. IS, 37, 38, 
Apl. 5, 13, 33, JDoe 6, 25, Jaly 30, 1S6I, W. B. JoIiiibod to Memminger. Mch. 21, 
1361, Comni'n to the lame, Uaj 3T, 1861 ; Rcp'U Secr'y Trtai'g; Charleiion 
Courier, Apl. 1, 6, S, II, la, 15, 17-30, Jane 33, Dec. 30, 1861 ; Jan. 4, 1S63 ; JVtw 
bera FrogrtM*, A{j. 17, 1861 ; Offl Btc'di EeUUim, Ist 8., LO, p. M ; Va. oid. 
Jul; 1„1861. 


The issue of Confederate treasury notes began with that /^^^ *^ 
authorized on March 9, 1861. By this act one million dol- Avi-^^ * 
lars in interest-bearing notes were created; a later act of 
August 8, 1861, doubled the amount. They bore annual 
interest at the rate of 3.65 %, that is, a one hundred dollar 
note yielded one cent a day. They were intended as a tem- 
porary expedient, and fell due in one year, but could be re- 
issued when received by the treasury until March 1, 1862. 
Their size — the smallest denomination was $50 — and thei] 
being transferable only by endorsement indicate that the; 
were not intended for general circulation, but as an invest- 
ment. The notion that holders of interest-bearing notes 
would find it to their advantage to hold them as an invest- 
ment and withdraw them from circulation and so prevent 
their redundancy prevailed in the South as well as in the 
North, and was a repetition of the similar experience in 
France seventy years before.^ 

The Confederate government at once began issuing these 
interest-bearing notes, and by July 19 had exceeded the limit 
set by the act of March 9. As a result, the limit was raised 
as has been noted. By November 16, 1861, the new limit, 
$2,000,000, had been passed, but thereafter the issue of these 
notes was superseded by others for which they were ex- 
changed, but on January 1, 1863, nearly one million were 
still outstanding. 

On May 10, 1861, the Secretary presented a comprehensive 
report with recommendations for future fiscal legislation. 
Up to May 1, 1861, the revenues of the Confederate gov- 
ernment had amounted to something over a million dollars, 
practically all of it being funds seized from the United States 
mints and custom houses in the South. The Secretary antici- 
pated no large revenue from import and export duties in the 
immediate future, and looked to loans and direct taxes as 
the chief sources of revenue. For the purposes of direct 
taxation he advised depending on the States' tax machinery 
to raise at most $15,000,000. We shall see ^ how effectively 

1 White, Fiat Money in France, 10 ; Falgrave, Dict'y Pol, Econ., I, 63. 
^ See pages 284 & as. 


and promptly the recommendation vaa carried out by the 
Congress. Tumirig to loans as the chief source of revenue, 
the Secretary expressed his doubts of being able to float 
another beside the 15-miUion loan before the next crop was 
harvested, and had provided intending investors with the 
necessaiy funds. He recommended, however, a provision for 
a SO-miUion 8 % bond issue, the government to accept from 
investors the tender of any reaourcea available as a means 
of credit, — a suggestion pointing toward a produce loan. In 
view of the difficulty of providing an immediate revenue by 
any form of taxation or by the issue of bonds, the Secretary 
urged the issue of three-year treasury notes in anticipation 
of such revenue, and proposed that they should be issued of 
two kinds ; of small denominations, — $5 and $10, — bearing 
no interest and evidently intended to serve as a circulating 
medium; and some of larger denominations, to bear interest, 
and intended to appeal to the investor. 

The last au^eation regarding interest-bearing notes was 

not at the time acted upon by the Congress. But the other 

^ treasury notes and the bonda recommended were autbor- 

\ ized by the act of May 16, 1861. This act provided for 

{ 50 milliona in 20-year~ 8 % bonds, of which more below. 

, In lieu of 20 millions of these bonds that amount in non- 
interest-bearing treasury notes was authorized, in denomina- 

\ tions of at least $6, and redeemable in specie in two years. 

: These " two-year notes " were receivable by the government 
in payment of all taxes except of the cotton export du^, 
and also in payment of subscriptions for the 20-year 8 % 
bonds. Moreover, they could be re-issued and — a very 
important provision — they were made exchangeable at par 
for 10-year 8 % bonds, an issue of which for that purpose 
was authorized. As a result of this funding provision tho 
market price of the bonds could not rise appreciably above 
par. The notes instead of being raised in value by the 
bonds, as it was hoped would be the case, in point of fact 
dragged down the bonda to their level. This result might 
naturally have been apprehended. 



It is evident in this early Confederate loan act that the 
Congress already scented the popularity of a paper money 
policy, and willingly started the ball rolling with an issue of 
20 millions in notes. The Secretary's tax recommendation 
was easily disposed of by pledging the faith of the Confed- 
eracy to provide a revenue with which to cancel the bonds 
and notes and calling upon that official to collect information 
about methods available for raising $10,000,000 — a third 
less than he had suggested — by means of taxation. 

Great difficulty was found in securing the services of 
skilled engravers and a supply of paper, and, as usual under 
similar conditions, assistants were provided for the particu- 
lar government officials in signing the notes.^ By Novem- 
ber 16, 1861, $17,847,955 in two-year notes, out of a total 
of 20 millions authorized, had been issued. Large amounts 
were exchanged for other issues or for bonds during 1862, 
and on January 1, 1863, not quite 11 millions were still 

The two-year notes had barely begun to be issued, — in 
fact, owing to the delay in their manufacture, the banks had 
advanced nearly two millions in banknotes in anticipation of 
their issue, — when the Secretary intimated to the Congress 
on July 29, 1861, that bonds were neither popular nor avail- 
able, and advised further issues of notes. He still held to his 
recommendation of interest-bearing notes in large denomina- 
tions, which were also recommended at a bank convention 
held in Richmond at that time. The standing committee 
of this convention even reported that a further issue of 
100 millions in notes could be safely undertaken by the 

The Congress followed up these suggestions on August 19, 
1861, by authorizing an issue of non-interest-bearing notes to 
the amount of 100 millions and in $5 and larger denomina- 
tions. They were made tax receivable, like the former issues, 
as well as fundable in the 8 % bonds pi*ovided by the same 

^ Capers, Memminger, 336 ; Act Jalj 24, 1861. 

* Bqt't Secr'y Trtat^y, Jolj 29, 1861 ; Charleston Courier^ July 29, 1861. 



act. The redemption of the notes waa pushed off indefi- 
nitely to "six months after the ratification of a treaty of 
peace between the Confederate States and the United States." 
Oa December 24, 1861, the limit of 100 millions waa fui^ 
ttier raised to 150 miUioDS, On the same date an issue of 
6 % bonds or call certificates was authorized and made 
exchangeable for treasury notes, which could again be con- 
verted into 6 % bonds. This issue aimed to combine the 
requirements of an investment with those of the circulat- 
ing medium. By August 1, 1862, 37^ millions of these call 
certificates, and by the end of 1862 a further 22 millions, had 
been issued. The holders evidently preferred to use them as 
currency, and exchanged only a small part for bonds, for 
in January, 1863, 56i milHons, and in April 1, 1864, 40J 
millions were outstanding. 

To return to the issue of bonds nnder the act of May 16, 
1861, the amount was first put at 50 millions, but increased to 
. 100 millions on August 19, and to 150 millions on December 
24, 1861. The bonds became known as the 100-million loan, 
and represented a wide departure from the first, the 15-million 
loan. The latter was aimed at the hanks and the commercial 
community ; the 100-miIlion loan was especially directed at 
the planters. The bonds bore 8 % interest, fell due in 20 
years, and were to be sold for specie, militaiy stores, or for 
the proceeds of the sale of raw produce or manufactured 
articles to be paid in specie or in foreign bills of exchange. 
The Secretary counted on half tiie loan's being a " produce 
loan," the planters virtually turning over their food products 
and cotton to the government in pajrment of 50 millions of the 
bonds. A further part of the issue he expected would go to 
noteholders who wished to fund their notes in bonds. The 
rest of the issue was open for subscription in treasury notes 
or banknotes current at par in the commercial centres. The 
difficulty of obtaining specie in payment of the 15-million 
bonds, and the increasing currency disorders due to tJie paper 
money policy, drove the government to devise these means of 
floating the new loan. By making it at least in part a prod< 


nee loan, the government aimed to secure the needed sup- 
plies without the intervention of the deranged currency. 
Notices of the loan were published in the newspapers solicit- 
ing the contribution of crops. Cotton, corn, flour, bacon, pork, 
beef, and similar produce were desired, — the food articles 
by the commissary, and the cotton by the treasury depart- 
ments. Agents were appointed in the various States, and 
tried to impress the planters with the profitableness of the 
proposed investment if the Confederacy succeeded; and if 
the government should collapse, the planters* property would 
have no value at all.^ 

In order to raise the value of the bonds given in exchange 
for produce, a part of them fell due and were payable every 
six months beginning January 1, 1864, which engagement 
was apparently adhered to, though it could not have improved 
the standing of the bonds, as the redemption was necessarily 
made in depreciated treasury notes.^ 

The agents who solicited subscriptions to the produce loan 
were reasonably successful in their efforts. By the end of 
1861 over 400,000 bales of cotton had been offered, 1000 
hogsheads of tobacco, 5000 bushels of wheat, 270,000 bushels 
of rice, 1000 hogsheads of sugar and molasses, and about 
$1,000,000 worth of other produce ; also 11,000,000 in money, 
that is, in treasury notes or banknotes.^ The preponder- 
ance of the cotton subscribed — in value more than nine- 
tenths of the total subscription — is noticeable, and indicates 
the leading motive in the introduction of the produce loan, 
namely, the relief of the cotton planters, who were largely in 
debt, and were shut out of a market for their staple by the 
efficiency of the Federal blockade. 

1 Ref^t Secr'y Trtas'y, Mch. 14, 1862 ; Charleston Courier, July 4, 1861 (Mem- 
minger to D. F. DraTton); Jan. 3, 25, 31, 1862; Confed, Archives: letters of 
J. A. Jordan, June 27, 1861, C. Mason, Julj 16, 1861 ; Ojfl Rtf^ds Rebellion, 4th 
8., I, 689-91 (Memminger to Comm'rs) ; Economist (London), XIX, 1261 (Nov. 

* Richmond Examiner, Dec. 22, 1864; Charleston Courier, Jan. 8, 1862; Jan. 
25, 1865 ; Act Jnne 13, 1864. 

• Confed, Archives: Rep*t8 to Memminger, Jan. 16, 1862, Jan. 9, 1863. 


PoUard clums that President Davis originated the idea of 
a produce loan.' This, however, is not likely, as the notion 
that tlie government should secure the cotton by making 
advances to the planters was very widely expressed and dis- 
cussed. In June, 1861, a correspondent of the Treasury 
Department* ui^d the government to pay for the cotton it 
secured under the produce loan of May 16, 1861, in 8% 
treasury notes instead of in bonds. The latter were not 
desired by the planteraj the notes, on the other hand, would 
enable them to cancel their debts. " Relieve private indebt- 
edness and you relieve the government" was the writer's 
advice. This plan involved making the notes a legal tender, 
which was also proposed by another correspondent.* 

From all sides came proposals that the government should 
buy the cotton crop outright with an issue of treasury notes 
as a means of saving the planters from bankruptey and sup- 
plying a ready currency based on the foreign scarcity value 
of cotton and tobacco. It was the old device of converting a 
form of capital having at the time and under the peculiar 
conditions only a fictitious value, into some other form in 
which it could be used for paying debts. The issue of paper 
money based on the security of the confiscated land of the 
imigris during the French Revolution offers a striking parallel. 
The notion prevailed that the government was converting 
into available form a valuable asset. A large debtor class 
had arisen, its nucleus being the persons that had bought the 
confiscated land from the government, and these persons were 
interested in farther issues of notes. The Southern planters 
were in the position of speculators, heavily in debt for the 
purchase of land which they are anxious to realize upon at a 
time when the real estate market is disoi^anized, and no 
buyers on any terms can be found. At some of the conven- 
tions of cotton plantera held to devise means of relieving 

> Polkrd, Davit, 173. 

■ Confid-Archica: W. C. Bibb to U«inminget, June 16, 1861. 
* Conftd. Ardiina.- W. C. Smedea t« Memming«t, Jnl; 10, ISSI ; cf. Rich- 
mond Whig, Not. 14, ISSI (corrMp.). 


their distress, resolutions were offered and sometimes passed 
calling upon the government to issue notes and buy at least 
a part of the cotton crop.^ 

Others had in mind the relief the banks could and should 
offer the planters by making liberal advances to them on the 
security of their crops. Some wished the banks to supple- 
ment the relief offered by the government, and urged a policy 
of banknote extension and a suspension of specie payments to 
meet the demands of the situation; others urged that the 
government should not be drawn into straining its credit in 
order to make advances to the planters, but should leave the 
matter to the brokers and bankers.^ 

Secretary Memminger's attitude toward the policy of gov- 
ernment advances to the cotton planters was rather equivocal. 
In his report of May 10, 1861, he hinted at the planters' put- 
ting their cotton at the government's disposal as a means of 
credit, that is, in exchange for bonds issued on their security. 
This he soon saw met the wishes of the planters, and he wrote 
to a correspondent in South Carolina in July, that he was 
thinking out a plan of lending the government's credit to 
planters by advancing treasury notes at the rate of 5 cents 
per pound of cotton offered, the notes to bear interest He 
claimed such a plan would offer all the advantages without 
the evils of a bank. On further consideration of the subject, 
however, he tried to shift upon the Congress the responsibility 
of inaugurating some relief measures, and assured the planters 
in a circular, dated September 5, of the department's sym- 
pathy with their difficulties. A month later he had become 
convinced that such government aid was inadvisable, and 
strengthened his position by maintaining that it would be 

1 N. 0. Price Current, Jane 22, 1861, quoting Mobile Register ^ Advertiser; 
Charleston Courier, July 22, 1861, Feb. 26, Mch. 3, 1862 (Convention, Richmond, 
Feb., 1862); Confed. Archives: L. P. Blackbourn to Memminger, Oct. 2, 1861; 
DeHaw's Rev., Oct. & Nov., 1861, p. 462 (Convention, Macon, Oct., 1861); Pol- 
lard, Davis, 178-9; Richmond Examiner, Nov. 4, 1861; Charleston Mercury, 
Jan. 16, 1862 (Convention, Onacbita Conntj, La.). 

> Richmond Whig, Nov. 14, 1861 ; Charleston Courier, Jolj 29, Oct. 16, 17, 
Dec. 9, 1861 ; N. 0. Delia, Oct. 5, 1861. 


clearly nncoiutitaUonaL However, be snggested thst the 
ConstitaUon might be amended to meet these objections. On 
the other band, his arguments againat the practicability of 
either purchaaing the entire cotton crop or making advances 
on a lai^ part of it vere convincing. Such a scheme in- 
volved the isane of from 100 to 175 milliona in additional 
tieasnrj notes, and wonld wreck the govemment'B finances 
by destroying it« credit at the ontset of what promised 
to be a gigantic war. The value of its currency would be 
doomed, and the government would be in no way benefited 
by holding the planter's note or his cotton, neither of which 
the government wanted.' 

At the time it looked as if the Congress had taken the same 
stand that ttie Secretary bad finally taken, and had determined 
^lainat any legislation for the relief of the planters.' But 
the seed had been sown in providing for a produce loan, 
which gave the planten a taste of what they might expect in 
the way of relief from the government, and provided the 
government with a lai^ supply of cotton, which at first and 
as late as the fall of 1861 Mr. Memminger looked upon as a 
white elephant, but which he soon learned to use as a means 
of speculation, especially by issuing bonds upon its security. 
This phase of the Confederate finances we shall present 
under the head of the foreign loans attempted and effected.* 

The relief measares which the Confederate Congress re- 
fused to the planters the individual State legislatures freely 
provided. Mississippi led the way during the first year of the 
war. On August 2, 1861, the State legislature memorialized 
the Congress, urging that body to declare the Confederate 
treasury notes a legal tender. It represented also "the 
expediency of affording the planters a market for their cotton 
. and tobacco crops by the purchase of the same or liberal 

> Btft Sea's Trtat'y, Maj 10, ISfil ; Charlaton Courier, Sept. 19, 18S1 
(Uemmingei to inbacriben oF produce loim) ; Offl Eec'di Rebeitian, «th S., L 
fle9-ei ; Capen, Mtmmngtr, 353; Moore, Rebellion Record, I, a06-8; Cmfid. 
Arehivti: Memminger to W. W. Harlse, JaljS, 1861 ; Pollaid, £>ani, ITS-SO. 

* Neiebent Progrtn, Dec. T, 1861 ; DtDovfi Bev., Dec, 1861, p. 558. 

* See pagM SG3 & u. 


advances to them, by the Government, of Treasury notes for 
those commodities, in order to afford to the Government a 
basis for the redemption of the notes so issued, and to afford 
the necessary moneyed facilities to the planters and others 
to pay their individual liabilities and carry on their business 
without interruption or material embarrassment during the 
war." The memorial added that such a policy would put 
a powerful lever — in the shape of a large supply of cotton — 
in the hands of the government with which to coerce the 
Federal government into peace ; and at the close of the war 
the Confederate States would be most free from foreign in- 
debtedness, and its inhabitants most wealthy of any nation, 
because the money was spent among their own people, — the 
latter a familiar protectionist argument that had never ap- 
pealed to the South. Tliis memorial did not convince the 
Congress, and in the winter of 1861-2^ the Mississippi legis- 
lature authorized large amounts of State treasury notes in 
denominations as small as one dollar to be advanced on cotton 
at the rate of 5 cents a pound, — roughly one-half of its 
market value at the time, — the cotton being left on the 
plantations. With specie driven out of circulation, people 
welcomed the new currency. One newspaper praised it 
because it was " based on our productions, which at present 
is dead capital." * It was again the case of the " land poor " 
speculator welcoming a paper money inflation and the market 
it created. 

In Louisiana a similar scheme was proposed in the legis- 
lature. At first it was planned to issue 10 millions in State 
treasury notes for the relief of the cotton planters; the 
amount was reduced to 7 millions, but the bill was never- 
theless vetoed by the Governor, to the disgust of the planters 
and with the approval of the bankers and cotton factors in 
New Orleans.' 

The fifth session of the Provisional Congress closed on 

^ Miss, acts Nov. 29, Dec. 29, 1861 ; Jan. 29, 1862 ; 22 Wallace, 479. 
« Vicksburg Eve. Citizen, Dec 24, 1861. 
< Charleston Courier, Jan. 29, 31, 1861. 




February 18, 1862, and with it the first year of the Confed- 
eracy as an organized government. The financial measures 
of this first year may be summarized as follows : An issue of 
15 millions of dollars in bonds had secured for the govern- 
ment's use a large part of the available specie held by the banks. 
This went abroad for the purchase of supplies. A further 
issue of 150 millions in bonds had largely been subscribed for 
in produce, especially in cotton, which had opened the way 
for an agitation in favor of relieving the cotton planters by 
government advances on the security of their product, and 
which also laid the foundation of the government's later 
policy of hypothecating the cotton at home and abroad by 
issuing cotton bonds. This loan was in part also paid for in 
treasury notes, large issues of which had been authorized. 
Attempts were made to borrow the capital of the people 
without disturbing the circulating medium. Some of the 
notes bore interest, and most of them were fundable in bonds, 
in the hope that they would be taken out of the circulation 
and treated as an investment, thereby obviating a redundancy 
of the currency. But the seeming impossibility of obtaining 
any revenue ivom taxation and the difficulty of floating any 
bonds after the first issue drove the authorities irresistibly to 
relying more and more upon a forced loan in the shape of non- 
interest-bearing notes. Before the beginning of 1862 the 
Confederate government was irretrievably committed to a 
paper money policy, which became the chief reliance of its 
treasury. The total expenses of the first fiscal year were 
over 165 millions ; the receipts, 139 millions ; the difference 
remaining in the treasury in the shape of treasury notes to 
the credit of disbursing officers. Of the total receipts, 
105 J millions, or 76 %, were derived from the issue of 
treasury notes; 31 millions, or 22%, from the issue of 
bonds ; and the remainder, from the seizure of United States 
funds and from an insignificant customs revenue. 

It is important to notice that apart from customs duties 
taxation was not resorted to for the purpose of raising a 




Bonds and Notes — Intbbbst-Bbuuko Notes — Notes of Small 
Denominations — Producb Loans — Cotton Loans — Foreign Sup- 
plies — Erlanobr Foreign Loan. 

The Permanent Constitution went into effect on February 
18, 1862. It had been ratified by the various State legisla- 
tures during the previous spring. Davis and Stephens, who 
had been re-elected on November 6, 1861, entered upon their 
six-year terms on February 22, 1862, and the Senate and 
House of Representatives convened four days earlier. The 
Senators included, among others, C. C. Clay, Jr., and W. L. 
Yancey of Alabama, B. H. Hill and H. V. Johnson of 
Georgia, W. E. Simms of Kentucky, W. T. Dortch, and 
George Davis of North Carolina, R W. Barnwell and J. L. 
Orr of South Carolina, R. M. T. Hunter of Virginia, G. A. 
Henry of Tennessee, and L. T. Wigfall and W. S. Oldham of 
Texas. The important Finance Committee comprised Sena- 
ators Barnwell, Hunter, Davis, and Henry. Of the 26 
Senators, 14 were former members of the United States 
Congress; of the 106 Representatives, 33 had similarly repre- 
sented the South in Washington. T. S. Boocock of Virginia 
was elected Speaker. The personnel of the important House 
Committees was as follows.: the Ways and Means Committee 
comprised D. F. Eenner of Louisiana, G. W. Jones of 
Tennessee, M. L. Bonham of South Carolina, M. R. H. 
Gamett of Virginia, J. Mcflae of Mississippi, F. S. Lyon of 
Alabama, W. B. Machem of Kentucky, H. Holt of Georgia, 
R. MacLean of North Carolina; the chairman of the Com- 


mittee on Military AfEairs was W. P. Miles of South 
Carolina; of the Committee on Foreign Affairs, H. S. 
Foote of Tennessee ; o£ the Judiciary Committee, L. J. 
Gartrell of Georgia. 

The new Congress had to face a serious crisis during its 
first session. After the Federal inactivity during the second 
half of 1861, the spring of 1862 brought a succession of Con- 
federate reverses. Forta Henry and Donelson fell eariy in 
the year. General Johnston retired from his position at 
Manassas, the hopes centred in the '^ Merrimac " were 
shattered hy the " Monitor," important seacoast towns were 
captured, and the brilliant Federal operations on the lower 
MissiBsippi followed. These reverses were reflected in the 
stringent measures adopted at Richmond. The writ of 
habeas corpus was suspended by the Congress during the first 
days of the session, martial law was declared in various cities, 
and the first conscription act was passed soon after.' 

The fiscal legislaUon of the session followed Mr. Mem- 
minger's report of March 14, 1862, — he had been re-appointed 
Secretary of the Treasury. In this report he reviewed the 
operations of his department during the past year. He 
pointed out the difficulties attending the issue 'of bonds, 
owing to the wholesale suspension of the banks, which, how- 
ever, he did not bring into connection with the government's 
paper money policy ; and indicated that the produce loan had 
aimed to avoid these difficulties, and had supplied the gov- 
ernment with cotton as a basis for credit. He still counted 
on the efficacy of notes being "fundable" in bonds in "re- 
lieving any redundancy in the currency, by withdrawing a 
part of the circulation," though he was obliged to confess that 
the currency was already redundant 

The Secretary's estimate of government expenses during the 
coming nine months was 215 millions. To meet this amount 
he counted on 18 millions in bonds still available of the 
lOO-million loan, and on 20 millions as the proceeds of the 
direct war tax, levied on August 19, 1861, and collectible 
1 Bee pages ISG, 193. 


during 1862,^ the amount of which he overestimated by 
several millioiu the remainder, or 176 millions, he proposed ( ^ 
to raise by new taxes, and by the issue of bonds and of notes. 
He was not very urgent about establishing a tax revenue, 
and only proposed a tax of sufficient size to sustain the pro- 
posed loan, that is, to pay the interest on the additional 
bonds. More than this could not be expected, he thought. He 
proposed to issue bonds to the amount of 164 millions, and 
make subscriptions payable in produce. Intending sub- 
scribers, he said, had property in abundance, but not in the 
shape of money. They should be accommodated, and the 
government should accept farm produce, clothing and other 
manufactured articles, railroad transportation, coal, and iron 
for its bonds. Moreover, he recommended devising a plan by 
which the government might use this produce, — other than 
the part of it available for army use, — for remittance abroad 
with which to purchase the necessary foreign supplies. He 
had distinctly in mind the possibility of the government's 
taking the place of the planters in h3rpothecating their staple 
or shipping it abroad and drawing against it. ** The cotton 
and tobacco crops have usually furnished the means of mak- 
ing foreign payments, and they can probably now be used 
with advantage for the same purpose." As to the issue of 
treasury notes, the Secretary granted that it was a most 
dangerous method of raising a revenue, and that 108 millions 
were then outstanding, a fifth more than the entire currency 
of the South before the war, and 8 millions more than he had 
in a previous report deemed a safe limit. Still, he recom- 
mended an additional note issue of 50 millions, 10 millions of 
which were to be held in reserve by the treasury and issued 
to holders of deposit certificates on any sudden and unex- 
pected call, and to be returned to the treasury as soon as 
possible, — a futile proviso on the face of it. 

The Congress soon acted upon the Secretary's recom- 
mendations, and adopted those regarding the issue of bonds 
and notes, but did not attempt for the present to add to 

^ See pages 286 & 88. 


the war tax levied in 1861. The act of April 12, 1862, 
sometimes dated April 18, 1862, authorized aa issue of 
165 millions in 8 S bonds payable in 30 and redeemable 
at the option of the government in 10 years. The same 
act also provided for additional treasury notes to the 
amount of 50 millions, of which, as desired by the Secre- 
tary, 10 millions were to be held in reserve for sudden 
emergencies. These notes, as heretofore, were made ex- 
changeable at par for bonds. For this purpose a part of 
the 165 millions in bonds were to bear 6 % interest and to 
run 10 yeaxs,^ and they were made reconvertible into notes 
at the holder's pleasure. This desire to make notes and 
bonds interchangeable had its peculiar attractions. Though 
aimed iu theory at preventing a redundancy of the currency 
by eucouraging note-holders to exchange notes for bonds 
and presamably to their advantage, In practice it did not 
materially reduce the amount of notes in circulation, but 
simply enabled those who advanced their produce to the 
government to exchange the bonds they received in pay- 
ment, for notes with which they paid their debts or made 
their ordinary purchases. Or, if the subscribers to the prod- 
uce loan could not conveniently make the exchange, they 
sold their bonds, thereby depressing their value, and thus 
obtaining the desired notes. 

The confusion between bonds as an investment and notes 
as a circulating medium, and the futile attempts to make 
a bond as attractive as a note and still keep it out of circu- 
lation and prevent its adding to the Inflation of the currency, 
are further illnstrated in the interest-bearing notes author- 
ized by the act of April 17, 1862. The previous act of 
March 9, 1861, had created 3.65 % notes ; a year later simi- 
lar notes were authorized and made more attractive by 
bearing interest at the rate of 7.30%. They were issued 
in denominations of $100, and were payable six months 
after a prospective treaty of peace ; tliey were, as usual, 

' The limit wm Ant pat at 50 millicmA and raiwd od Septembei 23, 1862, to 


receivable for taxes except for the cotton export duty, and 
were issued in lieu of a part or all of the 165 millions in 
bonds just provided for. They were evidently planned to 
combine the attractiveness of an interest-bearing investment 
with the readiness of circulation of a note ; and still it was 
hoped they would not become generally current, but be kept 
locked up by investors. Bankers had advised the issue of 
such notes.^ At first the banks received these interest- 
bearing notes willingly. Large amounts were issued; on 
August 1, 1862, nearly 23 millions were outstanding; and 
on January 1, 1863, 114 millions. The government soon 
found that they were not being held as an investment, but 
were largely circulated, — the easier because of the abnor- 
mally high range of prices, — adding greatly to the redun- 
dancy of the currency.* They continued to be a source of 
annoyance to the government, and finally in connection with 
the notorious funding act of February 17, 1864, it was 
provided that these 7.30 % notes should be no longer tax 
receivable, and should be deemed bonds and be payable 
two years after a treaty of peace. They continued to circu- 
late, notwithstanding, and a final attempt was made on 
November 28, 1864, to drive them out of circulation by 
making them exchangeable for 30-year 6 % bonds, which 
could not have succeeded, for it was generally more profits 
able to circulate the notes than to hold them. As the 
inflation of the currency grew, the popular demand for in- 
creased issues of notes and the requirements of the gov- 
ernment to meet increased appropriations owing to the 
growing dimensions of the war and the rapid rise in prices 
inevitably led to further issues. 

The demand for notes in small denominations was met 
on April 17, 1862, by an issue of 5 millions in notes of 
denominations of 81 and $2, which did not bear interest 
and fell due six months after the ratification of a treaty 

1 CharlesUm Courier, July 29, 1861 (Richmond bank conyention) ; Confed, 
Archives : Den^gre to Memminger, Dec. 28, 1861. 
* Eichmond Examiner, 3vlj 19, 1862 (edit), 


of peace. These notes were in great demand, and their 
amount was increased to 10 millions in the fall of 1862 on 
the Secretary's recommendation.' By the end of tiie year 
over 6 millions were outstanding. In tiie following spring 
treasuiy notes in denominations of less than $1 were au- 
thorized to meet the demand for small notes, and began to 
appear in circtdation in June.* 

Besides increasing the amount of small notes the act of 
September 23, 1862, made a sweeping provision for issuing 
bonds and notes, — preferably bonds, — like those already 
authorized,^ without limit to meet the appropriations of the 
Congress. These necessarily grew to enormous proportions 
with the general inflation of prices. From February 18, 
1862, to the end of the calendar year the Secretary reported 
total government expenditures of 417 millions, — about 
twice the amount he had anticipated in his report at the 
beginning of the period, of which 362 millions were for the 
support of the army and navy, and nearly 36 millions' for 
interest on loans and redemption of notes, all payable in 
notes. Of the receipts during this period 85 % were from 
the issue of treasury notes and call certificates, — roughly 
one-half of them interest-bearing, — and 9% from the issue 
of bonds. 

Some efforts were made to avoid putting so much reliance 
upon the issue of notes by extending the system of produce 
loans, but this did not improve matters materially. An act 
of April 21, 1862, was passed on the Secretary's recommen- 
dation, authorizing the exchange of bonds for any articles the 
government had need of. Subscriptions were invited in cot- 
ton, tobacco, — up to the amount of 35 millions in bonds, — 
and in any agricultural produce. The Secretary was to obtain 
advances on the produce, especially the cotton, by hypothe- 
cating it at home or abroad and issuing produce certificates, 

> Rep'C Secr'y Treca'i/, Aug. 18, 186S ; act Sept. 23, 1862. 
* Act Apl. 27, 1863 ; Rickmond Examiner, Apl. 3, June !, 1863 ; CharleMoit 
Cottrier, Jane 13, 1S63. 

■ B7 acta ot Aug. 19, D«c. 2t, 1861, & Apl. 12, 1862. 


that is, he was authorized to swell the redundant currency 
in a roundabout way. Regulations were published describ- 
ing the methods of subscribing cotton in kind, subscribers 
being allowed to retain the cotton in storage on their plan- 
tations, and were even allowed to pay their subscriptions in 
treasury notes at any time, which provision was opposed to 
the very object the loan was aimed at, and enabled the plan- 
ters to profit by a rise in the value of cotton, by holding it 
and paying their subscriptions in notes.^ 

The system of produce loans was further extended by an 
act of February 20, 1863, and especially by a secret one 
dated April 30, 1863,^ which provided for an issue of 
250 millions in 20-year 6 % bonds to be sold for agricultural 
produce or for treasury notes at not less than par. Interest 
was payable in currency or in cotton at 8 pence a pound. 
The principal was payable in specie or at the discretion 
of the government in New Orleans middling cotton at 6 
pence per pound, the cotton in either case to be delivered 
at any one of seven enumerated Confederate ports. So, for 
instance, the interest due on June 1, 1864, was payable in cot^ 
ton delivered at Mobile.' Before that date, however, namely 
on February 6, 1864, this secret act had been repealed. At 
the time the rise in the value of cotton abroad after the 
sununer of 1863 made it seem inadvisable to the Secretary 
to make loans payable in specific amounts of cotton, and 
induced him to make subsequent foreign contracts payable 
in money obtained from the sale of cotton which he had 
already shipped* While the above loan act was in force 
5 millions of the bonds had been floated in July, 1863, 
at above par in treasury notes, and another 5 millions had 
been placed. 

The individual States followed the example of the Con- 
federacy in issuing bonds on the security of cotton obtained 

1 Charleston Courier, Jane 3, 5, 12, 1862. 

* Text in Charleston Mercury, July 18, 1863, & Charleston Courier, Oct. 31, 

* Charleston Courier, May 28, 1864 (Notice, Secr'y Treaa'y). 

* Confed, Archives: Memminger to McRae, Joly 17, 1864. 


in exchange for the bonda or by the issae of State treasury 
notes. Texas made especially strong efForte to engage in 
sueh speculations. Her cotton bonds were ' made payable 
from six to twelve years after the close of the war, and the 
interest of one issue was made cumulative and payable in 
specie one year after its close. The State lands were also 
hypothecated as security for the eventual payment of these 
bonds, — as was done during the French Revolution. This 
financial experiment of Texas interfered with the similar 
cotton speculatjon carried on simultaneously by the Con- 
federate government through its Trans-Mississippi Cotton 
Bureau, and led to a conHict between the two governments, 
such as we shall have more examples of. North Carolina 
and Mississippi engaged in similar ventures. In the case of 
Mississippi the avowed purpose was the relief of the cotton 
planters by supplyiag them with a "sound circulating 
medium;" in the case of North Carolina it was to obtain 
supplies from abroad in exchange for the cotton bonds based 
on the cotton which was bought and stored by the State 
governments. The transactions were supervised by a com- 
missioner who had gone to Europe in the interest of the 
State government as early as the fall of 1861.' 

Early in the war the affairs of the produce loan had been 
in charge of a special department. This bureau was chiefly 
concerned with securing cotton from the planters in ex- 
change for bonds and to some extent for notes, and with 
shipping it abroad, or using it as collateral security in ob- 
taining advances, especially from foreign merchants. In all, 
some 430,000 bales were obtained by the government during 
the war, most of them before the fall of New Orleans in the 
spring of 1862. Less than 20,000 bales were successfully 
exported, of which about 19,000 bales reached the foreign 
consignees. Some 2000 hogsheads of tobacco were also 

■ Tex. acta Dec. 10, IB, 1S63; N. C. Slandard, Dec 15, 18S3; N. C. acts 
Jnly 6-7, Doe. U, 1863; Raltlgk Proj«j»,DM. 18, 1865; Peyton, J w. Criiis, I, 
113; N. C. CmveniiBH, 1865, Rep'i Tretu'r; CharUttm Courier, 3sa. IB, 1863; 
Og'l Btddt Rtbellum, 4th S., U, 351 (Got. UiM. mesa.); It 8., XXXTV, 
pt. 3, pp. 730-4. 


secured in Virginia by the government, of which an insigni- 
ficant amount was exported. Of the government cotton that 
remained in the country, — generally stored on the planta- 
tions, — about a quarter was destroyed on the approach of 
the enemy or was captured. Much of it was ruined by ex- 
posure or sold to the enemy or to others. As the price of 
cotton rose abroad, the planters became reluctant to let the 
government have the advantage of speculating in their staple, 
and the subscriptions to the produce loan fell off. Sub- 
scriptions already made were evaded to a great extent, no 
difiScult matter when the enormous territory to be covered 
by the officials and the inaccessibility of many of the plan- 
tations are considered. Toward the end of the war the 
government made some efforts to secure more cotton by 
impressment or by offering a good price in notes, the cotton 
being sold for sterling exchange and shipped. It is evident 
that the produce loan had run its course before 1863, and 
that later no considerable additions were made to the supply 
of government cotton obtained thereby.^ Already in 1863 
there is shown some unwillingness on the part of the planters 
to lose control of their cotton, for during the nine months 
ending September 30, 1863, only $2,000,000 in cotton certi- 
ficates were issued. Six months later, however, the amount 
outstanding had risen to over $8,000,000. 

In another connection we shall point out ^ the extent and 
character of the cotton exports undertaken by the Confeder- 
ate government. "We are here concerned with the govern- 
ment's policy of hypothecating the cotton in its possession 
by effecting or attempting loans on its security. The au- 

1 DeBow't Rev,, II, 328 & ss. (1866) ; Rtp*t Prod, Loan Off-j Nov. 30, 1863; 
Rep'U Secr'y Treas*y; Charleston Courier, Feb. 10, Mch. 13, 1863; Richmond 
Examiner, Feb. 5, Mch. 10, Dec. 30, 31, 1863; Con/ed. Archives: Letters to 
Memminger, Jan. 9, 30, 1863; Apl. 9, 1864; Memminger to Davis, Maj 25, 
1864; to Secr'y Navv, Aug. 5, 1864; Secr'y Trenholm, Nov. 7, 10, 29, 1864; 
Ojgri Rec'ds RebeUion^'lst S., XXXIV, pt. 2, p. 1 106 ; LII, pt. 2. p. 507 ; N. C, Stand- 
ard, Jnly 1, 1864 ; McRae in London Times, Aug. 6, 1863 ; Jones, Diary, U, 382 
(Jan. 11, 1865) ; Lynchburg Virginian, Jan. 23, 1865. 

' See pages 252-4. 


thorities were urged, espeoiallj in the ■winter of 1862-3, to 
purchase the entire cotton crop, the value of which in the 
world's market, it was seriously maintained, was sufficient 
to pay the entire Confederate deht and re-estahlish the cur- 
rency on a specie basis.' The notion prevailed that "no 
nation has ever had in its hands so much wealth in a single 
article of production." Similar proposals were constantly 
made with a view to the government's assuming control of 
the avowedly valuable monopoly of the cotton supply, in 
order to establish an unlimited credit abroad.' 

Under similar conditions in 1779 Hamilton had urged 
Robert Morris to effect a foreign loan as the only remedy for 
the disturbed state of the currency.' In Revolutionary times 
the financial condition of the treasury compelled the govern- 
ment to obtain the highly piized foreign supplies by placing 
loans on the Continent on the security of exported American 
products, especially tobacco and cotton,^ which it was foond 
very difficult to get to their destuiation owing to the watch- 
fulness of the English cruisers. Similarly the Confederate 
government elaborated financial transactions with foreign 
business houses which looked toward die export of cotton 
through the Federal blockading fleet The cotton was con- 
signed especially to Fraser, Trenholm, and Company of Liver- 
pool, Uie branch house of John Fraser and Company of 
Charleston, and the foreign purchasing agents of the Confed- 
erate States drew against it in bujring supplies and ships. As 
soon as the belligerent rights of the South were recognized 
by Great Britain in the spring of 1861, these agents were 
despatched. Among them J. D. Bullock was particularly 
active in attempting to bay or build men-of-war. Caleb 
Huse and C. J. McEae were also active in financing the pur- 

• Pclertimrg Expnu, Jan. 7, 1863 ; Rkhmmd Enguirer, Jui. 20, 1853 (cor- 
TMp.) ; RUhnond Ezamimr, Apl, S, ISBS. 

" Ojf i Ric'dt lUbtaion, «h S, II. 987-8 (Aw't Secr^ War to Secr'y Wat, 
Oct., 1S63) ; iBt S., XXVI, pt. 2, pp. S73-S ; Richmomi Examintr. Jan. a, Dec 9, 
1864 (Got. Vb. mess.) ; Auffiula Dailg ConMlilationalitt, Feb. 9, ISM (eorreap.). 

' SniDDei, Financier Am. Revol'a, 1, 83. 

< Ibid.,1, 181-7,252-1. 


chase of foreign supplies. Others were stationed in Bermuda 
and in the West Indies to superintend the transshipment of 

Presumably a large part of the proceeds of the first, the i 
15-million loan, were sent abroad to these agents. There- / 
after, when the specie supply of the government was ex- 
hausted, an attempt was made to keep them supplied with 
funds by shipping cotton, and especially by hypothecating 
the cotton owned and held by the government, and floating 
Confederate securities, particularly cotton certificates, abroad. 
During 1861 and 1862 Major Huse alone bought and shii)ped 
supplies to the value of $4,000,000, half of them consisting 
of small arms, and still had on hand over $1,000,000 worth.^ 

There is evidence of wastefulness in securing the supplies, 
the contractors asking and obtaining extortionate prices for 
their goods, and even persuading one of the government's 
agents to share in the profits by accepting a commission.^ 
Similar wastefulness had characterized the securing of for- 
eign supplies during the Revolution.' 

Within a few days of the establishment of the Treasury i 
Department it had received the suggestion of a foreign loan,* 
and two months later a correspondent offered his services as 
European treasury agent to float a loan of 10 to 20 millions.* 
The government, however, did not enter into the matter, 
until its accumulation of cotton under the operation of the 
produce loan suggested the possibility of establishing a large 
credit abroad by consigning cotton shipments to foreign bank- 
ers and drawing against them. Negotiations were opened 
with the New Orleans agents of foreign bankers, but they 

1 Case U. S.f Arbitration Geneva Conference, 90-1 ; Off'l Rec*ds Rebellion, 
4th S., I, 220, 343 ; II, 383^, 645, 647, 658 ; Confed, Archives : Memminger to 
8ecr*y Navy, Jan. 5, 1863 ; to A. H. Stephens, Sept. 3, 1862 ; Rep't Secret/ Treas^y, 
JtJi, 10, 1863 ; Jones, Diary, II, 47; Bankers* Ma^ (London), XX III, 394 (May, 
1863); Richmond Examiner, Jan. 29, Feb. 27, Mch. 10, 1863; Rhodes, Hiafy 
U. 5., IV. 377 & SB. 

« Ojgri Rec'ds Rebellion, 4th S., H, 557, 891, 982-5. 

• Sumner, Financier Am, RevoVn, I, 183; II, 89, 94. 

^ Confed, Archives : C. G. Baylor to Memminger, Feb. 26, 186L 

» Ibid. : W. W. Wright to Pres. Davis, Apl. 22, 1861. 


came to nothing, presumably owing to the capture of tliat 
city.' Other offers to negotiate a foreign loan on the hypoth- 
ecation of cotton were made in 1862 by leading foreign bank- 
ers and their Southern representatives." 

In the fall of 1862 the LoTidon Timeg^ stated that the 
Confederate government contemplated collecting a million 
bales of cotton and selling them in Europe, but very naturally 
questioned the government's ability to get such an amount 
of cotton out of the country. StiU there were, it said, many 
apeculators in England and on the Continent, who were 
ready to enter into a transaction b; which a part of the 
cotton would be hypothecated. In fact, the rise of cotton 
in the English market from 7 pence duiing the first months 
of 1861 to 12 and 13 pence a pound during the spring of 
1862, and to nearly twice that figure by the end of the year, 
aroused the European speculators to the possibilities of the 
situation. J. G. Gibbes had been sent to Europe in Decem- 
ber, 1862, to assist James Spence in disposing of 15 millions 
in cotton loan bonds. After some weeks of negotiation 
among the bankers, the French banking house of Erianger 
et Compagnie was found most willing to undertake to float 
a Confederate foreign loan, and even urged at the outset an 
extension of the loan beyond the proposed limit of £3,000,000. 
The Confederate agents, however, declined to assume the 
responsibility without authority from Richmond. There- 
upon M. j^mile Erianger, a member of the French firm, crossed 
the Atlantic in the hope of persuadiug the Secretaiy of the 
Treasury to float a larger loan. In this, however, he failed. 
Mr. Uemmii^r insisted upon limiting it to $15,000,000 for 
the present, to which he had made up his mind after some 
hesitation. The details of the loan were fully discussed, and 
a contract was drawn up and signed by the Secretary and 
Erianger on January 28, 1863. The latter at once returned 

> OjT' Bec'di SeUaion, ifh S., I, 846 (Seer"/ War, Jan. 17, 1862}. 
<■ Con/td. Archicei; O. T. Gerdinf; to Memminger, June SI, 1862; E. C. 
Cabell to same, Not. 23, 1863; Ojf Z iice'ii) ikkU'on, 4th 8., H, lOU-5. 
■ London TimtM, Oct. S3, 1862. 


to Paris to cany out its provisions. In the mean time the 
Confederate Congress legalized the contract by the secret act 
of January 29, 1863.* 

The terms of the contract were as follows : The Secretary 
of the Treasury agreed to secure the necessary authority for 
an issue of 75 millions of francs or 3 millions of pounds ster- 
ling in 20-year bonds. They were to bear 7 % interest, pay- 
able semi-annually on March and September 1 in gold or its 
equivalent. Half-yearly redemptions of one-fortieth of the 
face value of the principal (£150,000 annually), commencing 
on March 1, 1864, were provided for, the government agree- 
ing to remit the amount necessary to meet the charges for in- 
terest and redemption to Erlanger and Company two months 
before they fell due, the bankers agreeing to disburse the 
amounts, charging a commission of 1 % thereon. Each 
bond was made exchangeable at its face value for New 
Orleans middling cotton at the rate of 6 pence a pound, 
and at any time not later than six months after the ratifica- 
tion of a treaty of peace with the North. Two months* 
notice of such proposed exchange was to be given to the 
Confederate agents in London or Paris. If such exchange 
of the bonds for cotton was desired during the war, the cot- 
ton was to be delivered at points within the Confederate 
States not more than ten miles from a railway or navigable 
stream, and was to be exported by the bondholders subject to 
no government charge except the usual export duty of one- 
eighth of one cent a pound. If the exchange was postponed 
till the establishment of peace, the cotton was to be delivered 
to the bondholders in Charleston, Mobile, or New Orleans. 
In case cotton of a higher grade than New Orleans middling 
was offered, the ratio of exchange was to be determined by a 
board of arbitration. 

Erlanger and Company guaranteed the subscription to the 

* Capers, Memminger, 357-8 (J. G. Gibbet to H. D. Capers) ; 859 (Mem- 
minger to J. Slidell); So, Hist. Soc. Papers, XIV, 454 (1886); Economist 
(London), XXI, 317 (Mch. 21, 1863) ; Con/ed. Archives: Memminger to Davis, 
Jan. 9, 1863, enclosing contract with Erlanger & Cie ; House J'rl, secret sees., 
Jan. 20, 1863; Secret act Jan. 29, 1863. 


loan at 77 % of its face value ; in fact, they purchased 
the bonds from the government at that figure. They were 
allowed a commission of 5 3 on the amount of the loan 
placed, and any difference between 77 and the actual price 
received, agreeing to open BubscriptjooB in London, Paris, 
Amsterdam, and Frankfurt. At the opening of the subscrip- 
tion they were to pay to the government 750,000 francs, and 
the same amount 15 days later; 2^ millions one month ; 7^ 
millions two months; 9 millions three months; 11^ millions 
four months ; 13| millions five months ; and 13 \ millions six 
months aft€r the first payment, — a total of 57,750,000 francs. 
Any of these payments to the government could be antici- 
pated by discounting the amount due at 7 % per annum. 
Two months after openiog the subscription, the bankers 
were to report the amount of bonds they had placed, and 
if they had not succeeded in placing the entire loan, the 
instalments, as stated above, were to be reduced in propor- 
tion. In any case, however, 1^ millions of francs, the amount 
of the first two instalments, were to be held at the disposal of 
the government. 

The existence of the contract was not generally known for 
nearly three months. On January 20, 1863, it was taken up 
I in the Confederate House of Representatives, and on January 
, 29 the secret act was passed legalizing the contract. A 
month later, a formal protest to this act was presented in the 
House by eleven Representatives, but went unheeded.' In 
March the plan for the loan was announced in London, and 
at the same time became known in Richmond. The bonds 
were at once put upon the market on March 19, 1863, by 
Erlanger and Company in Paris and Frankfurt, by J. H. 
Schroeder and Company in London and Amsterdam, and by 
Fraser, Trenholm, and Company in Liverpool. They were 
offered to the public for subscription at 90. Of the subscrip- 
tion (face value), which closed on March 21, 5 % was pay- 
able on application, 10 % on allotment, 10 % on the first 
dajrs of May, June, and July, and 15 % on the first days 
1 Con/ed. Arthiva : Honse JVl, secMt sen., Feb., 1863. 


of August, September, and October, — an arrangement which 
seemed to insure the bankers against any possible loss from 
making advances to the government more rapidly than the 
recurring payments by subscribers to them warranted. The 
existence of the loan contract had been kept so secret that 
not until the advertisements of it appeared in the foreign 
papers did the public in the Confederate States and in other 
countries know the details of the loan. The London stock 
exchange avoided giving it official recognition, and in France 
difficulties were put in the way of publicly advertising it. 
M. Drouyn de Lhuys expressed wishes for the success of the 
loan, but advised Mr. Slidell to rely upon circulars, and re- 
fused his consent to advertising it till overruled by the Em- 
peror. It is clear that from the outset the loan was looked 
upon as a wild cotton speculation, notwithstanding the favor- 
able attitude of the London TimeB and the JEconomist The 
latter rated these cotton bonds higher than the Federal 
securities on the English market.^ 

Cotton was then selling in England for 21 and 22 pence a 
pound. It was thought this price could in no case possibly 
sink to 7 pence for several years to come, thus assuring a 
wide margin for profits to the bondholders. The Confederate 
government was known to hold in its possession over 350,000 
bales of cotton, of which 333,000 bales at about £9 a bale — 
or 6 pence a pound — would suffice to cancel the entire loan. 
Such considerations led to the favorable reception of the bonds. 
In two days the loan was reported to have been over-sub- 
scribed three times in London alone ; and the total subscrip- 
tions were said to have amounted to 15 millions of pounds 
sterling, five times the face value of the loan.^ The bonds 
were at once driven up to 95J, the highest point they ever 
reached. A reaction set in, and transactions in the bonds 

1 Richmond Examiner, Mch. 20, Apl. 10, 27, 1863; Jones, Diary, I, 289 (Apl. 
9»1863); Bigelow, France 4r Confed. Navtf, 151; London Times, Mch. 18-20, 
1863; Economist (London), XXI, 309, 314 (Mch. 21, 1863). 

« Confed, Archives: Secr'y Treas'y to Secr'y Navy, Aug. 5, 1863; Off'l 
Reeds Rebellion, 4th S., 11, 449; London Times, Mch. 21, 23, Aug. 6, 1863; 
Richmond Dispatch, Apl. 27, 1863; Richmond Examiner, Apl. 8, 10-11, 1863. 



became of s very specnIatiTe character, in which Eilanger and 
Company played a prominent part, as we Bhall see. There 
never was any doubt of the good faith of the Confederate 
goTermnent, or that it held enough cotton to meet the demands 
of the loan. How to get the cotton out of the Confederate 
States to the foreign markets was quite another matter. It 
was evident at the outset that during the continuance of the 
war any attempt to do so would be futile. Small amounts of 
cotton evaded the blockade or reached Europe by way of 
Mexico, but the Federal fleet prevented any general exporta- 
tion.* What might happen when peace was established, or 
whether the Confederate goTemment would then be in a 
position to redeem its pledge, was not seriously considered. 
During the month of March, 1863, the bonds were selling 
at from 90j to 95, and then suddenly fell. The full amount 
of the loan had been subscribed at 90 ; 15 % of the sub- 
scription (face value) had been paid in before May 1 ; the 
subscribers became fr^htened at the sudden drop in the 
price of the bonds, and many thought of forfeiting the 
amount already paid in and abandoning the loan. The 
Federal agents were said to be bearing the market, and it 
looked as if the loan was doomed to failure. At this juncture 
J. M. Mason, who was engineering the enterprise, allowed 
himself to be persuaded to adopt the following measure with 
a view to raising the price of the bonds. He signed an agree- 
ment with Erianger and Company on April 7, 1863, by the 
terms of which the latter were authorized to sustain tlie 
market by buying back the bonds with the government's 
funds and for the government's account, at 90 or below, to 
the extent of the face value of one milhon pounds, Erianger 
and Company to sell them again, if possible at 90 or above, 
but not below that figure except with Mr. Mason's consent. 
The real party in the market was not to be disclosed, and 
any profits from the transaction were to go to the govern- 
ment The agreement was at once carried out : Erianger 
and Company entered the market as buyers of the Con- 
1 Sw pages S3S-9. 


federate bonds, beginning their purchases on April 7 at 87. 
The purchases continued till April 24, by which time the 
French bankers had bought bonds to the face value of 
£1,388,500, the purchase of a further half million having 
been authorized on that day. In the mean time the price 
of the bonds had been driven up to a fraction above 91 ; 
t^rlanger and Company had been able to dispose of a small 
batch of £26,000 of bonds for the government at prices be- 
tween 89^ and 91 f.^ 

It appears that the transaction was closed here. About 
$6,000,000 of Confederate gold had been squandered in bull- 
ing the London market with no lasting effect on the standing 
of the bonds. They were quoted at above 90 till the first 
week of May, and then declined slowly to 88 by the end of 
the month, fluctuating about that figure till the news of the 
Federal victories at Vicksburg and Gettysburg broke the 
spell in July, 1863, and started the bonds on a rapid down- 
ward course. The part which Erlanger and Company played 
in the above attempt to manipulate the stock market cannot 
be satisfactorily explained. On the face of it, however, it 
appears a strange financial transaction ; the bankers who were 
directly, or indirectly through their clients, interested in sus- 
taining the bonds, being authorized to open a way for unlucky 
bondholders to rid themselves on favorable terms of securities 
which were proving of doubtful value. They are certainly 
open to the grave suspicion of having themselves been large 
holders of the bonds in question, especially in view of the 
presumably large amount of lapsed subscriptions, and of 
having quietly unloaded them on the unsuspecting Con- 
federate agents when the market showed signs of collapsing. 
In any case the profits of Erlanger and Company in placing the 
loan must have been enormous, for they retained beside their 
commission of 5 % of the amount of bonds floated, and 
1% of the payments for interest and redemption, the 
difference between 77 and the actual price the bonds brought. 
The Richmond Sentinel ' a year later stated on good author- 

^ Bigelow, France 4r Confed, Navy, 175 & 81. 
s Bichmond Sentinel, May 7, 1864. 


ity that the bankeis* profits amounted to \Z\ milliom of 
francs, wHich must have been about the trae esdmate. 

The results of the campaigns in Pennsylvania and on the 
Mississippi during the summer of 1863 had a demoralizing 
effect on the Confederate finances. The 8 % bonds of the 15- 
million loan sold in April, 1863, for flSO in treasury notes, 
or $32 in specie ; by the end of the year these bonds were 
selling for $182 in notes, or $9 in specie. The bonds of other 
domestic loans fared much woise. The Erlanger bonds de- 
clined with the others, but much less rapidly. The disasters 
of July, 1863, drove them down to 65 ; they rallied, however, 
and fluctuated greatly. They fell wiUi frequent rumors of 
the fall of Charleston ; they rose, correspondingly, with recur- 
ring rumors of repulses of the Federal blockading squadron. 
The news of the battle of Chattanooga reached London in 
December, 1863, and temporarily depressed the bonds to 37, 
the lowest point they reached till the closing months of the 

During the year 1864 the Erlanger bonds held their own 
and even rose in value. This remarkable rally did not de- 
pend upon the price of cotton abroad, which was 28 peuce in 
January, reached its highest point, 31J pence, in August, and 
fell off to 26 pence before the end of the year. Repeated re- 
ports of Federal defeats and Confederate victories, a rise of the 
gold premium in New York, or a fall in the value of Federal 
bonds, or a rumor that the Confederate authorities had suc- 
ceeded in shipping some cargoes of cotton to Bermuda or the 
West Indies, drove up the price of the bonds. Now and 
then reports and stories of the opposite kind depressed the 
price, as occurred particularly in September, 1864, when the 
bonds fell within a fortnight from 84 — which point they 
had reached on the news of General McClellan's Presidential 
candidacy — to 57. The opinion was often expressed that 
the South could not be subdued; even McClellan's defeat 
and Lincoln's re-election had no marked effect on the quota- 
tion of the bonds. As late as September, 1864, the London 
Times considered the holders of the Erlanger bonds better 


off than those of Federal securities. The London Bankeri 
Magazine^ thought the position of the Confederate States 
more hopeful at the end of 1864 than at the beginning of the 
war. This sanguine hopefulness of the English investors 
— among whom were many newspaper editors ^ — lasted well 
into the year 1865. The peace conference at Fortress Monroe 
carried tiie bonds to 69, but the news of Federal successes 
that reached London a few weeks later led to a great decline, 
which was hastened by the closing victories of the Northern 

The hopeful spirit in regard to the cotton bonds, which 
lasted till the fall of Charleston, was largely due to the 
Englishmen's mistaken notion of the security offered by the 
cotton held by the Confederate government. Their minds 
were fixed in the impression that, whatever became of the 
government, the chances were good of getting the cotton out 
of the country so as to redeem the bonds. The latter were 
quoted in the London market till November, 1865, notwith- 
standing the fact that Secretary Seward had directed Mr. 
Adams eight months before, and again in August, 1865, to 
authoritatively undeceive the English public as to the likeli- 
hood of any part of the cotton bonds being assumed by the 
Federal government.^ The quotations of the bonds in the 
London market after the downfall of the Confederate States 
were, of course, merely nominal, but the public only slowly 
realized the meaning of that overthrow. Till the last the 
London bankers expected the assumption of the debt by 
the United States or by some individual Southern State 
government.* Of course, neither of these steps was ever 

The unlucky bondholders met in London in the fall of 
1865, and appointed a committee to look into their rights 
and take the necessary steps to enforce them. The question 

1 Bankerg' Mag, (London), XXIV, 1092-3 (Dec. 1864). 
« N, Y, Timet, Sept. 14, 1865 (1-1) ; Dec. 9, 1865 (1-4). 
» N. Y. Times, Sept. 19. 1865 (1-2); N. Y Herald, Sept. 19, 1865. 
* Economiit (London), XXIII, 1307, Oct. 28, 1865 ; N. Y, Herald, Sept. 4, 
6, 18, 19, 1865; N Y. Times, Ang. 5, 1865 (4-4). 


of the llabili^ of the individual Southern States was consid- 
ered, and some uiged approaching the United States govern* 
ment with Uieir claims. A report that the baakers who had 
placed the loan in 1863 still held some funds to the credit of 
the Confederate goTenunent roused the bondholders' hopes of 
recovering something, but these were soon dispelled by a state- 
ment of Erlanger and Company.^ Sixteen years later similar 
unfounded rumors that foreign banks, among them the Bank 
of England, held large sums to the credit of the Confederate 
government aroused a temporary interest in the Erlanger 
bonds, and there was an active demand for them on the 
London market, which continued some time, notwithstand- 
ing the statement by Judah P. Benjamin — then living in 
England, and formerly member of the Confederate Cabinet 
— that the Confederate government had exhausted their 
funds abroad before the end of the war.' 

There continued to be some citation on the part of the 
bondholders in favor of attempting to secure the assumption 
of the cotton bonds by the individual Southern States, but 
it was not taken very seriously, though there was a slight 
revival of dealing in the bonds in London during 1881-3.' 
As late as ten years after the close of the war the assumption 
of the debt by the United States government was suggested, 
and its possibility was mentioned during the Presidential 
campaign of 1876, even after the election of that year, when 
it was vaguely assumed by some of the holders of the 
Erlanger bonds that Tilden's election would mean the re- 
demption of all or a part of the bonds out of the United 
States treasury. It will be remembered that the " Southern 
Claims " and the alleged intention of the Democrats to pay 
them when in power, were also prominently referred to in 
the political excitement of 1876.* 

1 N. Y. T^'nu*. Sept. 18,1865(1-1); Sept. 19, 1866 (I-I), Hor. 6, 1869; X. Y. 
Beraid, Sftpt. 4, 18, 1865. 

* London Tinun.Soy.a, ISSt (5-1); N. Y. Ti'dmi, Not. 6, I8SI (8-3); Ju. 
30, 1B83 (3-3) ; SepL S3, 1883 (3-3), qnoting Aagatia Chron., Sept. 19, 1889. 

> Limdim TVnu, Not, 3, 1881 (S-l); Jnlj 7, 1883 (13-1,14-3); N. Y. T!met, 
Oct 31, IBBS & Jolj 7, 1883 (qnotiag Loadmi Daily JVom) ; Aug. 1, 1883 (edit.). 

• EeonoaUtt (London], XXXIV, 136-7 (Oct. SI, 1876) ; N. Y. Timet, Not. 8, 


In 1884 again there appear traces of a revival of the hopes 
of the foreign bondholders, possibly to be brought into con- 
nection with the numerous similar efforts then being made 
by the creditors of bankrupt nations like Turkey to obtain 
a settlement, and also into connection with the negotiations 
then going on between Virginia and the foreign holders of 
its discredited State bonds. ^ In the following year we hear 
of activity in buying and selling Confederate bonds. The 
revival of this trade, which in the last instance was con- 
cerned with domestic as well as foreign Confederate bonds, 
is of very little importance. The frequent references to 
speculative activity in these securities upon American mar- 
kets evidently misinterpret its meaning, or exaggerate its 
dimensions. The similar occasional activity in the market 
for Confederate postage stamps does not lend itself to a 
similar picturesque and effective interpretation.^ 

To return to the standing of the Erlanger bonds during 
the war: one factor which contributed to their strength in 
the foreign market were the tolerably regular disbursements 
for interest and for the semi-annual redemptions of one- 
fortieth of the principal. These payments were made partly 
from the proceeds of the sale of the little cotton which the 
government succeeded in exporting, and largely from the 
proceeds of the loan itself. The last part-payment of 
the principal was made on March 1, 1865, under a secret 
act of February 3,^ appropriating £75,000 toward the re- 
demption of one-fortieth of the face value of the loan. The 
Economist^ figured out that £2,418,800 of the bonds were 
still outstanding in the fall of 1865, constituting a loss of 
about 10^ millions of dollars to the holders, and the enemies 

1876 (4-7) ; Not. 15, 1876 (1-5), quoting Hartford Courani; Nov. 30, 1876 (i-2), 
quoting Dundee , Scotland, Advertiser ^ Not. II, 1876; cf. N» Y. Tribune, Oct 10, 
1871, qaoting London Standard, Sept. 26, 1871. 

1 N, y. Times, Feb. 23, 1884 (3-7) ; London Times, 1883-4 (passim), 

« N. Y. Times, June 18, 1885 ; Dec. 9, 1869 (3-1) ; Sept. 1, 1882 (2-5) ; Sept. 
22(8-2); Oct. 29 (4-6); Not. 10, 11, 1882 (1-2); Jan. 17, 1883 (2-7); Aug. 1, 
1883 (edit.). 

■ Text in Confed. Archives. 

* Economist (London), Mch. 18, Oct. 28, 1865. 


of England would gladly have seen the figure much larger. 
A leading Northern newspaper said maliciously at the close 
of the war: ^^It is now greatly to be regretted that the rebel 
loan put on the market in England • • • was not greater." ^ 
The above estimate was obtained by basing the calculation 
on the assumption that the entire loan was placed at 90, 
that £204,600 were redeemed, and that £376,600 were 
exchanged for cotton certificates, the latter being presumably 
not redeemed and therefore constituting a further loss of 
$1,830,000 to the English investors. 

These figures need some correction, owing to the fuller 
information available to us. In the first place the entire 
three millions of pounds of the loan cannot fairly be said to 
have been placed. Of this amount, £1,388,500 were bought 
back in the attempt which we have outlined, to bull the mar- 
ket, and only a part of these bonds were again successfully 
sold. In June, 1863, £1,150,000 were still undisposed of.^ 
By the fall of 1863 the bankers had floated some more, but 
£704,000 still remained on their hands. ^ They then entered 
into a supplementary contract with the government on Sep- 
tember 24, 1863, ratified by the Congress on February 17, 
1864, which provided for placing £650,000 of the bonds 
under similar conditions to those contained in the original 
contract. The bankers underwrote this amount at 77 % 
of its face value, — considerably above the bonds* current 
value, — and agreed to pay the government the necessary 
12,500,000 francs in instalments covering twelve months 
from the time of the subscription. With the rapid decline 
in the value of the bonds, to far below 77, Erlanger and 
Company found it unprofitable to float the bonds, and pre- 
ferred to pay the penalty provided for in the contract. The 
penalty was reduced from the £140,000 the contract called 
for to £100,000 as a compromise, and a new contract was 

1 N, Y. Times, ApL 28, 1865 (4-3). 
' Confed. Arcfiivu : McRae to Memminger, June 19, 1863. 
* Confed. Archives: Memminger to McRae, Sept 15, 1863; McBaa to Mem- 
minger, Oct. 2, 1863. 


entered into with the bankers on February 22, 1864, the 
details of which are unknown to us. The contract of Sep- 
tember 24, 1863, was annulled by the Congress in secret 
session on January 4, 1865,^ by resolution, which, on the 
recommendation of the Secretary of the Treasury, authorized 
him to float a foreign loan of £15,000,000 on terms to be 
agreed upon by the contracting parties. Of course, nothing 
more is heard of this new loan. By the spring of 1865 the 
amount of Erlanger bonds still on hand and not disposed of 
had been reduced to X 509, 000. Adding this amount to the 
sum spent for the semi-annual part payments of the princi- 
pal, — namely, £255,200, — and deducting the sum from 
the amount of the original issue (£3,000,000), we derive 
£2,235,800 as the face value of the bonds outstanding at 
the end of the war, which, on the basis of the original sub- 
scription at 90, constituted a loss of approximately 9| mil- 
lions of dollars to the foreign bondholders.^ The amount of 
Erlanger bonds converted into cotton certificates can be dis- 
regarded, as the latter also constituted a loss to the holders. 

When we come to estimate the amount of profits from the 
foreign loan accruing to the Confederate government, we 
have a more difficult problem. Mr. John Bigelow estimates 
it as follows: ^ He puts the gross amount realized by the Con- 
federate government upon its foreign loan at $15,000,000, — 
an evident overstatement; the amount lost in the attempt to 
manipulate the market in April, 1863, at $6,000,000; the 
amount lost in the purchase of ships which were never deliv- 
ered, at $5,000,000. The net profits derived from the issue 
must have been $4,000,000 according to these figures. 

^ Confed, Archives: Memminger to A. H. Stephens, Dec. 15, 1863 (with con- 
tract, Sept. 24, 1863); Secret acts Feb. 17, 1864, Jan. 4, 1865 ; Memminger to 
McRae, Sept. 15, 1863, Feb. 16, May 24, 1864 ; Slidell & McRae to P. W. Gray 
& E. K. Smith, Oct. 26, 1864 ; Hoase J*r'l, secret sess., Jan. 9, 22, 1864 ; Memmin- 
ger to Dayis, Dec. 15, 1864. 

• Confed. Archims : Memminger to Davis, Dec. 28, 1863 ; to Senate, Not. 7, 
1864 ; to Fraser, Trenholm & Co., Nov. 25, 1864 ; to McRae, Ang. 20, 1863, Aug. 
18, 1864, Jan. 23, 25, 1865 ; to Honse of Rep's, Feb. 11, 1865; Secret acts Jane 
IQ, 1864, Feb. 3, 1865; CharleMton Cotaier, Ang. 17, 1864 (McRae to editor /iM/ex, 
July 6, 1864). 

* Bigelow, France 4r Confed. Navy, 188. 


An examination of the correspondence of the Treasury 
Department and of all the available material leads to the 
following conclusion. The face value of the issue was 
£ 3, 000, 000. Of this amount £ 2, 491, 000 were placed. The 
gross receipts from the loan were, say, £1, 900, 000. Deduc- 
tions should be made as follows: The bankers received 5% 
commission on the amount of bonds placed, and 1 % of 
the interest disbursed ; the expenses of the agency amounted 
to a small sum; the redemptions of the principal as well 
as the interest payments were practically met out of the 
proceeds of the loan, and should be deducted; and a small 
sum for interest on deposits and the £100,000 received from 
Erlanger and Company for their failure to carry out the 
supplementary contract should be added. On the basis of 
this calculation £1,283,930, or say 6^ millions of dollars, 
are left as the net profits of the loan. 

Face Tftlae of the loan £3,000,000 

Amount of loan placed (face yalae) 2,491,000 

£2,296.000 at 77% £1,767,920 

70,000 at 66% 46,200 

125,000 at 60% 75,000 

Gross receipts of loan £1,8S9,120 


Interest on deposits (say) £10,000 

Penalty nnder contract 100,000 



Bankers* 5% commission £124,550 

Expenses of agency 7,190 

Bonds redeemed 255,200 

Interest on bonds, 325,000 

Bankers' 1 % interest 3^50 


Net receipts of loan .' £1,283,930 

The proceeds of the loan were turned over to Fraser, Tren- 
holm, and Company of Liverpool, and were drawn against by 
the various Confederate agents making purchases abroad. 
The government depositories were also supplied with specie 


from Richmond, and with various kinds of bonds on which 
to obtain advances by hypothecating the same with foreign 

bankers.* ^Ufmn^r^ 

The financial success of the foreign loan was not great, "^ ^ 
when we remember that to gain the 6^ millions of dollars 
finally received the government had to go heavily into debt 
at home, and helped to wreck the currency in order to secure 
the necessary cotton on which to base the loan. As early as 
June, 1863, the Confederate agents in Europe declared ^ that 
the loan was more successful as a political demonstration 
than as a source of revenue. As a financial measure it bene- 
fited largely the shipbuilders and bankers, but it was still i 
** a moral recognition of the Confederacy by the commercial 
world," and that, though of little practical value, must have 
given great satisfaction to the Confederate authorities, who 
were so signally unsuccessful in gaining a more substantial 
recognition from the European governments. 

The " Alabama " and other Southern privateers were most 
of them secured abroad during the first two years of the 
war, and were presumably paid for out of the proceeds of 
the 15-million loan transmitted to the European agents of 
the Confederacy.* 

As we have seen, the 15 millions obtained, largely from 
the banks, by floating this loan, constituted the main source 
of specie revenue of the Confederate government. To this 
should be added the United States funds seized in the spring 
of 1861 and the specie seized from the New Orleans banks, 
also the above 6^ millions of specie secured by the Erlanger 
loan and spent abroad. The total amount of specie thus ^ 
secured could not have exceeded 27 millions of dollars. 
This sum constituted the entire specie revenue of the Confed- 
erate government during its four years' existence. 

The government was driven to rely for a revenue more 

1 Cmfed. Archivf.s : Memminger to Fraser, Trenholra, & Co., Aug. 2, 16, 1864 ; 
Off*l Rec'dB Rebellion, 4th S., II, 481, 645, 824-6, 845, 887-9, 909. 

* Can/ed. Archives: Fraser, Trenholm, & Co. to Memminger, June 2, 1863. 

* U. S, Ccue^ Arbitration, Geneva Conference (paseim) ; Beaman, Ala. Clainuf 
Bnssell, Diary, 170. 


and more npoQ ifleoes of treasuiy notes. Its expenses in- 
creased prodigiously. By November, 1861, they amounted to 
70 millions; by March, 1862, to 160 millions; by August, j. 
1862, to 329 millions, and by the end of 1862 to 582 millions. ^ 
The funded and unfunded debt of the Confederate States in- 
creased correepondingly from 10 millions in July, 1861, to 
59.1 miUions in November, 1861, to 139.2 millions in Febru- 
aiy, 1862, to 313.2 millions in August, and to 567.5 millions 
in December, 1862. Notwithstanding the efforts to borrow 
by issuing bonds instead of notes, as shown in the funding 
features and in the produce loan, the government was ine- 
sistibly driven to rely more and more upon forced loans as 
represented by the issue of notes instead of the voluntary 
loans as represented by bond issues. Of the total Confed- 
erate debt on July 19, 1861, 10 % represented outstanding 
notes; on November 16, 1861, the fraction had already risen 
to over 63 S, and in February, 1862, to 77 ft ; and in Decem- 
ber, 1862, it stood at 82 %. These figures tell their stoiy. 
The government found it difficult, if not impossible, to find 
lenders willing to advance capital in any shape in exchange 
for interest-bearing bonds. After the first patriotic loan, 
which brought the government a large part of the available 
specie in the South, had been exhausted, the produce loan 
aimed to secure the advance of capital in a shape to suit the 
convenience of the lenders, and in a way that took advantage 
of tiieir awkward position owing to the blockade, but failed 
to obtain a sufficient amount of such farm produce as the 
government was most in need of, namely, food products. 
I The issue of treasury notes was too tempting a means of 
I overcoming the difficulties of the situation. Lenders were 
more ready to accept them than bonds, as they could be put 
I into circulation. As prices rose, — those of food products in 
I 1862 to four and six times their normal level, — appropria- 
tions correspondingly grew, and more notes were issued to 
meet the increased expenses. 



Thb FuiTDiNO Act of March, 1863 — Ths Statb Guarahtss of Confbd- 
XRATB Bonds — Voluntart and Compulsort Funding of Notbs in 
Bonds — Thb Taxation of Notes — The Funding Act of Fbbruart, 
1864 — Sbcrbtart Trbnholm succeeds Sbcrbtart Memmingbb. 

The recommendations of the Secretary of the Treasury 
contained in his report to the Congress on January 10, 1868, 
centred about available means for the encouragement of the 
funding of notes into bonds and thereby reducing the redun- 
dancy of the currency. The Secretary still insisted upon 
classing the interest-bearing notes and call certificates — of 
which over 175 millions were outstanding — with bonds 
and as distinct from paper currency, the amount of which 
he put at 810 millions, 290 millions of non-interest-bearing 
notes and 20 millions of State treasury notes and banknotes. 
In reality, the interest-bearing notes and call certificates 
should have been added, and a much larger allowance made 
for State and local currency of various kinds. ^ The total cur- 
rency at the end of 1862 must have exceeded 500 millions of 
dollars. The gold premium at the time was 200%, or a 
dollar in specie sold for $3 in treasury notes. The Secretary 
recommended a reduction of the currency to 150 millions, 
which figure he thought represented the proper amount in 
view of the business stagnation due to the war. This, to his 
mind, called for larger amounts of currency than 100 millions 
to be kept on hand by individuals and to take the place of the 
bills and drafts used under normal conditions and now dis- 
carded. The Secretary's analysis of the situation now seems 
thoroughly mistaken. 

^ See pages 149 & ss. 


The reductioii of the canency -was to be accomplished by 
stimulating the funding of notes into bonds, which evidently 
had not been 'done by the noteholders to the desiied extent. 
During the last fiye months of 1862 only 17} millions had 
been thus converted. The government's hopes that the 
redundancy of the currency would be corrected by their 
absorption in bonds proved as groundless as similar hopes in 
the North.' In the fall of 1862 an attempt had been made 
I to hasten this movement of absorption. The act of October 
' 13, 1862, provided that all notes issued after December 1, 

1862, should be fundable no longer in 8%, but only in 
7 % bonds. As to issues outstanding at the time, the Secre- 
tary was authorized to require noteholders to fund their notes 
in 8 % bonds within six months of notice given. All notes 
not BO funded should thereafter be fundable only in 7 % 
bonds. This act "to reduce the rate of interest on the 
funded debt " distinctly violated the terms of the contract ^le 
government had entered into with the noteholders. Thereby 
a foundation was laid for a series of repudiation measures 
which eventually wrecked the Confederate finances. This 
first funding act of October, 1862, while still a bill under 
discussion in the Congress, was given a more severe chaiac- 
ter, but was amended in the Senate before its final passage.^ 

The Secretaiy at once circulated notices to the public 
embodying the provisions of the act, and fixed upon April 
22, 1863, as the dat« after which outstanding notes could no 
longer be funded in 8 %, but only in 7 S bonds.* 

It is interesting to note that the Confederate policy was 
soon followed by State legislation along similar lines, as we 
shall find was often the case. By an act of February 6, 

1863, the North Carolina legislature provided that the State 
treasury notes heretofore fundable in 8 S should thereafter 

1 Rtp'tStcr') TVnu'jr, Hch. 14, 1863; Appleton, Jnn. Cyrl(>pc(f./i>r IB6I,U6 
(Hemmingoi to Comm'n Prodoee Loui) ; McPhenoo, BebeUim, 35S-9 {Sect'f 
Chaae to T. SteTeu). 

■ Con/td.AnAieti! HonsB J'rT, Oct 9, 11,1863. 

* CAdrfMton Coarur, Oct. 81, Hot. IB, 1861. 


be fundable only in 6 % bonds, and should be stamped to 
that effect. 

To return to the Secretary's recommendations in January, 
1868: He dilated upon the evils of a depreciated currency 
and the necessity of meeting the continual rise of prices 
with the issue of more notes. He proposed to meet the diffi- 
culty by extending the principle adopted in the legislation of 
the previous fall, and compel noteholders to exchange their 
notes for bonds, thereby reducing the amount in circulation 
to the desired 150 millions. The means he proposed were 
the simple declaration that notes dated previous to December 
1, 1862, should cease to be currency after July 1, 1868, 
when they should no longer be fundable. He tried to justify 
the proposed measure by claiming that on the basis of the 
existing law "six months have already been allowed for 
investment in 8 % securities, according to the contract on 
the face of the note. Two months more will be allowed 
for investment in 7 % bonds, and if, after so long a notice, 
the holders do not choose to avail themselves of their 
privilege, the good faith of the government will stand clear 
of imputation." So far the government had merely offered 
inducements to funding, but these had been lessened in 
value by the depreciation of the notes in which the interest 
upon the bonds was paid. "It is proposed now to supply 
the deficiency by a small portion of constraint." The grave 
objections to such compulsory funding were counterbalanced, 
the Secretary thought, by the advantages accruing to the 
currency system. Moreover, he held that " the modification 
of the contract is substantially for the benefit of both parties 
(the government and the noteholder). The object in view 
is to increase the value of the whole remaining currency." 
This was a favorite notion, — that the noteholder could not 
fairly complain of unjust treatment, in that the notes he 
retained would have the same purchasing power after fund- 
ing the other two-thirds of his notes ; and, besides, he would 
gain by having an additional block of bonds into which these 
two-thirds had been funded. There was something naive in 


the notion that the noteholder ehonld be compelled to enter 
into a transaction, avowedly profitable to himself, which 
called upon him to throvr awaj a lai^e part of his notes in 
the belief that the remainder would thereby be increased in 

The notion that compnlsoiy funding was an infringement 
of a contract between the government and the noteholder 
the Secretary met by saying that the Congress had already 
answered this objection by passing the above Funding Act of 
October 13, 1862. Then he justified the adoption of a simi- 
lar measure by claiming that "a limitation of time for the 
performance of contracts has never been considered an in- 
fringement where sufficient opportunity is given to claim 
performance. Justice is satisfied by giving to the party full 
opportunity to receive the benefit of his contract. Examples 
of the same principle are afforded in private matters by the 
laws of partnerahip and for the administration of assets. In 
pubhc matters the history of eveiy nation affords like prece- 
dents, which will probably find support in the laws of every 
State in our Confederacy. . . . The time for the enjoyment 
of these advantages [of fundii^ notes in bonds] was no part 
of the contract, and eveiy holder [of notes] was bound to 
know that such an incident has always been considered within 
the control of the law-making power." 

Another objection the Secretary as summarily dismissed, 
namely, the fear that the Confederate bonds would decline 
in value on the adoption of a policy of compulsory funding. 
He admitted that they would depreciate, but claimed that 
any loss on this score would be compensated for by a rise in 
the value of the notes. If one or the other, bonds or notes, 
must depreciate, he preferred that the former should do so. 
However, he claimed "whatever may be the amount of 
depreciation on the bonds, it cannot exceed the depreciation 
in the value of the currency." It he had gone a step further, 
he would have foreseen that such a policy as he proposed 
would inevitably and primarily depress the value of the 
notes. Moreover, he assumed that compulsory funding was 


practicable and would in a short time, with the assistance of 
a general tax, remove from circulation all outstanding notes 
and make room for a new issue of 200 millions before the 
middle of 1868. It required a more extended experience 
with compulsory funding to show the difficulty of compelling 
the noteholders to do what they instinctively knew was to 
their disadvantage, namely, to exchange their notes, which 
they could pass on before they depreciated further, for bonds 
which they would have to hold while they shrank in value. 
However we' may rank Secretary Memminger's powers as ( ^ 
an advocate, as a financier he certainly did not distinguish | 
himself. ^ 

He used the identical arguments that were put forth in the cl^Jt^^^^ 
French Assembly in the nineties of the eighteenth century r^jf<H4^^^ 
in favor of similar projects of compulsory funding. The j^jZ aI /• <m 
holders of assignatSy it was claimed, would not be injured A fi^\, / 
by exchanging some of them for national bonds. The notes /w^i 
remaining in their hands would be correspondingly increased ^ 
in value. Such compulsory funding could not be deemed a 
breach of contract. Various means of persuading the unwill- 
ing holders of assignats to fund them were proposed and 
adopted, but they proved of little effect, as one deputy had 
anticipated. He had foretold that the notes would not be 
funded in "bons," simply because the noteholder did not 
want the latter.^ 

Another financial device recommended by the Secretary in 
his report of January, 1863, at the end of the third session 
of the First Permanent Congress, was the guarantee of the 
Confederate bonds by the State governments. The experi- 
ence with the Confederate war tax,^ which proved a failure \/ 
owing to its dependence upon State legislation to make it 
effective, did not deter him from proposing that each State 
should guarantee the payment of the interest and principal 

1 Le Moniteur, XXIV, 440, 444 (10-11 mai, 1795); 474-6 (16 mai, 1795); 
XVI, 410-11 (19 mai, 1793) ; XVII, 278 (31 juillet, 1793); White, Fiat Money 
in France, 59, 68-9. 

3 See pages 285 & as. 



of ita quota of the Confederate bonds. This, he held, wonld 
improve their standing, and wonld enable him to convert the 
8 S into 6 % bonds, — at the time about 90 millions in amount, 
— issue new bonds at the lower interest rate, and apply the 
saving in interest to the reduction of the principal. 

This plan did not originate with the Confederate author- 
ities. A resolution had been introduced in the Virginia 
legislature in May, 1862, and presumably was passed, favor- 
ing the State's guaranteeing the Confederate bonds. A simi- 
lar resolution was ofFered in January, 1863, but was opposed 
by a committee, which feared that the Confederate as well 
as the State's credit would suffer by adopting the course 
recommended.' The Alabama legislature bad also passed a 
joint resolution on December 1, 1862, proposing that the 
States jointly strengthen the credit of the central Govern- 
ment by guaranteeing the payment of the Confederate debt, 
each in proportion to its representation in the Congress. 
South Carolina followed suit, and went a step furttber by 
authorizing the Governor to endoise the State's share of 200 
millions of Confederate bonds, which was two months later 
fixed at about 34^ millions.' About the same time the 
Florida legislature followed Alabama's example, and pro- 
posed to guarantee the State's share of the Confederate debt, 
provided the other States did the same.* The legislature of 
Mississippi also acted upon Secretary Memminger's su^es- 
tion, and authorized the Governor on January 3, 1863, to 
endorse Confederate bonds to an amount equal to Missis- 
sippi's share of 200 millions. The Texas legislature did not 
go so far, but provided by joint resolution of February 27, 
1863, that if the State for any reason were compelled to 
withdraw from the Confederacy, she bound herself to pay 
her share of the Confederate debt. In Georgia and North 
Carolina, where, as we shall repeatedly see, the particular- 

> Btp't Secr'g Treat'g, Jan. 10, 1863 ; CharUtlan Courier, Dec. 8, 186S, Jul. 
SI, 18G3; Richmond Diipatch, Jon. 9, 1B&3. 

* S. C. acta Dec. 18, 186a ; Jan. 28, Feb. 6, 1863. 

• Fla. resoVn Dec. 15, 1862. 


istic States rights notions strongly prevailed, the attempt to 
involve the State in a guarantee of the Confederate debt V 
failed. In Georgia Governor Brown and the leading news- 
papers opposed the policy as calculated to confuse Confed- 
erate and State finances and to impair the confidence of 
investors at home and abroad, — the Richmond Examiner 
claimed, from selfish jealousy for Georgia's State credit 
There was some talk of the legislature's referring the matter 
to popular vote in the fall, but it was after much discussion, 
on April 15, 1863, indefinitely postponed.* In North Caro- 
lina a similar bill failed of enactment. Opposition to it was 
akin to that shown in Georgia, and in addition was based on 
true States rights grounds, — that such action by the States 
was unnecessary, as the Confederate government was merely 
their agent, and the States were therefore without further 
legislation bound to pay their share of the Confederate debt. 

The Congress took Secretary Memminger's recommenda- 
tions into consideration. A bill was introduced in the Senate 
in February, 1863, providing that each State should issue 
20-year 6 % bonds in proportion to its representation in the 
Congress. These were to be sold only for Confederate treas- 
ury notes issued since December 1, 1862 ; the central govern- 
ment was then to issue to the States the same amount of 
similar Confederate bonds. The bill did not commend itself 
to the Finance Committee and was tabled,^ but the Funding 
Act of March 23, 1863, of which more below, contained a pro- 
vision in line with the Secretary's recommendations. Bonds 
bearing 6 % interest were to be sold at par for treasury notes, 
on a guarantee by the States according to a plan to be deter- 
mined by the Secretary of the Treasury. Nothing came of 
the matter. The military disasters in the summer of 1863 
and the refusal of some States to assume their share of the 
debt made it impossible to carry out the project,* which in ^ 

^ Raleigh Progress, Mch. 27, Apl. 14, 17, 1863; Richmond Examiner, Dec. 5, 
1863; Charleston Courier, Jan. 15, 1863 (quoting Augusta Constitutionalist) ; Mem' 
phis Appeal (Atlanta), Not. 9, 1863. 

* Con/ed, Archives: Senate J VI, Feb. 6, 9, 1863. 

• Rej/t Seer^y Treat^y^ Dec. 7, 1863. 


no way could have benefited the Confederate finances. It 
would have been a case of "the blind leading the blind," a8 
a study of the finances of the individual States fully shows.' 
The recommendations of the Secretary regarding compul- 
S017 funding were embraced in an elaborate act dated March 
28, 1868.' Its provisions were as follows: Non-interest- 
beaiing treasury notes were divided into two classes. Those 
dated prior to December 1, 1862, were made fundable in 8 % 
bonds till April 22, 1863,' thereafter till August 1, 1863, in 
7 % bonds. After August 1, 1863, they could not be funded, 
but were still receivable for chaises due the government, 
except for the cotton export duty, and were payable six 
months after a treaty of peace, as specified on their face. 
All non-interest-bearing notes dated between December 1, 

1862, and April 6, 1863, were fundable in 7 % bonds till 
August 1, 1863, and thereafter in 4 % bonds, and continued 
to be receivable by the government and payable as the above 
first class of notes were. AU 8 % call certificates were fund- 
able with accrued interest in S % 30-year bonds if presented 
on or before July 1, 1863. Those outstanding at that time 
were to be deemed SO-year 6 % bonds. The Funding Act of 
March 23, 1863, further provided that no more call certifi- 
cates should be issued, but that notes fundable in 6 % bonds 
should be exchangeable for 4 % call certificates, and the latter 
should be convertible into bonds bearing the same interest, pay- 
able in thirty and redeemable in five years at the pleasure of 
the government, as were all the bonds authorized by this 
act. Furthermore, an attempt was made to reduce the out- 
standing currency by providing that authority to issue notes 
in ^ and higher denominations should cease with the expira- 
tion of the first Congress after the ratification of a treaty or 
at the end of two years. The Secretary was also authorized 

1 See pages 303 An. 

* The legiolatiTe history of the bill 1* given in Rlckmond Examintr, J&n. SI, 

Feh. IT, lasa. 

* The later act of April 30. IBS3, alloired the E-year Dotes andei the act of 
Haj 16, isei, of which perhapa ten millioiu wen i^oatitanding, till Augiut 1, 

1863, to be offered for 8 % bonda. 


to sell 6 % bonds for notes at par up to 200 millions with a 
view to reducing the amount of notes in circulation to 175 
millions; the notes which were thus obtained by the govern- 
ment were not to be re-issued if the amount in circulation 
should thereby be increased beyond 175 millions. More- 
over, the Secretary was in general authorized to use all dis- 
posable means to purchase notes with a view to effecting 
contraction to that extent. On the other hand, he was 
empowered to issue monthly up to 50 millions of dollars in 
non-interest-bearing notes, which were, as usual, to be tax 
receivable by the government except for the cotton export 
duty, payable within two years after the establishment of 
peace and fundable in 6 % bonds if presented within one year, 
and in 4 % bonds if presented later. A similar issue of 15 
millions in small notes of 50 cent, $1 and S2 denominations, 
payable six months after a treaty of peace, but not exchange- 
able for bonds, was also provided for. The act of April 27, 
1863, made similar provisions for fractional currency. It 
was about this time that the Federal Congress also provided 
for an issue of small denomination "greenbacks.** ^ 

The provisions of the Funding Act were at once put into 
opemtion. At first there was a decided fall in prices, which 
was ascribed to the prospective contraction of the currency 
and the passage of the Tax Act of April 24, 1863.^ The 
increased confidence in the currency was, however, soon dis- 
sipated, and gave way to a popular distrust in the govern- 
ment's promises. The newspapers deplored the "flagrant 
breach of public faith " involved in the attempt at compul- 
sory funding, and questioned the wisdom and justice of such 
a policy, which was deemed a virtual repudiation of the 
government's obligations and was upheld by the Richmond 
Sentinel alone.^ 

1 U. S. act Mch. 3, 1863. 

■ Richmond Examiner , Apl. 20, May 7, 9, 1863; Charleston Mercury, Apl. 28, 

* Richmond Dispatch, Jane 1 1, 1863 ; Raleigh Progreu, Jane 23, 1863 ; Charleston 
Courier, Mch. 27, Jane 16, 18, 1863 ; Charleston Mercury, Mch. 26, Jane 19, 1863; 
Rithmond Examiner ^ July 7, Nof. 12, 1863 ; N, C, Standard, Jane 30, 1863. 


The attitude of the hanks toward the discredited notes 
dated prior to Decemher 1, 1862, added to the popular dis- 
trust. The banks in Richmond ^reed in June not to accept 
or pay out such notes, which action aroosed much feeling 
and urgent demands for legislative interference.' The Vir- 
ginia legislature, however, followed the banks* example, and 
sought to protect the State treasury by forbidding aherifEs 
and tax collectors to accept the discredited notes. The 
North Carolina legislature, on the other hand, refused to 
take such action, under the advice of Governor Vance, and 
provided that all Confederate notes should be treated alike 
and accepted by the State treasury, even after they were no 
longer fundable in Confederate bonds.' 

It is di£Bciilt to determine the extent to which noteholders 
funded their notes in bonds, as the new issues of notes more 
than displaced those that were exchanged for bonds. Appar- 
ently the old notes — those dated before December 1, 1862 
— were offered in large amounta for 8 % bonds aa long as 
they could be, namely, till May 22, 1863; and then for 7 % 
bonds till August 1, 1863, by which time, roughly speak- 
ing, 100 millions had been funded together with perhaps 25 
millions of notes dated since December 1, 1862. The new 
issue of notes authorized in March, 1863, to the extent of 
50 millions a month prevented this apparent reduction of the 
currency from becoming real, and swelled the circulation of 
non-interest-beariug notes from 289 millions at the beginning 
of the year to 453 millions in August, to over 600 millions in 
October and to over 700 millions on January 1, 1864. This 
immense increase in the amount of notes issued and outstand- 
ing was made necessary by the extensive military operations 
of the summer and fall of 1863, which proved so disastrous 
to the cause of the South. Confederate bonds fell to a very 
low figure, and the gold premium rose with increasing rapid- 

1 Pettrshurg £xpr»>, Jane 6, IS, 13, 1863; Richmond DUpaich, June 9, 11, 
1863; Ridtmand Ezaminer, May 89, Jnne 1, 5, II, Ang. 1, 1863. 

* Ya. acta Mch. 23, Sept 14. 1863; N. C. act JnljS, 1B6S; Raleigh Pngrat, 
Jnne 39, Julj 1, 7, 10, 1863; N. C. Standard, June SO, Julj S, 7, 1863. 


ity. Gold had been quoted at $3 in currency at the begin- 
ning of the war, rose to three times that figure by July and 
to $20 for $1 by the end of 1863. Under these circum- 
stances the voluntary funding of notes in bonds had presum- 
ably come to an end by July. Noteholders continued to 
hold their notes instead of exchanging them for bonds, and 
thereby destroying their usefulness as a circulating medium 
and as a means of speculation. The Funding Act instead 
of correcting the redundancy of the currency threw discredit 
on the previous issues of notes, which dragged down the 
subsequent ones to their own level. The new were no 
better than the old notes; both were of equally doubtful 
value, and continued to circulate together and carried prices 
as quoted in them to still more prodigious heights. As 
usual, this called for larger and larger appropriations and 
correspondingly increasing issues of notes. Cereals, which 
at the beginning of 1863 sold at four times their normal 
price, rose to twelve times that figure before December; 
meat products rose to a much greater altitude. The army 
requisitions, which had footed up to 59J millions in 1861, 
reached 398 millions in 1862, 512 millions in 1863, and 670 
millions in 1864.^ 

During the first nine months of 1868 the receipts of the 
government had been some 601 millions. Of this amount a 
paltry 5 millions had been secured by taxation, — by export 
and import duties and by various direct taxes ; 153 millions 
had been obtained by floating bonds; and 442.6 millions, or 
over 73 % of the total revenue, by issuing notes, 417 millions 
of them bearing no interest. 

The Congress had to face an appalling financial condition 
when it met in its session during tibe winter of 1863-4. At 
the opening of the session on December 7, 1863, the Secre- 
tary of the Treasury presented his report. The estimates he 
offered called for 1500 millions to be provided for by the 
Congress during the year 1864. The public debt of the Con- 

1 Ojff*l Ree'ds Rebellion, 1st S., XLVI, pt. 2, pp. 1239-40 (Secr'y War to Daris, 
Feb. 18, 1865). 


federate States on September 80, 186S, the Secretary put at 
994 millions, of which 29S milliona represented bonds, most 
of them bearing 8 % interest. The unfunded debt amounted 
to 701 millions, of which 617 millions were notes in circula- 
tion not beftring interest; 123 millions, interest-bearing notes; 
and 26 mUlions, call certificates. 

By January 1, 1864, the total public debt of the Confed- 
erate States had increased to 1221 millions of dollars. Of 
this amount 298 millions represented outstanding bonds 
under the following acts: 15 millions of the 15-million loan 
of February 28, 1861; 109 millions of the produce loan, and 
S3,612,300 of the loan of April 12, 1862, all of which bore 
8% interest. The bonds to meet the requirement of the 
Funding Act of March 23, 1863, were outstanding to the 
extent of 162 millions, of which 96 millions bore 8%, 64 
milhons, 7 % , and the remainder, 6 % interest. No 4 % bonds 
were outstanding, which indicates that no notes were funded 
in bonds after August 1, 1863, when those dated after 
December 1, 1862, became fundable in 4!S bonds. Of the 
6% cotton bonds authorized on April 80, 1863, 8J millions 
were outstanding. The similar Erlanger bonds did not figure 
in this statement of the Secretary of the Treasury. Of the 
923 millions of unfunded debt on January 1, 1864, 192 
millions represented interest-bearing notes (7.30%) and call 
certificatcB; the rest, 731 millions, represented non-intcrest- 
bearing notes (lOJ millions of them in small denominations), 
and 336 millions issued under acts previous to the funding 
act of March, 1863, and 392 millions of new notes issued 
under that act. 

In his report of December 7, 1863, the Secretary of the 
Treasuiy pointed oat the failure of the tax system. The war 
tax established in 1861 had been based on the tax machinery 
of the individual States and had been changed by them into 
a loan,^ The more elaborate tax law of April 24, 1863, had 
been inadequate. The Secretary, however, did not present 
a practical plan of increasing the revenue &om taxation other 

I 6«e pagu SaT &M. 


than to propose a 5 % tax on all property to be levied after 
the existing taxes had been collected, payment of the tax to 
be made one-half in treasury notes, and one-half in specie or 
in the coupons of a new bond issue, the proceeds of the tax 
to be devoted primarily to meeting the interest charge upon 
these bonds. This provision was aimed at making it advan- 
tageous to hold bonds. 

The Secretary confessed that the voluntary exchange of 
notes for bonds, from which so much had been expected, 
had proved a failure. He claimed that the plan would have 
worked well and the redundancy of the notes been prevented 
by their being funded in bonds, if the interest on those 
bonds could have been paid in specie. But the supply of 
specie had been cut off by the blockade, and to provide 
specie, he might have added, no adequate revenue system 
had been invented. The funding acts had not reduced the 
circulation, as had been hoped. He recommended adding 
further compulsory features which would force noteholders 
to give up their notes and thereby correct redundancy. 
About 700 millions in notes were in circulation ; 500 millions 
must be retired in order to reduce those outstanding to 200 
millions, a sufficient contraction for the time being, which 
could be carried further when peace was attained. Taxes 
could only be relied upon to a slight extent to cancel these 
500 millions of notes ; the chief reliance must be put upon 
loans, and necessarily upon forced loans. 

In detail his recommendations in this particular were as 
follows : An issue of 1000 millions 6 % 20-year bonds should 
be provided with a view to eventually consolidating the 
entire public debt, and with a view to funding the above 
excess of 500 millions of notes and meeting current appro- 
priations. Noteholders were to be encouraged to fund their 
notes by exempting the new bonds from the above 5 % tax, 
in whole or in part, according to the promptness with which 
their notes were offered for tiie bonds. Furthermore, note- 
holders were to be compelled to fund their notes of denomi- 
nations above $5, — to which alone the plan applied, but 


which included almost all the notes outatanding, — by notice 
tiiat after April 1, 1864, — or July 1, 1864, in the trans- 
Missisaippi States, — the notes would no longer be current 
or receivable by the government, thoi^h atill redeemable by 
the government as their face indicated. Six months more 
were to be allowed within which the notes could be ex- 
changed for bonds, then those still outstanding were to be 
debarred from any further claim upon the government, that 
is, they were to be repudiated. The reconunendataoos of the 
Secretary had in view the direction indicated hy the two 
previous funding acts and pointed at its logical limit. The 
currency was to be forcibly reduced by compelling note- 
holders to withdraw their notes from circulation and turn 
them into bonds, by threatening tbem with a heavy tax in 
addition to eventual repudiation. The Secretary sought to 
justify such a measure by the arguments of the year before. 
He granted that it would constitute an infrii^ment of the 
contract between the government and the noteholder, in that 
the original provision regarding the exchange of notes for 
bonds would be violated, and also in that the government 
would break its promise to accept and eventually pay the 
notes. He attempted to minimize such a repudiation of gov- 
ernment obligations by claiming that in offering to exchange 
within a limited time the notes for the proposed new bonds, 
the government had "provided a fund as nearly equal to 
specie as is within ite power," that the government would 
act as every honest debtor does, would recognize the validity 
of the debt, offer the best security it could, and ask for 
time; in essence, then, he proposed forcing a compromise 
upon the creditors of the bankrupt government The chief 
ai^ument in favor of his plan of repudiation was the familiar 
one that unless such a measure were adopted all would be 
lost, private as well as public credit would be ruined, and 
the noteholders would be still worse oS than at present. 
Any measure, involving no matter how great a breach of 
contract, could be juatilied if it averted such a calamity. 
The continuance of the circulation in its present dimensions 


must be prevented by any means, the currency must be 
reduced, prices must be lowered, if the Confederate govern- 
ment is to continue. While drawing the strongest picture 
possible of the evils of the inflated currency, the Secretary 
of the Treasury almost in the same breath states that the 
further issue of treasury notes is absolutely necessary in view 
of the difficulty of obtaining any revenue by other means, 
and he proposed a new issue of notes to the amount of 
200 millions of dollars in substitution for that amount of 
old ones, — which he planned would all be funded, — 
and a pledge that the government would not increase the 

Secretary Memminger, as well as President Davis, had 
evidently made up their minds that compulsory funding of 
notes was the only way open to the government, by which 
the redundant currency could be corrected. The President 
seconded his Secretary's proposals in his message to the Con- 
gress.^ The similar devices adopted during the French and 
during the American Revolution, by which the currency was 
scaled, were in the Secretary's mind.^ By various methods 
similar to those proposed by him the holders of French 
assignats had been compelled to fund these notes in bonds. 
It was hoped to reduce the amount in circulation with a view 
to raising the value of the remainder. They ceased to be 
accepted in payment of dues to the government; a new issue 
of notes was substituted for the old ones.^ The similar 
provisions adopted by the Continental Congress, which the 
French Assembly had distinctly in mind, were also perfectly 
familiar to the Southern statesmen. The famous act of 
March 18, 1780, by which the Continental currency was 
practically repudiated, was framed along the same lines as 
those suggested by Secretary Memminger. The report upon 

1 Charleston Courier, Dec 14, 1863 ; Applcton, Ann, Cycloped.for 1863, pp. 205, 

^ Confed. Archives': Memorandnm in Memminger's handwriting, Dec., 1863. 

• White, Fiat Money in France, 59, 68-9 ; Palgrave, Dict*y Pol. Econ., I, 63; 
Le Moniteur, XVI, 410-11 (19 mai. 1793) ; 587 (7 juin, 1793) ; XVII, 278-9 (31 
juillet, 1793) ; XXIV, 440, 444-5 (10-11 mai, 1795). 


this measure by a committee of the CoDtineDtal Congress 
might have been copied hy the Confederate authorities: 
" The old money must be called in and cancelled. For until 
that is done no regularity can be introduced into the finances, 
nor any dependence placed on any requisitions made. For 
as the old currency is daily depreciating, and as the same, 
l^ laws of many of the States, is made a standard by which 
to value the new money, unless it be speedily destroyed, it 
cannot fail to sink the new. It is therefore indispensably 
necessary that it be called in without delay." ^ 

The plan proposed by Secretary Memminger of correcting 
the redundancy of the currency by s variety of provisions 
aimed to compel the noteholder to give up all or a part of 
his notes dates back much further than to the eighteenth cen- 
tury. We hear of similar funding schemes being put into 
, operation in China in the twelfth and fourteenth centuries," 
; when the paper currency was "scaled" by putting a limit 
■ upon the privilege of funding old into new notes. 

The recommendations of the Secretary and the President 
not only fell upon willing ears, but were no doubt reinforced 
by a popular clamor in favor of compulsory reduction of the 
currency which found expression in the Southern newspapers 
during the fall and winter of 1863—4, in marked contrast 
with the outcry raised upon the passage of the preliminary 
repudiation measure of March, 1863. The Richmond Exam- 
iner took the ground in September that "compulsory funding 
of some latge body of the government's currency, now out- 
standing, is the only cure left our government." This meant 
compulsory reduction of the currency which the paper under- 
stood and justified, though it would not fully acknowledge 
that such a policy involved a partial repudiation of the Con- 
federate debt. Voluntary reduction of the currency was out 
of the question; it must be accomplished by force. "No 
matter who is to profit by the resumption of a proper basis 
for our business transactions — no matter who is to suffer 

1 Secret Tr'l Conlinental Congreti, I, M7 (Rep't Comm., Apl. Ifl, 1781). 
» Joamai Aiialique, S» 8., T. IV, pp. iSS^tO, 447 {sept, nor., 1837). 


'—that basis must be established once for all, firmly and 
honorably." * 

Other Virginia newspapers frankly admitted that volun- 
tary funding had been tried and had failed, and that the 
only plan now open was to compel the noteholders to give 
up their notes. " Scaling " the notes was proposed, but espe- 
cially a heavy tax upon the notes, which was justified and 
held to be constitutional on the familiar pleas that every tax, 
however much it approached confiscation, was justifiable, 
and that the government could honorably tax its own obliga- 
tions. Duff Green proposed taxing all notes 6 % if funded 
within 90 days, and adding a 10 % tax every further 90 da3rs 
till the whole issue was absorbed, the tax to be collected 
from the noteholders when they offered the notes to the gov- 
ernment for bonds, as if they would walk into tlie trap.^ 

Of the South Carolina newspapers the Charleston Courier 
was outspokenly opposed to all these suggested currency meas- 
ures. It objected to the injustice and bad faith they almost 
all involved, warned the government against the demoralizing 
effect of any repudiation measure, and urged heavy taxation 
beside a forced loan, if necessary, as an adjunct. How such 
a loan could avoid the injustice complained of was not 
stated.^ The Charleston Mercury^ on the other hand, fell in 
with the popular demand for compulsory reduction of the 

Other newspapers went the full length of advising either 
editorially or through contributed letters, outright repudia- 
tion of the Confederate debt. One correspondent suggested 
taxing the bonds and notes out of existence and beginning 
over again, or taxing all slave property, the cause of the 
war, 60% of its value.^ 

^ Richmond Examiner, Sept. 3, Nov. 14, Dec 3, 11, 19, 1863 ; Jan. 1864 (fHUsim), 

* Lynchburg Dailif Republican, Jan. 27, 1864 ; Petersburg Express, Nov. 29, 
Dec 12, 1863 ; Jan. 5, 1864 ; Jones, Diary, II, 97-8 (Nov. 14, 1863) ; Duff Green, 
Finance 4' Currency, 1-3 ; Richmond Enquirer, Oct. 30, Nov. 2, 6, 1863 ; Jan. 8, 
1864 (corresp.) ; Jan. 16, 1864 (Duff Green, corresp.). 

* Charleston Courier, J&n. 18, 1864. 

* Charleston Mercury, Nov.-Dec, 1863 (passim), 

^ Memphis Appeal (Atlanta), Not. 11, 1863, Jan. 5, 1864; Charleston Courier, 
Dec 16, 1863 (corresp.). 


Some of the North Carolina papeiB opposed the popular 
movement and held that repudiation of the debt would be an 
illusory remedy of the existing difBculties. The govemment 
had broken its word and was being urged to do so again. 
As a result, the government credit was mined, and no means 
could be devised to compel the unwilling noteholder to ex- 
change his position for that of a bondholder. The previous 
funding aots had not driven the notes out of circulation, and 
later and similar acts would have no different effect* 

A bank convention held in Augusta in November, 1863, 
had uiged — as the Secretary a few weeks later brought for- 
ward — a new lOOO-mlllion bond issue to bear 6 % interest 
in coin, the subscriptions payable in any kind of treasury 
notes; but the bankers urged the Congress to fully recognize 
the noteholdera' right to fund their notes in 8 S bonds, and 
that such bonds should be provided.' Such a proposal could 
not have been taken seriously, as the government was already 
fully committed to paying its interest charges in notes, and 
had already learned to tamper with t^e terms of its contracts 
with its noteholdeis. 

The Vii^inia legislature appointed a committee to for* 
mulate plans to remedy the difiGculties of the Confederate 
finances. A scheme was proposed which was framed by a 
Virginia banker aiming at a diminution of the Confederate 
currency and a stoppage of further issues. Eventually ex- 
elusive dependence was to be put on taxation. In the 
mean time a large issue of bonds was to furnish a sufficient 
revenue. The plan apparently was not further discussed, but 
the legislature took up a scheme to effect a forced loan of one- 
tenth of all property with a view to reducing the currency.' 
The Governor in his subsequent message urged the adoption 
of a fiscal policy which should retire the excess of currency 
above the amount necessary to the business of the country, 

1 N. C. SUmdard, Oet. 9, \»63; RaUigh Progru; ^»a. 8, 1 8M, quoting C<*«1- 
boM Caroiinian, 

* Rep'l Comm'r Taxtt, No»., 1863, p. 43 ; Richmond Examina; Nov. 17, 1863. 

■ Ciarlaton Courier, Oct. IS, 1863, qaoting Bickmimd DUpatck; RiehMcnd 
Enquira-, Oct 19, 1863. 


and bitterly denounced the government policy which had led 
to the present redundancy, to which the issue of Virginia 
State treasury notes had materially contributed. In a later 
message he offered more specific recommendations. Bonds 
to the amount of 1000 million dollars bearing 4% interest 
should be authorized, and notes should be forcibly converted 
into them and cease to circulate.^ 

While these discussions were going on, the Congress was 
fully considering the financial situation. It was taken for J 
granted that bold measures would be adopted. The House 
of Representatives at once appointed a special committee to 
consider the various plans proposed. It consisted of Repre- 
sentatives Boyce of South Carolina, Conrad of Louisiana, 
Jones of Tennessee, Baldwin and Johnson of Virginia, Lyon 
and Pugh of Alabama, Bridges of North Carolina, and Gray 
of Texas. Numerous bills were introduced in both Houses, 
for instance, one to compel noteholders to exchange nine- 
tenths of their notes for 2 % bonds, and another taxing notes 
5 % every month for eleven months, and a similar one more 
in line with the Secretary's recommendations. In January, 
1864, the matter was seriously taken up in the Congress, and 
in secret session. The special committee of the House had 
reported a bill to tax, fund, and limit the currency, which 
provided that all non-interest-bearing treasury notes above $5 
should be funded in 6 % bonds till March 1, 1864, then in 4 % 
bonds till May 1 at par, during May at three-fourths, during 
June at one-half, and during July at one-fourth of their face 
value ; thereafter such notes should not be any longer fund- 
able, and the debt they represented should be deemed satis- 
fied. Authority was to be given for 200 millions in new notes 
and 500 millions in 6 % bonds. The minority of the committee 
presented a much more radical scaling measure, which proved 
to be more acceptable to the House, for the majority's bill 
was referred to the committee with instructions to amend it 
so as to provide for a 60% tax on property, profits, etc., 
sufficient to absorb the remainder of the outstanding notes, 

* Va, Senate J'r'l, 1863-4, p. 18, 69 ; Richmond Examiner, Jan. 2, 1864. 


also to provide for an issue of 200 millions in new notes and 
6 % non-taxable bonds to meet any deficit. The committee 
was slow to act upon these instiuctions, and in the mean 
time numerous bills weie offered providing for a new issue of 
notes exchangeable for the old ones at some such ratio as 1 
for 5 or 1 for 8. Other lulls called for a pn^pressive tax 
upon the notes with a view to driving them out of circula- 
tion. The House repeated its Instmctious to the committee, 
and by the middle of Januaiy a bill was reported and passed 
on the ISth providing that all non-interest-bearing notes 
above S5 shonld be fundable in 6 % bonds till April 1, 1864, 
thereafter in 4 % bonds, and that those outstanding on June 
1, 1864, should be taxed 25 % per month till they had been 
taxed out of existence. The bill also called for a new issue 
of 200 millions in notes and 500 millions in 20-year 6 % non- 
taxable bonds. In the Senate various amendments were 
offered. A compromise was arranged by a conference com- 
mittee of both houses, and the bill was passed and was signed 
by the President on February 17, 1864, at the close of the 
session, together with a number of other financial bills of im- 
portance, of which more below.' 

The provisions of the famous act **to reduce the currency 
and to authorize a new issue of notes and bonds " were as 
follows. Non-interest-bearing notes were divided into three 
classes: tliose of denominations of S5 and less; those of 
denominations between $5 and 3100; and those of denomina- 
tions of SlOO and above. 

The notes of small denominations — 95 and less — were 
to continue to be receivable by the government, and fund- 
able at par till July 1, 1864, — Oct. 1, 1864, west of the Mis- 
sissippi, — thereafter they were to be taxed one-third of their 
face value and were to he exchangeable for new notes at the 
rate of 83 in old for $2 in new notes. A later act of June 

' Confed. ArdiiBa : JoamcUt of Senate ^ Hoatt, Dec, IBE3, Feb., 1864 ; Rich- 
mmd Examiner, Dec. 9,8, 10, 14, 15, S5, 1863; Feb. 17, IS, Mch. I,1S64; Charla- 
tan Courier, Dec. 15, 22. 1863 ; Feb. 26, Mcb. I, 5, 1864 ; JooeB, DIari/, II, 130 
(Jan. 18, 1864); Capers, Memminger, 344; McPhereou, Rebeliion, 368; Moore, 
Ration Rtcord, VIII, 431. 


14, 1864, levied a tax of 100 % upon all the old notes out- 
standing on January 1, 1866. 

The notes of denominations above S5 and under $100, 
which comprised the great mass of the circulation, were 
made fundable in 20-year 4 % registered bonds till April 1, 
1864, — July 1, west of the Mississippi. The requirement 
of registered bonds aimed of course at impeding their easy 
transfer. However, these bonds and the corresponding cer- 
tificates to be issued till the bonds could be prepared were 
to be receivable at par in payment of dues to the government 
during the year 1864, except, as usual, for the cotton export 
duty. All such notes not funded in 4% bonds before the 
given date were to be taxed one-third of their face value, the 
tax to be deducted at the treasury or by the tax collectors when 
they were presented in payment of taxes, or were offered for 
new notes at the rate of $3 in old for $2 in new notes, or for 
bonds, in which case the notes were fundable at two-thirds of 
their face value. The right to fimd was to cease on Janu- 
ary 1, 1865, and the old notes then outstanding were to be 
taxed 100%. 

The notes of large denominations — $100 and above, in 
amount exceeding 200 millions — were treated with still 
gfreater severity. Those not presented for 4 % bonds by April 
1, 1864, — July 1, west of the Mississippi, — were then to 
cease to be receivable by the government and, in addition to 
the 88^ 7o tax, were to be taxed 10 % per month till funded. 
Moreover, they were not exchangeable for new notes. 

The interest-bearing call certificates were treated like the 
notes. If not presented within the time specified for the 
notes they were to bear interest on only two-thirds of their 
face value, and were made redeemable only in treasury 
notes at that rate. 

The 7.30% notes, of which, roughly speaking, 125 mil- 
lions were outstanding, received similar treatment, as we 
have seen. They were no longer to be accepted by the gov- 
ernment, and were to be deemed bonds, bearing the same 
interest and payable two years after the establishment of 



peace. A later act of November 28, 1864, made these notes 
exchaDgeable for SO-year 6 % bonds. 

Expressed in simple terms, the act aimed to rednce the oat- 
standing circulation of notes by compelling noteholders to 
fund their notes in 4 % bonds or exchange them at the rate 
of 93 in old for $2 in new notes. To carry out this plan tiie 
necessaiy bonds and notes were authorized. The authority 
to issue the old not«6 ceased on April 1, 1864. The new 
notes which superseded all previous issues were made pay- 
able two yeara after the establishment of peace, and were 
receivable by the govomment for all dues except for the 
cotton export duty. They could be exchanged for 4 % call 
certificates payable at the same time. A similar issue of 
6 % non-taxable certificates was also authorized with which 
to pay for government supplies, if ^reeable to contractors. 
These were not intended for general circulation, as they 
were made transferable by endorsement only. The expenses 
of the government were further to be met out of the proceeds 
of a new bond issue for 500 millions bearing G% interest. 
The interest and principal of these bonds were exempt from 
taxation, and their payment was secured by the net receipts 
of any export duty hereafter to be levied upon cotton, tobacco, 
and naval stores, and also by the net proceeds of the im- 
port duties. The former never materialized, and the latter 
amounted to an insignificant sum. A provision was added 
making all import duties payable in specie, sterling exchange, 
or in the coupons of these bonds. Finally, the Secretary of 
the Treasury was authorized to hypothecate these bonds for 
notes so as to meet the appropriations of the Congress and to 
reduce the currency. 

As to the effect of the Funding Act, the popular belief 
that prices would fall was not realized. Immediately upon 
the passage of the act there were complaints of a scarcity 
of currency, a familiar phenomenon at the time of inflation.* 
" From a plethora of paper money, we shall soon be without 
a sufficiency for a circulating medium," wrote one observer.' 

) Seepages 146 Am. ■ Jonet, Piary, II, IH (Fek !1, 18M). 


Such feais were based on commodities continuing to rise 
after a temporary drop in price in spite of the supposed 
contraction of the currency. This movement surprised and 
exasperated people.^ 

It is difficult to state the amount of notes funded in bonds 
before April 1, 1864. Apparently the amount was 260 mil- 
lions,^ one-third to one-half of which represented $100 notes, 
which were fully discredited by the government after that 
date. The Secretary's report of May 2, 1864, put the total 
amount of currency at 800 millions, — 1000 millions would 
have been nearer the correct figure. Of this amount, 60 mil- 
lions were in the hands of disbursing officers ; 260 millions 
had been funded east of the Mississippi, and 60 millions pre- 
sumably would be funded west of the river, leaving 460 mil- 
lions in old notes still in circulation. Of these 460 millions, 
128 millions were $100 notes, and were considered out of exist- 
ence by him, as they were no longer tax receivable and were 
to be taxed out of existence in six months. This figuring 
left 322 millions (460 minus 128) still in circulation, equiva- 
lent in new notes, at the rate adopted, to 214 millions. It 
was by such legerdemain that the Secretary and the Presi- 
dent tried to satisfy themselves and the Congress that the 
currency was once more within bounds. In point of fact, 
the 128 millions of $100 notes continued to circulate, and 
only a part of the 322 millions of smaller notes were offered 
for exchange in new notes. Of the latter 48 millions had 
been issued by the end of April, 70 millions by August, and 
284 millions by October, 1864.^ When the Funding Act 
went into operation, the treasury notes and call certificates 
outstanding must have amounted to over 1000 millions of dol- 

1 Richmond Examiner, Mch. 1, ApL 21, Aug. 27, 1864; Raleigh Progress, June 
1, 1864; Mobile Advertiser ^ Register, Mch. 5, 1864; Columbus Daily Sun, A'pl, 
12, 1864; Jones, Diary, II, 178-80. 

2 RepH Secr*y Treas'y, Maj 2, 1864; Richmond Examiner, Apl. 21, 1864 ; Rich- 
mond Dispatch, Apl. 5, 1864; Richmond Sentinel, Apl. 7, 1864; Charleston Courier, 
May 9, 1864 (Pres. Davis, mess., Maj 2) ; Capers, Memminger, 480. 

• Con/ed. Archives: Register to Memminger, ApL 29, 1864; Richmond Ex- 
aminer, ApL 1, 14, 16, Nov. 26, 1864 (Secr'y Trenholm to Speaker, Not. 25, 1864). 


lara.^ By October 1, 1864, the amoant must have exceeded 
tiiiB figure,' though it ia impoBsible to diBtinguish in the 
official accounts between the amount of old notes exchanged 
for new ones and those simply discredited, though still remain- 
ing in ciTculation. During those seyen and a half mouths 
the amount of notes in circulation had no doubt been consider- 
ably reduced, but had again risen to and above their old 
level. This movement was distinctly reflected in the gold 
premium. The value of s gold dollar had been S23 in paper 
at the time the Funding Act was passed, sank successively 
to S22. $21, $19, and SI 7 during the following four months, 
but rose as rapidly after the middle of 1864, and reached $23 
again in September, and then rose to $30 and $40 before the 
end of the year. As soon as the government began to ex- 
change new notes for old ones at the established ratio of $2 
for $3, their value fell, and both kinds circulated side by 
side, were equally discredited and continued to depreciate 

The attempt to float the 500 millions of 6 % non>taxable 
bonds, with which it had been hoped to meet the govern- 
ment's running expenses, met with little success. They 
were at first disposed of in small lots at 135 in currency, 
equivalent to $6 in specie, but did not find many buyers. 
By October 1, 1864, less than 14^ milliona had been placed, 
much to the chagrin of the Secretary of the Treasury." 

The issue of 6 % certificates to government contractors had 
been even less successful. Government contractors were 
unwilling to accept them, and only 1| millions could be 
placed by October 1, 1864. Notes to the extent of 21 mil- 
lions, however, were secured by hypothecating bonds.* 

^ Cm/ed, Archivet ! Register to Memminger, ApL 30, 1 864. 

» ntp'l Seer'y Traa'y. Not. 7, 1864. 

» Rep'l Serr'y Treat's, Not. 7, 1864; Charlfitm Courier. May 30, 1864 (Mem- 
minger to Free. Senate) ; June 8, S3, 1864 ; Bii:hmond Eiv/aircr, Jane 7, 22, 1864; 
Rithmond Examiner, Sept. 3, 1864 (Notice Socr'T Treaa'y, Aa,^. SS, 1864) ; Con- 
fed. Areliicel: Memminger to Secr'y War, Jqiib B, 1864; Chartitlon Mercar^, 
Oct. 18, 1864 ; Ofi Rec'ds Ri^llion, 4th S., Ill, 46S. 

• R<]/t Secr'y Treat's, Not. 7, 1864 ; Eidimmd Examintr, Aug. 9. 85, 1864 


It is evident chat, just as in the case of the act of March l^^(^ l4M^ 
18, 1780, the Confederate act of February^lT, 1864, wrecked | 
the government's finances I)eyond the hope of saving them* 
from utter ruin. Secretary Memminger soon lost confidence 
in the efficacy of the measure, and blamed the Congress for 
departing from his recommendations.^ This was hardly a 
fair attitude to assume in view of the Congress's having fol- 
lowed his instructions quite closely in framing the Funding 
Act. It evidenced the breach between the Congress and the 
Secretary which the failure of the Confederate financial policy 
had created. The feeling in the Congress against the Secre- 
tary grew in intensity. It was even proposed to impeach 
him, but the matter was not pressed, as his resignation, it 
was intimated, was to go into effect at the end of the ses- 
sion. The Richmond Examiner and its editor, E. A. Pol- 
lard, were especially violent in attacking the Secretary and 
blamiag him for leading the Confederate treasury into a 
labyrinth of difficulties, which feeling President Davis is 
credibly reported to have shared.^ Secretary Memminger , 
resigned on June 15> 1864, and was succeeded three days 
later by Mr. George A. Trenholm, a well-known cotton 
exporter of Charleston. He had been active in furthering 
blockade-running enterprises, and in that and other connec- 
tions had often been consulted by the Richmond authorities. 
He brought to the leadership of the Confederate treasury a 
wide acquaintance with large business operations, but could 
not infuse new life into the government finances, which had 
been hopelessly doomed by the previous policy culminating 
in the above Funding Act. 

Among the agencies which weakened the power of the 
South to resist the North we put first the Federal blockade fy^/ 
and the Confederate financial policy. Memminger cannot 
escape the responsibility for the latter. It was framed largely 

1 Jones, Diary, II, 182 (Apl. 5, 1864) ; RepH Secr'y Treaty, May 2, 1864. 

« Richmond Examiner, Feb. 15, Aug. 8, 24, 1864; PoUard, Davis, 175, 187; 
Pollard, Lost Cause, 18 & as. ; Charleston Courier, May 30, Jnne 1, 16, 18, 1864 ; 
Richmond Sentinel, July 2, 19, 1864; Alfriend, Davis, 246, 481 ; CraveD, Davis, 
138 ; Capers, Memminger, 365. 


upon lines sQ^ested by him ; and its development and final 
culmLnation in utter goTemment bankruptcy was not seri- 
ously resisted l^ him. A man of bis antecsedents and limited 
experience could not have been expected to formulate a 
brilliant fiscal policy and win publio favor for it. But we 
miss in him the ability to foresee the inevitable consequences 
of the measures be proposed, and the power to assume leader- 
ship by winning the confidence of the Congress and their 
co-operation in framing a policy that should have seciued the 
fullest use of the resources of the South instead of one that 
dissipated and deranged them. A financier of like talent to 
that of the Southern military leaders would doubtless have 
conducted the afEtun of the treasury with more success. 



Thb Sboond Confedbbatb Conorsbs — Thb Effects of the FuimiHO Act 
OF Fbbbuabt, 1864 — Thb Rblation of thb Banks and the Statb 
Tbeabubibs to its FBOviBiONrs — Its Amendments — Intbbbst Payment 
ON Confedbbatb Bonds — Thb Financial Mbasubbs of the Last Ses- 
sion — Specie Loans and Taxes — The Final Collapse. 

The Funding Act of February, 1864, had been passed 
during the last hours of the first Congress, which expired on 
February 18, 1864. The second Congress had been elected 
during the previous November, and was called together on 
May 2, 1864. The first session lasted till June 14, and the 
second and last from November 7, 1864, till March 18, 1866. 
The new House of Representatives contained nearly forty 
new members in the place of that number of old ones who 
were not re-elected. Among the ten North Carolina Repre- 
sentatives, eight were new, and represented the opposition to 
the extreme war policy. In the personnel of the Senate 
there were also some changes. Senator J. L. Orr was elected 
chairman of the Committee on Foreign Affairs ; Barnwell, of 
the Finance Committee. In the latter committee the chair- 
man and Senator Hunter of Virginia were the only old mem- 
bers ; the new ones were Senators Graham of North Carolina, 
T. J. Semmes of Louisiana, R. Jemison, Jr., of Alabama, and 
later Orr of South Carolina and Oldham of Texas.* 

When the new Congress met in May, 1864, the Confed- 
erate prospects of ultimate success were indeed gloomy. 

1 Confed, Archives: Senate J'rl, May 3, 1864, Feb. 1, 1865; Raleigh Progress, 
May 4, 1864; N, C. Standard, Nov. 6, 10, 17, 1863, June 10, 1864; Richmond 
Examiner, Dec. 8, 1863 ; Off 'I Rec^ds Rebellion, 4th S., Ill, 1183. 


It •-^•(■<|'[<^''Oeneral Sherman was beginniDg his maroh to the seacoast, 
>u/^Ma. General Grant had taken supreme command of the Federal 
, ^,t^ c troops, and was about to be^ the last aeries of successful 
K ^ campaigns. In North Carolina discontent was growing, and 
** the three desperate measures of February 17, 1864, the Con- 

scription Act, the Tax Act,' and the Funding Act were 
accomplishing little if anything to stem the tide. 

The primary effect of the Funding Act was to impair 
popular confidence in the Confederate government, as had 
^ been the case with similar measures passed during the 
American and the French Revolutions. Some declared it un- 
constitutional, tiiough it was inferentJally upheld by the 
Attorney-General,* and others ai^ued tliat the anoroalous 
condition of the Confederate States justified such a violent 
measure. ' From all sides it was attacked as an ill-advised 
act, which opinion Vice-President Stephens shared. Otheis 
took comfort in the fact that it did not constitute an entire 
repudiation of the government obligations, and called it an 
"ingenious adjustment" and "not a violent throwing off of 
the burden " of the public debt.' There was a genei-al agree- 
ment that the people's confidence in the government's 
promises was destroyed by the act beyond the hope of re- 
covery.* Secretary Trenholra soon realized its unfortunate 
effect, and wrote to Governor M. L. Bonham of South Caro- 
lina in August, 1864; — 

" However patriotically intended, it is not to be denied that 
the measure adopted by Congress for the reform of the currency 
had the unhappy effect of inspiring the publick mind with feel- 
ings of fear and distrust as to the course that would ultimately 
be pursued by the Treasury notes. Apprehensions of ultimate 

1 See pages 299* it. 

* Ait's Gen'l'i opinion, Mch. 18, 1664; CharUttm Coarier, Feb. ST, 1864 
(corresp. 4 edit.}. 

' CSoriMfm CoimfT, Fnb. 24, 1864, quoting other newapttpets; MMh Advtr- 
User S- Regiiler. Feb, BO, 1864; Raleigh Pngrft. ApL 6, 1864 (Vice-Proa. 
Stephena' artdcess to Ga. legielatnte) ; Richmond Examiner, ApL 14, 1B64 (edit.). 

• Charleitm Courier, Aug. 23, 186* [qoOtiEg J/omn Telegraph) ; Macon TeU- 
jraph. Fob. 17, 1864 ; Raleigh ProgretM, Mch. 16, 1864 (QoT. Ga. mesa.). 


repudiation crept like an all-pervading poison into the minds of 
the people, and greatly circiunscribed and diminished the pur- 
chasing power of the notes ... It must now be universally ad- 
mitted that the policy [of compulsory funding] was erroneous." ^ 

As we have seen, currency prices continued to rise without 
interruption. At first the old notes were accepted with a 
discount as compared with the new issue. But soon the gen- 
eral lack of confidence in the government's ability to meet 
any promises led to old and new notes being treated alike. 
The intricate character of the act and the variety of treat- 
ment accorded to the different classes of notes contributed to 
this result. Noteholders found it, as formerly, to their ad. 
vantage to withhold the old notes from the treasury and cir- 
culate them.2 

Secretary Memminger had asked the banks to co-operate 
with the government in scaling the unfunded debt by receiv- 
ing old notes on deposit, and crediting depositors with $2 for 
$3 deposited. The Richmond and Charleston banks and 
other corporations acted upon his suggestion, and notified 
depositors to close their accounts and settle their claims 
before April 1, 1864, unless they wished their deposits or 
claims scaled one-third, or credited to them in 4% bonds.' 

The treasuries of the individual States naturally held large 
amounts of Confederate notes, and were separately provided 
for in the Funding Act. Confederate notes received by the 
State treasuries before the time set for taxing them one- 
third of their face value, namely, April 1, 1864, could be 
exchanged at par for 20-year 6% bonds; if offered before 
January 1, 1865, notes received by them after April 1, 
1864, were similarly fundable, but only at one-third of their 
face value. This provision was amended on June 14, 1864, 
so as to enable the State treasuries to exchange all the old 

^ Richmond Examiner, Ang. 22, 1864. 

< Bep*t Secr'y Treag'y, Nov. 7, 1864 ; AUaiVta Register, Feb. 20, 1864; Eggles- 
ton, IUco(Uctions, 91. 

* Richmond Examiner, Feb.-Mch., 1864 {pauim)\ Charleston Courier, Mch. 
4, 1864. 



notes they held for 4% non-taxahle bonds, or one-half 
for 6% bonds and l^e other half for new notes. It had 
evidently been impossible to distinguish between the notes 
received by the States before and those received after April 
1, though the act of February, 1864, had magnanimouBly 
left the matter to the good faith of the States and their 

Some of the State governments took advantage of the 
original and &e amended offer of the central government. 
A Viiginia act of March 8, 1864, at once provided for an ex- 
change of old Confederate notes, which were accumulating 
in the State treasury, for 6% bonds. Five millions were 
apparently thus funded. There was also some talk of copy- 
ing the Confederate policy and forcibly funding the State 
treasury notes in State bonds.^ 

The State of Mississippi arranged a similar exchange of 
notes for bonds, the latter to be sold for State or new Con- 
federate notes, presumably in the hope of a successful specu- 
lation. The legislature also provided gainst loss to the 
treasurer, by requiring that the old notes should be accepted 
for taxes at one-third of their face value till July 1, 1864, and 
thereafter not at all, special provisions applying to the $100 
notes and those under $5. North Carolina took similar pre- 
cautions.' The Alabama legislature followed suit on October 
7, 1864. Geoigia had anticipated the effect of the Funding 
Act by providing on March 17, 1864, for an issue of State 
treasury notes redeemable in Confederate notes issued after 
April 1, 1864, which t^e act declared necessary as a means of 
meeting State appropriations and in order to avoid the con- 
fusion of the Confederate notes which were "unsuitable as 

The Congress found it necessary to amend the Funding 
Act in a way that indicates how futile the attempt was to 
reduce the outstanding currency. By an act of December 
29, 1864, which was under discussion more than a month,' the 

1 Va. Wu Doc'; IB64, no. 8, p. 161, Special Etp't Slate And., Oct. 3, 1864. 

* Hiu. acta Mcb. 30, Apt. S, Ang. 13. 1864; N. C. Mt May SI, 1664. 

* Richmond Examiner, Nor. 18, 19, 186*. 


term for exchanging the old notes for 4 % bonds was extended 
to July 1, 1865, and the 100 % tax upon them, which was due 
on January 1, 1865, was suspended for six months, and all 
notes of the old issues were again made tax receivable during 
the same period. This amounted to an acknowledgment of 
the failure to remove the obnoxious old notes from the 

An earlier amendment passed on May 21, 1864, had refer- i,^ ■•^\>>^ 
ence to old notes held by tribes of friendly Indians, which, it 
was provided, could still be exchanged at par for new notes. 
The relation of the Confederate States to the tribes of 
Indians within their borders called for considerable legislation. 
Numerous treaties of peace had been framed beginning with 
some in 1861, which often created trust funds of which the 
Confederate government was custodian. These in the shape 
of money or bonds were held by the treasury, and interest 
was paid to the Indians in treasury notes, and toward the 
end of the war in cotton at its market value. Apparently 
this small class of creditors were treated with special \^>^ 

Interest payment on the Confederate bonds continued with 
tolerable regularity throughout the war.* The interest on the 
15-million loan authorized in February, 1861, was paid in coin 
for a year,* a policy which the Secretary was anxious to main- 
tain. But after the spring of 1862 no further effort was made 
in that direction, and the government met the interest charge 
with treasury notes. The policy aroused little complaint.* 
The question could not seriously be mised after the gold 

1 Indian Treaties (bound with Statutes C. S., 1861-5) ; Acts Mch. 15, Dec. 24, 
31, 1861 ; Jan. 10, 1862 ; May 1, 1863 ; Mch. 9, 1865 ; Oj^l Eec'ds Rebellion, Ist 
S., Ill, 572-6. 

* Acts May 21, Dec. 24, 1861 ; Apl. 2, 19, Oct. 13, 1862; Feb. 10, Majl, 
1863; Feb. 11, 17, June IS, 1864; Mch. 1, 1865; Rep'U Seci^y Treat* y ; Notices 
in newspapers. 

* Con/ed, Archives: Denbgre to Memminger, Dec 21, 1861; Memminger to 
Den^gre, Jan. 7, 1862; N 0. Price Current, July 6, 1861 ; Charleston CouritTp 
Jan. 1, 1862 ; Charleston Mercury, Feb. 25, 1862. 

^ Charleston Courier, Sept, 15,1863; N. C, Standard, Jko, 8, IS&4, quoting 
South Carolinian, 


premium had reached 50% and higher figures. The continaed 
payment of interest in depreciated treasury notes cost the 
government no effort, and, of courae, did not add appreciably 
to the standing of the bonds, especially in view of the suo- 
cesaiTe repudiation measures described above. 

The last official and full statement of Hie Confederate 
fioances available to us coveiB the six months ending October 
1, 1864. On tliat day the domestic public debt amounted to 
1371 millions of dollars, an increase of only 50 millions dur^ 
ing the previous half year, more than accounted for by the 
increase of 61 millions in bonds outstanding. The operations 
of the Funding Act had reduced the amount of notes and call 
certificates outstanding on April 1, 1864, — namely 1021 
millions, — by 12 millions, to 1009 millions. On October 1, 
1864, the debt comprised 862 millions of bonds, a third of 
them dating from the loan acts of 1861 and representing 
voluntary loans, and two-thirda of them from the vaiioua 
funding acta and representing funded notes. Interest-bearing 
notes and certificates were outstanding to the amount of 178 
millions, wliich with the 881 millions of non-interest-bear- 
ing notes outstanding, constituted thrce-fourtha of the Con- 
federate debt at the time. Of these notes 547 millions were 
old notes atill in circulation but discredited by the govern- 
ment, and 284 millions were new notes issued in exchange 
for old ones at the rate of $2 for $3. 

The preponderance of note over bond issues is noticeable. 
Of the domeatic debt, as it atood on October 1, 1864, not more 
than 125 milliona repreaented voluntary loans, namely, the 
15-million loan and the produce loans of 1861, while roughly 
1250 milliona represented forced loana of one kind or another. 
Aa has been shown in a variety of connections, from bis 
standpoint the government creditor preferred to hold a 
government promise which could be used in circulation and 
for purposes of speculation to holding a government bond by 
which his profits were limited to the interest he received in 
depreciating notes. The pressure on the part of the govern- 
ment creditors to secure a government obligation which could 


be readily passed on from hand to hand in commercial trans- 
actions is evidenced in a small way by the legislation of the 
last year of the Confederate States, which aimed to facilitate 
the exchange of registered for c oupo n bonds. The act of June 
18, 1864, offered the holders of registered bonds under the 
produce loan acts an opportunity to exchange them for 
coupon bonds, which were much more easily transferred. A 
similar act of February 23, 1865, applied the same provisions 
to the bondholders of the 15-million loan of 1861. The 
original act had failed to . clearly provide for such an 


There must have been some agitation in favor of similarly 
making the 6% registered bonds imder the act of February 
17, 1864, exchangeable for interest-bearing treasury notes 
which would circulate freely, for a bill to that effect was 
offered in the Senate in November, 1864; also a bill with 
much the same object in view, to make the 4% bonds and 
certificates under that act tax receivable during 1864.^ 

A comparison of the government's receipts during the half- 
year periods ending respectively on March 31 and September 
80, 1864, throws much light on the Confederate finances and 
their approaching collapse. 



Oetober 1, 18G3, to 
March 81, 1R(H 

Aivfll, 18G4to 

Iflsne of notes and certificates . . 

Issue of bonds 












Confiscated property 

Miscellaneons receipts 

Total receipts (in corrency) . . 

Total receipts (in specie), say . 



After April 1, 1864, the issue of bonds yielded little, not- 
withstanding the efforts to compel noteholders to fund their 
notes in bonds ; the revenue from taxes fell off nearly one- 

^ Richmond Examiner, Not. 9, 15, 1864. 


third ; confiscated proper^ yielded a trifling lerenne. Tho 
main reliance after April 1, 1864, was put npon the issne of 
notes, which yielded nearly four-fifths of all the revenne 
daring the following six months, though the issue of new 
notes, strictly speaking, constituted no net revenue, as they 
had to he exchanged for old ones which were suj^Ksedly not 

When the Congress met for its last session in November, 
1864, Secretary Trenholm presented his report. He pointed 
out that the compulsory funding law of the previous session 
had not permanently diminished the volume of the currency 
nor sustained the value of the notes. These had continued 
to depreciate. In view of the hopeless condition of the cur- 
rency he recommended as a last resort the dependence of the 
government upon specie and banknotes, whatever that meant. 
He proposed that the gOTemment should reverae its policy 
and discontanae taxing the old notes, and should pledge itself 
not to increase the existing issues ; one-fifth of the revenue 
from taxes was to go to redeeming outstanding issues till 
their amount should be reduced to ISO millions. The exist- 
ing taxes, under the most favorable conditions, could not have 
accomplished this end in less than forty years. However, 
Secretary Trenholm proposed an increase in the tax rate, for 
instance, to 5 cents a pound in the case of the cotton export 
duty, and a doubling of the import duties, both of which 
would hardly have increased the government revenue to an 
appreciable extent. He also proposed devoting the tithe on 
cotton, com and wheat, from which source he anticipated 
obtaining an annual revenue of 90 millions, to the redemption 
of outstanding notes. The existing burden of taxation he 
very properly deemed merely nominal, and called for a laige 

President Davis, in his message to the Congress, endorsed 
the Secretary's proposed plan for remedying the redun- 
dancy of the currency and the lack of confidence in the 

* RichMond Examijier, Nov. 6, 1864. 



A month later a bill was prepared by the Ways and Means 
Committee and offered in the House embodying Secretary 
Trenholm's recommendations. All notes issued before Feb- 
ruary 17, 1864, were declared non-taxable, a reversal of the *- 
plan adopted by the Funding Act. One-fiRh of the notes 
thereafter received by the government were to be cancelled 
until the amount outstanding fell to 150 millions. After 
the establishment of peace four-ninths of the cotton tithe at 
50 cents a pound, four-ninths of the com tithe at $2, and 
one-ninth of the wheat tithe at $4 a bushel should be 
pledged to the redemption of the notes until they were all 
cancelled, — the tax in kind being continued until then. 
The bill was discussed by the Congress during December, 
1864, and its passage was strongly urged by Secretary Tren- 
holm, whose views were presented in the House by F. S, ^ 
Lyon of Alabama. He spoke of the groundless popular 
outcry against heavy taxation, claimed that the existing 
taxes amounted to no more than 1% of the value of all 
taxable property, and favored heavy taxation, — that is, 
closing the door after the horse was stolen. Others wisely 
held forth upon the fact that the Confederacy had neglected ' ti^ty. 
to raise a revenue by taxation at the outset, but had com- ; 
mitted itself almost exclusively to note issues. 

Substitutes for the committee's bill were offered and dis- 
cussed. On December 24, 1864, the original bill was passed 
by the House with one important amendment. Instead of 
reversing the policy of the act of February 17, 1864, and 
declaring notes issued before that date exempt from taxation, 
as recommended by the Secretary with a view to raising 
public confidence in the government's promises, the bill as 
passed exempted only the notes issued since February 17, 
1864, which the act of that date had already done. In the 
Senate the bill met with opposition. A conference com- 
mittee tried to bring the two houses to an agreement in 
February, 1865, but failed, and on March 3 the committee 
was discharged, and the bill failed of enactment.^ 

^ Charleston Courier, Dec. 2, 3, 10, 1864; Jan. 4, 1865; Augutta Ckron, fr 
Sera., Dec. 4, 1864 ; Jan. 6, 1865 ; Richmond Examiner^ Dec IS, 15-17, 19, 22, 


The feeling in and out of the Congress was general that 
the paper money policy had gone too far to he reversed, 
that nothing would be gained by attempting to correct its 
evils and improve the government's credit, that it waa as 
easy to issue small as it was to issue large amounts of notes, 
and that the government might as well continue to pay its 
way with further issues, which might be worth something 
if the South succeeded, and would be worth nothing if it 

The Gongresa accepted this view, and among its last acts 
provided for a new issue of 80 millions of dollars to pay the 
srresTS due the army. This act was passed over the Presi- 
dent's veto on March 18, 1865, Senator Semmes of Louisiana 
casting the only negative vote in the Senate. The Presi- 
dent's objections that such a measure violated the distinct 
pledge contained in the act of February 17, 1864, not to 
increase the issue of notes, and his warnings that such an 
increase would prove disastrous passed unnoticed.^ 

As the Federal armies closed in on Richmond and over- 
ran the Southern States during the last months of the war, 
the Confederate treasury was driven to extreme measures. 
Secretary Trenholm reported in the middle of December, 
1864, that by January 1 the treasury would be empty; the 
estimated expenses during the first half of 1865 he put at 
444 millions, which he had hopes of partly meeting with 
the proceeds of the tax in kind (145 millions). The re- 
mainder he proposed to raise by a tax on money, that is 
presumably on currency, half of which, or lOTJ millions, 
could be collected by the middle of 1865, and by the sale 
of bonds.' 

In January, 1865, he further recommended raising ad- 
ditional taxes to the extent of 860 millions by doubling the 

1864; Jan. 4, 1865 j N. Y. Tima.Jaa. 31, 1865 (8-1); CSarittUn Mercury, Veb. 
4, 1865 ; EaUigh Pmgrtu, Hch. 6, 1665. 

> Raleigh Prcgres; Feb. SO, 1B65 (edit.). 

* Raleigh Progrru, Mch. 13, 1865; Cmfed. Arehiou ; Ti't Senate ^ Houee, 
Mch., 1865. 

■ Cmjid. ArtMiia! Treuliolm to Wftji & Heuu Comm., Dee. 15, 1864. 


existing rates and obtaining 86 millions from the sale of 
cotton. A bill to that effect was introduced and passed in 
the House, but apparently made no headway in the Senate, 
It raised the cotton export duty, and imposed a similar tax 
on tobacco ; it also provided for the confiscation of all cotton 
and tobacco within the Confederate States, the owners to be 
reimbursed at a future time and at present prices.* This 
plan of having the government accumulate cotton and real- 
ize upon it still found favor with the Charleston Courier^ 
which advised the government to seize cotton and tobacco 
and borrow specie on their security, and redeem large 
amounts of notes. The Secretary further suggested estab- 
lishing a government deposit oflBce in connection with the 
treasury, which was to induce noteholders to deposit their 
notes with the government in exchange for some other form 
of demand obligation, and thereby remove the notes from 
the circulation and arrest the progress of their depreciation. 

This plan was at once carried out, and deposits of notes 
were called for, 4 % certificates to be issued in return and 
secured by hypothecating some of the 500 millions of 6% 
bonds which, as we have seen, had not been floated to any 
large extent. The old notes — other than those for $100 — 
were to be accepted on deposit at two-thirds of their face 
value, and the certificates issued in exchange were made pay- 
able in ninety days.* The plan was further perfected by the 
act of February 23, 1866, which established such a depository 
in each State, to receive drafts upon the treasury and all cur- 
rent notes. As the deposits bore no interest and the only 
inducement offered to noteholders was a partial exemption 
from taxation of their notes deposited, presumably little 
advantage was taken of the government's offer. 

Finally, during the closing days of the Confederate Con- 
gress, an attempt was made to secure a supply of specie. 

^ Confid, Archives: Trenholm to House of Bep's, Jan. 9, 1865; C7uurle$t<m 
Mercury, Jan. 21, 23, 1865. 

' Charleston Courter, Jan. 28, 1865. 
* Richmond Dispatch, Jan. 18, 1865 (advert). 



A teDtatave act of March 18, 1865, aimed to boirow 80 mil- 
lionB in specie by issuiug 6 S bonds payable two years after 
the eatablishmeiit of peace, the proceeds to be lued for the 
reduction of the outstanding notes. A fev days later an- 
; othst tnore elaborate specie loan was authorized on_. the 
'President's recommendation. This act of March 18, 1865,^ 
1 authorized the SecretAiy to borrow 8 millions in coin with 
6 % bonds payable two years after the establishment of peace, 
the principal and interest payable in specie. The loan was 
secured by hypothecating 60,000 bales of government cotton 
to be delivered to bondholders at convenient shipping points, 
and at the rate of 15 cents a pound. If Uie loan could not 
be effected, a tax of 25 % was to be levied on all gold and 
silver coin and bullion and foreign exchange, — $200 were 
exempt in the case of each taxpayer, — the tax to be col- 
lected in kind on April 1, 1865, or as soon thereafter as 

The Secretary urged the banks to advance their specie 
to the government on the above terms, and succeeded in 
borrowing $300,000 from those in Virginia. But almost 
immediately thereafter the government departments col- 
lapsed, and the remnants of the treasury were shipped 
southward from Richmond as the city threatened to become 
untenable. The final collapse of the government is too 
familiar a story to call for repetition.* 

As was noted above, the Funding Act of February, 1864, 
amounted to an open avowal of government bankruptey. As 
soon as the provisions of the measure went into effect, prac- 
tically no more bonds could be floated, and whatever further 
notes were issued were exchanged for an amount of old notes 
half as large again. The latter, as they reached the treasury, 
were supposedly cancelled and destroyed. The only direct 

1 Con/ed. Archivei; Instnictioiui of Secr'ir Tieat'j, Hch. ST, 1865; Tretiliolni 
to A. Ko&ne, Mcti. 28, 1865, to W. T. Booker, Mch. 29, 1865 ; Rujimond DitpaUh, 
Mch. 24, 1865; Off't Rec'di Aiei/i™, 4th S., Ill, USS; Baitiah Progfta, Mch. 
20, 25. 1865 ; Richmond Whig. Apl. 14, 1865 ; N. Y. Tribmt, ApL 10. 1865. 

' C(. M. H. Clark in So. Hill. Soc. Paperi, IS, 643^ (1881) ; W. Y. Timtt, 
Jan. 6, 1882 (5-1). 


evidence of the extent to which the notes received at the 
government treasury were actually cancelled is offered by the 
passage of the act of Febiniaiy 28, 1865, which provided that 
all treasury notes, bonds, and certificates received from the 
sale of confiscated property should be cancelled. A similar 
act of January 5, 1865, called for the cancellation of all 4 % 
bonds and certificates received by the government. The pas- 
sage of these ^acts leaves it an open question whether or not 
the great mass of old notes received by the government after 
the spring of 1864 were, in fact, cancelled* 

After the spring of 1864 the net revenue of the govern- 
ment was nominally limited to the revenue from taxes, which 
we know was inconsiderable. In point of fact, however, we 
are led to believe that a large part of the old notes were 
re-issued in payment of government expenses. Moreover, 
the evidence is conclusive that the government expenses 
during the last year of the war, like those of a bankrupt 
corporation, were chiefly met by creating a huge floating 
debt, represented, for instance, by large arrears — 400 to 
500 millions — in the War Department, and by accumu- 
lated unpaid warrants on the treasury.^ 

1 Ojri Rec'd8 Rebellion, let S., XLI, pt 4, pp. 1109, 1129-30 (Dec, 1864); 
XLVm, pt 1, pp. 1382-3 (Feb. 8, 1865) ; 1424-5 (Mch. 15, 1865) ; LI, pt. 2, 
pp. 1064 & 88. (Mch. 5, 1865) ; XLVI, pt. 2, p. 1302 (Mch. 11, 1865) ; Cm/ed.^ Ar- 
chives : Secr'y War to Secr'y Treas'y, Dec. 30, 1864 ; Campbell, Betniniscences, 27 ; 
Richmond Sentinel, Mch. 20, 1865 (quoted in N. Y. Times, Mch. 23, 1865, 1-3). 



NoiBi — Agitation for ard aoainbt — Taa Qcbstum or Coiranrn- 


The fundamental law of the Southern Confederacy dif- 
fered slightly from that of the North. In regard to the 
issue of legal tender paper money, the Constitutions of 
both sections were practically identical. These granted both 
governments the right to borrow money on their credit,' to 
coin money, regulate the value thereof and of foreign coin, 
and fix the standard of weights and measures;' they also 
granted the identical war powera.* 

In framing legal tender laws to apply to coin, and espe- 
cially foreign coin, the Confederate Congress followed the 
well-worn path indicated by previous Federal legislation. 
The act of March 14, 1861, continued the Federal mint laws, 
including presumably the legal tender laws, and accepted 
them as ^e laws of the Confederacy, The familiar silver sub- 
Bidiary coins — the half-dime, dime, quarteiMlollar, and half- 
dollar under the act of 1853 — were made a legal, tender iu 
sums not exceeding ten dollars, twice the amount fixed as the 
limit by previous Federal legislation. The same act fixed the 
legal tender value of some foreign coins current in the South, 

" U. S. Corufn, I, 8, 3 ; Coa/ed. Pnn. CaM'n, I, 6, S ; Cmftd. Pern. Cantt'B, 
I. 8, 2. 

» (7. S. CobM*!!, I, 8. 5; Cim/M. Prot>. ConK'n, I, 6, S ; Confid. Ptrat. CoMl'n, 
I, 8, 5. 
. • t^. S. CoM('n,I,8, ll-lSj C<)n/eff.Praii.C<))ul'ii, 1,6, 11-19; Cmfid.Ptnt. 
CowCn, I, 8,11-15. 


namely, that of the English sovereign at $4.82 ; that of the 
French 20-franc piece at $3.82 ; and that of the Spanish and 
Mexican doubloon at $15.53. These figures were five months 
later raised to $4.85, $3.85, and $15.60 respectively. The 
silver coins in circulation were similarly rated, the American 
and Mexican dollar at $1.02, and the French 5-franc piece 
at 95 cents. 

The United States mints' fell into the hands of the Con- 7 
federates before and after the outbreak of hostilities, the 
important one at New Orleans early in 1861, the less im- 
portant ones at Charlotte, North Carolina, and Dahlonega, 
Georgia, somewhat later. At first it was planned to continue 
minting operations. There is some evidence of the New Or- 
leans mint's having been active as late as April 20, 1861. 
Dies were prepared, and a few silver half-dollars were coined^^ 
but an act of May 14, 1861, directed all Confederate mints to 
suspend operations after June 1. This step may have been 
taken partly owing to the fact that, before the capture of the 
New Orleans mint, the dies were defaced or destroyed by 
some of the loyal Federal officials.^ Even if mechanics skil- 
ful enough to replace and operate the necessary machinery 
had been found in the South, — which is unlikely in view of 
the difficulty of finding engravers for bonds and notes, — the 
rising tide of paper money would have soon closed the mints. 
Senator T. J. Semmes of Louisiana introduced a bill to au- 
thorize the coinage of copper token money in denominations 
of 1, 5, 10, and 25 cents to the amount of five millions of 
dollars. This bill passed the Senate on September 25, 1862, 
but was apparently never acted upon by the House.^ A year 

1 Confed. Archives : Statement of A. J. Guirot for week ending Apl. 20, 1861 ; 
Keifer, Slavery ^ Four Years of War, 1, 160, note, quoting Townsend, U, 5., 427 ; 
Resol'n Mch. 9, 1861 ; N, Y, Times, Feb. 14, 1873 (quoting Columbus Enquirer) ; 
Mch. 23, 1879 (quoting N. 0. Picayune, Mch. 16, 1879) ; Apl. 13, 1879 (quoting 
the same); Mch. 14, 1882; Nov. 2, 1883. 

« Report U. S. Director of the Mint, Oct. 27, 1862, in Finance Report for 
1862, p. 45. 

» Confed. Archives: Senate Journal, Sept 2, 25, 1862; Charleston Courier ^ 
Sept. 29, 1862, Jan. 1, 1863. 


later the Senst« made a move in tlie same direotioii,' bat 
nothing came of it. 

The story of the attempts to make the treaamy notes and 
other forms of paper currency a legal tender in payment of 
all debtfl, is a longer one. The advisability of taking such a 
step in the North was for the time settled wiUiin the first 
year of the war by the passage of the first Legal Tender Act 
on February 25, 1862. In the South the question of the con- 
stitutionality and expediency of such a measure was fiercely 
debated during the war ; the Confederate Congress was de- 
terred from passing a legal tender act by the arguments 
against the adoption of such a measure which were in run 
urged by the few opponents to the Federal Act of 1862, 

Early in the history of the Provisional Congress the legal 
tender question began to be agitated. In a long letter to 
Duncan F. Kenner, dated July 8, 1861,' E. J. Forstall says, 
" A plan is now agitating making Treasury notes a legal ten- 
der ; this would be bankruptcy to begin with, the destruction 
of public and private credit, and all confidence between man 
and man." He adds a lengthy sketch of the history of paper 
money issues under the earlier Confederation, in France dur- 
ing the Revolution, and in the United States after the second 
war with England. These former experiences with paper 
money were constantly cited in the later discussions, and 
as well by friends as opponents of legal tender legislation. 
Among the opponents no stronger voice was raised than that 
of James D. Den^gre, President of the Citizens* Bank of New 
Orleans, whose advice was always welcomed by the Treasury 
Department. Already on May 11, 1861, he had written to 
Secretary Memminger to ui^ that the Confederate notes be 
not made a legal tender in payment of all debts, a policy 
which he warned the administration would at once drive the 
banks into bankruptcy, unhinge credit, and wreck the gov- 
ernment. "It would be worse than the evils of war, and 
would destroy our banks and demoralize the community." 

' Cm/ed. Ardtivtt : Secr'y Trenholm to Vice-Prw. Stephen*, Dec 19, I8«4. 
* Conjid. Ardtlpei. 


On July 21, 1861, he addressed a similar letter to Mr. Kenner. 
John P. Richardson of South Carolina expressed himself in 
similar terms to the Secretary of the Treasury on July 10, 
1861, though he fully recognized the temptation to declare 
the government's notes a legal tender, as a {ueans of helping 
it in the purchase of supplies. To him, however, the constitu- 
tional objection alone was sufficient to deter him from favoring 
making anything but gold and silver a legal tender. 

There were others who favored declaring the notes a legal 
tender at the outset of the war as the best way out of its at- 
tendant financial difficulties. The arguments used have a 
familiar sound to one acquainted with the general history 
of legal tender legislation. So, for instance, in a letter to 
President Davis, dated July 10, 1861, William C. Smedes of 
Vicksburg urged the passage of a legal tender law which, he 
claimed, would alone save the merchants and planters from 
the capitalists of Europe and the North. A correspondent 
of Secretary Memminger, P. H. Skipwith of Louisiana, called 
attention to the clause in the Constitution empowering the 
Congress to make laws necessary and proper to carry into 
execution the power to declare war and support armies, and 
claimed, as later jurists in the North have done, that this 
authorized the i)assage of a legal tender law.^ 

The matter was discussed in secret session by the Con- 
gress, the Committee on Finance being instructed on July 26, 
on motion of A. H. Garland of Arkansas, to inquire into the 
expediency and necessity of making the 20 millions of 
2-year notes as well as the bonds of the Produce Loan, both 
authorized by the recent act of May 16, a legal tender during 
the war. The Mississippi legislature memorialized the Con- 
gress on August 2, urging the propriety of such a measure ; 
but a week later the motion of James A. Seddon of Virginia 
was lost to amend the bill being framed to provide for 100 
millions in notes, so as to make them a legal tender in pay- 
ment of all debts to corporations or individuals.^ The 

1 The above letters are found in the Confederaie Archives, 
3 Con fid. Archives : Secret Joamal of Congress. 


question did not come up again in the ProTisional Congress, 
except that it was found necessary to require postmasteis bj 
an act of August 30 to accept Confederate notes in payment 
for postage stamps, when offered in sums of at least five 
dollars. This last qualification was removed by an act of 
December 23, 18S1. It was about this time that a similar 
unwillingness on the part of postmasters to accept govern- 
ment notes showed itself in Pennsylvania, and led to strin- 
gent orders by the Federal Postmaster-General.' 

The urgency of legal tender legislation did not present 
itself to either the Federal or the Confederate Congress dur- 
ing 1861, when the magnitude of the war and of ibi attend- 
ant financial measures was still an unknown quantity. 
Dqring 1861 the Confederate States floated their Grst and 
only successful loan. With its proceeds and with the issue 
of not£8 the government met its expenses and preserved its 
credit to a reasonable degree. By the end of the year the 
15-niiilion bonds were still selling in the neighborhood of 
par, while gold had risen to only 1.15 or 1.20 in currency. 
With the opening of the new campaign, early in 1862, condi- 
tions changed both in the North and the South. Government 
expenses grew enormously, and could not be met either by 
t^e sale of bonds or by the issue of not«s without greatly 
depressing the government's credit. Under these circum- 
stances it is not surprising to find both Congresses turning 
to legal tender provision as a possible means of raising the 
value of the not«s and making them serviceable in carrying 
on the war. The question was discussed both in Washing- 
ton and in Richmond. In Washington it was settled on 
"^^ February 25,^1862, by the passage of the first Legal Tender 
Xdf^authorizing the issue of 150 millions of treasury notes, 
receivable in payment of all debts, public and private, ex- 
cept import duties to and interest from the Federal govern- 
ment. The arguments that were effective in winning the 
majority of the Federal Coi^ress to adopt such an unpre- 
cedented measure were the same that bad been urged with 

> Mtrdumts' Mag, XVJ, 649 (Feb., 1S69). 

-•■U, t 


less success upon the Confederate authorities during the 
previous summer. The Constitution, it was held, gave the 
Congress the power to declare war and support armies; it 
also granted to the Congress the authority to enact all laws 
necessary and proper to carry that power into execution; 
hence the constitutional right to issue legal tender paper 
money was established. It was urged in both Congresses 
that the Constitution could not consistently grant to the gov- 
ernment the power to wage war, and at the same time de- 
prive it of the most efficient tool for the purpose, — one that 
had been so often used by other nations similarly situated.^ 

The question of the constitutionality of a possible legal 
tender act came up for serious discussion in the Permanent 
Confederate Congress during its first session, February 18 
to April 21, 1862. 

On February 25, 1862, Joseph B. Heiskell, a Representa- 
tive from Tennessee, offered a resolution in the House in- 
structing the Judiciary Committee to inquire into the 
constitutionality of making treasury notes a legal tender. 
This committee consisted of L. J. Gartrell of Georgia, C. W. 
Russell of Virginia, E. L. Dargan of Alabama, J. W. Moore 
of Kentucky, A. H. Garland of Arkansas, J. B. Heiskell of 
Tennessee, P. W. Gray of Texas, T. S. Ashe of North Caro- 
lina, and J. P. Holcombe of Virginia. This committee con- 
sidered the question, and when a legal tender bill, which had 
been offered in the House on March 14, was referred to them, 
they returned it to the House a fortnight later with a non- 
committal report. 

Early in March, 1862, a bill to make treasury notes a legal 
tender was introduced in the Senate, and was referred to the ! . > 
Finance Committee, consisting of Senators R. ^ Barnwell i y** 
of South Carolina, R. M. T. Hunter of Virginia, George I 
Davis of North Carolina, W. E. Simms of Kentucky, and 
G. A. Henry of Tennessee. This committee reported against 
the passage of the bill on March 13. On the following day 

^ Congressional Globe, 37th Cong., 2d Sesa., pp. 523-5 (Jan. 28, 1862); p. 679 
(Feb. 6, 1862) ; N. Y. Times, Jan. 27, 1862 (edit.). 



Senator T. J. Semmes of Looisiana introdnced a similar bill 
which was discussed in the Senate March 21-25, but no 
action waa taken. 

The discussion by the Congress of the expediency and 
constitutionaU^ of making the government notes a legal 
tender offered the Secretaiy of the Treasury an opportunity 
to go on record as opposing the policy. Secretary Mem- 
minger was asked to give bis opinion upon the expediency of 
making treasury notes a legal tender in payment of debts, 
as Secretary Chase bad been six weeks before. In answer to 
such an inquiry from L. J. Gartrell, Chairman of the Judici- 
ary Committee of the House of Representatives, and himself 
an advocate of legal tender legislation, Secretary Memminger 
stated his position unequivocally in a letter dated March 13, 
1862.^ He summed up bis reasons for opposing the passage 
of the legal tender law under three beads. First, be said, 
treasury notes were now accepted as currency everywhere, and 
at par with banknotes ; they, therefore, needed no assistance 
to enable them to perform the functions of a legal tender. 
A law to compel their acceptance would at once arouse sus- 
picion, shake public confidence, and depress the value of the 
notes. Secondly, a legal tender law could not prevent a 
depreciation of the notes ; nor could it mitigate the harm done 
by such depreciation. Creditors would be unjustly treated by 
being required to accept less than they contracted to receive. 
The great body of sellers, the other class of people to whom the 
notes would be offered, would protect themselves by raising 
their prices, the more so because they would dread a further 
depreciation. Th.irdly, if legal tender laws should lead to 
attempts to legally constrain the acceptance of the notes 
by penalties, past experience in Virginia during the Revo- 
lution and in France somewhat later pointed to the utter 
failure of such a policy, Mr. Memminger closed his letter 
by urging upon the Congress the necessity of increased taxa- 
tion and the adoption of every means to promote con6dence 
in the integrity and solvency of the Confederate goveromeDt. 

* Cftpen, Memminger, pp. 4S6-9. 


** Extreme pressure may compel our govermnent to adopt in 
the future extreme measures, but it seems to me that at 
present it is our best policy to avoid every possible shock to 
public credit." 

This letter is in marked contrast with the letter written on 
January 29 by Secretary Chase, under similar circumstances, 
to Thaddeus Stevens, tiie chairman of the Ways and Means 
Committee of the Federal House of Representatives,^ in 
which he offered his^alf-hearted support to the pending 
legal tender bilL Its enactment would, he claimed, prevent 
further discrimination against the United States notes by 
those individuals and banks that refused the government 
their cordial support, an argumentum ad hominem we shall 
become familiar with in the South. The responsibility for 
framing a legal tender law Mr. Chase gladly put upon the 
Congress, where, of course, it properly belonged. 

The discussion of the legal tender bill in this first session 
of the First Permanent Congress aroused the newspapers to 
take sides for or against such a measure. Of the leading 
journals, the Richmond Dispatch and the Charleston Courier 
favored, and the Charleston Mercury opposed it. The former 
desired a legal tender act "as an accommodation to the loyal, 
and a check to the disloyal ; '* as a ready means of checking 
the refusal to accept Confederate notes, which refusal should 
be deemed prima facie evidence of " latent infidelity to the 
Southern cause," ^ an echo of Secretary Chase's argument 
mentioned above. The Charleston Mercury ^ questioned the 
policy, and foresaw disaster from pursuing it ; further depre- 
ciation of the notes and industrial confusion were inevitable. 
Those that justified such a measure did so on the groimd of 
its being distinctly a war measure. In the Congress, how- 
ever, stricter views were held, and the chairman of the Judi- 
ciary Committee of the House reported, on April 8, that the 
committee was divided, five believing the legal tender bill to 
be unconstitutional, and four, constitutional. 

1 McPherton, Hiatory of the Rebellion, 358-9. 

* Richmond Dispatch, Apl. 11, 1862 ; Charleston Courier, May 15, 1862. 
. • Charleston Mercury, ApL 10, 186^ 1 *^ ^ ^ 


Daring the next sessioQ of the Congress a number of legal 
tender bills were introduced, bat none of them came to a 
vote. Mr. Gartrell's, introduced on the fiist d&j of the ses- 
sion, August 18, 1862, was referred to the Judiciary Com- 
mittee, which reported against it on September 20. Heniy 
S. Foote of Tennessee attempted on October 6 and 8 to attach 
a legal tender proviso to two bills, but without success ; and 
on the last day of Uie session, October 18, T. J. Foster, 
Representative from Alabama, offered a bill making treasury 
notes a legal tender, and declaring their refusal punishable 
with imprisonment and fine. 

These were months of great military activity on the part of 
the Confederacy. After General McClellan's unsuccessful 
Peninsular campaign. General Lee had invaded Maryland, 
and General Bragg Kentucky. The government's expenses 
were enormously swelled. The issues of bonds and notes 
grew correspondingly ; their value fell ; gold, from being 
quoted at 1.20 in January, 1862, reached 3.00 by Kovember. 
Under these circumistancea it was natural to find some lean- 
ing to making the treasury notes a legal tender as a means of 
raising their value and carrying on the war. General Lee 
himself was influenced by such considerations, for, on with- 
■^ drawing from Maryland, he wrote President Davis, urging a 
* legal tender measure.' In the previous fall be bad urged 
making the treasury notes a legal tender in certain districts 
where people showed an unwillingness to accept them, to 
which the Secretary of War replied that no such authority 
existed, but suggested that such people should be treated as 
enemies of the Confederacy, and be arrested.' 

The constitutional objections were clearly in the people's 
mind. A correspondent of the Michmond Whig ' argued tor 
the constitutional right to make treasury notes a legal tender 
on the basis of the right of the Congress to " coin money " 

' Jonei, Diary, I, 176. 

* OJTI liec'di Rtbdiion, Ist S., XTX. pt 1, p. 635 ; «h 8^ II, 116 (Sept.-Oct., 

* Rkkmmd Whig, Sept 4, 1S62; cf . abo Daif Green, Finance ft Currtncy, 


and ^^ regulate the value thereof," an argument used in the 
North in discussing the same question,^ but hardly taken 
seriously. This correspondent also fortified his position by 
quoting the definitions of monetary terms in Worcester's 
Dictionary. A correspondent of the Richmond Enquirer^ 
August 26, 1862, urgently demanded the passage of a legal 
tender law, on the plea that the creditors to suffer will be 
chiefly " tories ; " constitutional or not, such a law will hurt 
the right man. Of course, the correspondent had in mind 
only a war measure, to be discontinued on the establishment 
of peace. The Richmond Whig did not commit itself editori- 
ally to a policy of legal tender notes, though it held such a 
law constitutional,* the power to issue the notes in question 
not being expressly granted to the Congress, but being 
implied, like the power to issue bonds and notes in general. 
A few months later the paper changed its position somewhat^ 
The editors claimed to have favored a legal tender policy at 
the outset, but that by adopting it now and applying the law 
to past contracts, the Constitution would be violated, — at 
least in spirit ; and by applying the law to future transactions, 
two currencies, attended with inconvenience and danger, 
would be created. 

During the third session of the First Permanent Congress, 
Januaiy 12 to May 1, 1863, the issue of legal tender notes 
was again fully discussed. On January 14 W. G. Swan of 
Tennessee introduced a bill in the House authorizing the 
issue of 250 millions of dollars in such notes in denomina- 
tions as low as one dollar, to be accepted in payment of all 
debts. There was some talk of a constitutional amendment 
to legalize them during the war and five years thereafter,* 
but, after long discussion in the House, the proposition to 
make the notes a legal tender was rejected in secret session.^ 

1 Cf. 1 Nott & Hnntington, 153-5. U. S. Court of ClainiB (Oct. term, 

s Richmond Whig, Oct. 6, 1862 (edit.). 

* Quoted in Charleston Courier, Jan. 15, 1863. 

* Richmond Enquirer, Jan. 20, 1863. 

* Charleston Courier, Mch. 9, 1863. 


The fourth session of the First Peimanent Coi^ress, 
December 7, 1863, to February 18, 1864, was largely given 
up to the hopeless task of bolstering up the value of Con< 
federate treasury notes, which effort cnlminatedf as we have 
seen,' in the passage of the famous Funding Act of February 
17, 1864. Among the proposals made with a view to remedy- 
ing the inflation of the currency and the incessant rise of 
prices, there were not lacking some that were based on the 
enactment of a legal tender law. Senator James Phelan of 
Missouri introduced such a bill on December 10, which called 
for the issue of 500 millions of dollars in bonds, their coupons, 
when due, to be a legal tender in the payment of all debts. 
On Januaiy 25 the Finance Committee reported against the 
bill, and it was tabled by the Senate on February 3. A 
similar fate awaited Senator Orr's bill of like tenor, and also 
his bill to declare exchequer not^ a legal tender in payment 
of all debts. The latter was tabled by the Senate on Febru- 
ary 9. Senator A. G. Brown of Mississippi also offered a 
resolution on December 10, 1863, to make Confederato treas- 
uiy notes a legal tender; and, in ui^ing its passage on 
December 24, repeated the familiar aiguments ; the measure 
V might not be constitutional, but it was absolutely necessaiy 
as a war measure ; the question before the Congress was one 
of expediency; moreover, there was no direct constitutional 
prohibition of such a legal tender law, except in so far as 
the State legislatures were concerned; the government had 
already made the notes a legal tender in dealings with the 
soldiers and its other creditors; the rest of the community 
deserved to be treated in the same way ; and finally, a legal 
tender law would increase the value of the notes.^ 
j The second Permanent Congress of the Confederate States, 
' which was in session from May 2, 1864, till the end of the 
war, never, as far as the records at our command show, dis- 
cussed the legal tender question. After the passage of the 

1 See pages 64 & bk. 

3 Cumpiire Mr. Spaulcling'e argaments in the Federal Houea of Representa- 
tires, Jan. 38, 1S62. Congr. GhU, 3Tth C, !d Sen., pp. 933-5; also the Nea 
York Times, Jan. 27, 1862 (edit.). 


famous Funding Act of Februaiy 17, 1864, no attempt was 
made to push any legal tender legislation. For a while the 
Congress relied upon its plan of compulsory funding and 
taxing of treasury notes to correct the currency evils; when 
this failed, the Congress evidently lost hope of successfully 
stemming the tide of inflation by legislation. Had a legal 
tender bill been passed, President Davis would surely have 
vetoed it. The only available record of his views on the 
subject is found in a letter to General Lee,^ in which he \ 
deprecates making notes a legal tender, as they were to all } 
intents and purposes a legal tender already, and payment of ] 
debts in anything else could not be enforced by the courts. 
The President never had an opportunity to sign or veto a 
legal tender bill. The question involved remained a subject 
for occasional newspaper controversy during the remainder of 
the war. 

In view of the later discussions in connection with ihe 
legal tender decisions of the United States Supreme Court, 
it is interesting to note the arguments pro and con brought 
forward in the South while the constitutionality and expe- 
diency of a legal tender law were a mooted question. One 
prevalent view was that the people regarded treasury notes 
as money; that their being issued by the Confederate govern- 
ment constituted them "lawful money," and, therefore, a 
legal tender; that there was no need of declaring them so 
by Congressional enactment.^ 

The Richmond Examiner was a particularly strqng advocate 
of a legal tender law, urging that, while the State legisla- 
tures were forbidden by the Constitution to do so, the Con- 
federate Congress was morally and constitutionally bound to 
make treasury notes a legal tender. The government had 
driven out specie by its issue of notes ; it was, therefore, in 
duty bound to keep the latter on a par with specie by mak- 

1 Jones, Diary, I, 176 (Oct 28, 1862). 

* Pamphlet Our Currency , quoted in the N. C, Standard, Oct 27, 1863, also 
in a letter from A. Miller to Secr'y Memminger, dated Nov. 10, 1863, in the Cof»- 
federate Archives, 


ing them a legal tender. The editor claimed that "it is a 
standing reproach to the currency to allow a class in the 
country to stand aloof, sullen, and cast that imputation " — 
that the notes will depreciate — "on the faith of the govern- 
ment and the success of our most righteous cause."' This 
fling at the unpatriotic persons who showed an unwilling- 
ness to accept the notes at their face value in specie we shall 
rl(.i->; \ ^^^ more of in another connection.* E. A. Pollard, the 

editor of the Richmond Examiner, and a voluminous writer 
on the history of the Confederate States, strongly favored 
following the example of the Federal government in legal 
tender legislation. During the war he commended the action 
of the Federal Congress in this particular; ' and after the war 
he still claimed * that the Confederate Congress should have 
•^ acted likewise. In 1868 he still accused the Confederate gov- 
ernment of having "produced an imitation of the Northern 
financial system, with the fatal exception that the Treasury 
notes were not made ' legal tenders.' " 
The majority of the Confederate Congress, however, 
I thought otherwise, and during the four years of the war 
; prevented the passive of a legal tender law by that body. 
The ai^uments used against the adoption of such a measure 
were identical with those used by its opponents in the Federal 
Congress in January, 1862. Of the leading newspapers that 
voiced these feelings, the Augusta Constitutionalist took, per- 
haps, the strongest ground. It claimed that a legal tender 
law was wholly unwarranted by the Constitution, beside 
being a gigantic folly. It could not be carried out, and 
would do harm and no good. "Congress has been import 
tuned to make Treasury notes a legal tender, but that body 
had more regard for the Constitution than Lincoln's Con- 
gress, and refused every time the bill was up, by over- 
whelming majorities."" The Richmond Sentinel took similar 

1 Richmond Examinti; Not. U, 1863. 

* See pases 101-3, 1B3 & n., 163. 

* Richmond Examiner, Nov. 24, 1863 (edit.). 

* FoUard, Tht Lo$t Cauit Regained, 38. 

■ Augaata, Qa., Daily CoMtitvtionaliU, Not. 35, 1863. 


ground a few months later. ^ It claimed no evidence of the 
constitutionality of the proposed law had ever been offered, 
nor any proof of its ever having arrested the depreciation of 
notes. In the past, legal tender laws had been a failure. 
Witness the colonial legislation during the eighteenth centuiy 
and the experience in France. 

During the war the constitutionaUty of a law making gov- 
emment notes a legal tender in payment of all debts was 
never satisfactorily established either in the North or in the 
South. What result constitutional interpretation has reached 
since the war has no bearing on the question. During the 
war Mr. Pendleton's arguments in the Federal House of 
Representatives, January 30, 1862,* were never overturned. 
He held the legal tender bill to be an impairment of con- . 
tracts; that the Congress could exercise only those powers 
specifically delegated to it in the Constitution ; that the Con- 
stitution granted nowhere to the Congress the power to issue • 
legal tender notes; in fact, that the delegation of such a ! 
power was intentionally and deliberately omitted from the 
Constitution of 1787. 

These strict constructionist views, which were overborne ^J i^K . • 
in the North by the supposed necessities of the war, pre- ^ j. . - 
vailed in the South, and prevented the adoption of a legal ^^'^^-"^ '.' ^'"^ 
tender law. The traditional interpretation of the Constitu- "J^ i »-- '^ ■ . r 
tion could not be so easily overcome in the South. This ^ ^^ y ^^ 
view-point was emphatically asserted in some of the changes .. 
in the Federal Constitution made at Montgomery in 1861, v» 
perhaps best in the adaptation of the familiar "general wel- 
fare clause." This in the Federal Constitution provides that 
the Congress shall have power "to lay and collect taxes, 
duties, imposts, and excises, to pay the debts, and provide 
for the common defence and general welfare of the United 

This clause was changed in the Permanent Confederate 
Constitution, so as to read:^ — 

1 Richmond Senttndf Jan. 4, 1864. 
' Congressional Globe, d7th C, 2d Seas., p. 549. 
» Con/ed, Perm, Const'n, I, 8, 1 ; cf. Confed, Provit^l Con$en, I, 6, 1. 




"The Congress shall ha'ra power to lay and collect taxes, dnties^ 
impostB, and excises, for revenue necessary to pay the debts, pro- 
vide for the common defence, and cany on the government of the 
Confederate States." 

It is to be Qot«d that, beside omitting tibe pbtase "geneiul 
welfare," — it was also omitted in the joeamble of both Con- 
federate Constitutioiis, — tbe above wording once for all put 
at rest the controversy as to whether tbe taxing power and 
tbe power to provide for the common defence and carry on 
the government were granted in 1787 as two distinct powers, 
or whether, as the strict constracdoiiists had held, the latter 
was merely a qualification of the former. 

On the score of expediency, also, the Southern Congress 
wisely and consistently decided against the adoption of a 
legal tender policy. It is greatly to the credit of the Soutih- 
em statesmen that, in tie stress of the conflict, they were 
not, like the Northern Congress, swept into adopting this 
desperate financial policy, but insisted throughout the war 
upon both its unconstitutionality and futility. This credit 
due the Confederate Congreas is somewhat dimmed by its 
having in other directions distinctly violated both the letter 
and iiie spirit of the Constitution. Thus the body which 
opposed a legal tender law, lai^ely upon constitutional 
grounds, passed the Funding Act of February 17, 1864, and 
thereby authorized a partial repudiation of the Confederate 
debt. The unconstitutionality of such a measure was far 
more certain than that of a legal tender act, in that it vio- 
lated a provision of the Confederate Constitution that " no 
law of Congress shall dischaige any debt contracted before 
the passage of the same," ' which provision had been added 
to the corresponding clause in the United States Constitu- 
taon. Moreover, from the standpoint of expediency, the 
same objections could be urged against the Funding Act 
that were urged against a legal tender law ; and in favoring 
one and opposing the other the Confederate Congress were 
strangely inconsistent. 

> Cenfed. Perm. Cimit'n, I, S, 4. 


However, from still another point of view, the persistent 
opposition to a legal tender law on the part of the Confed- 
erate Congress deserves notice. The State legislatures did 
not feel constrained by the Confederate Constitutions, and 
went to great lengths in passing legal tender laws. Among 
the memorials addressed to the Congress asking for the adop- 
tion of a legal tender law, several State legislatures appeared 
as petitioners.* But they went much furtiier. Some States 
made the Confederate treasury notes tax receivable at their 
face value. So, for instance, Mississippi, by acts of August 
6, 1861, and November 26, 1863, authorized its State treas- 
urer, tax collectors, and sheriffs to accept Confederate notes 
at their face value in payment of public dues. Louisiana 
followed suit on January 23, 1862, and North Carolina a 
short time after,^ both of these States making the notes re- 
ceivable for both State and local taxes. In Louisiana a 
meeting of citizens at Houma, July 4, 1861, had decided 
that it was right and proper that the legislature should 
declare Confederate bonds a legal tender for any debts due 
the State, ^ a position easily explained by the fact that the 
bonds of the Produce Loan of May 16, 1861, were finding 
their way into the hands of the Louisiana planters in ex- 
change for their cotton advanced to the government. 

In South Carolina it was at first proposed to enforce a 
penalty for refusing to accept Confederate notes, but it was 
toned down in the interest of the noteholders so as to require 
the tax collectors only to accept them without distinction.* 

In the House of Representatives F. S. Lyon of the Alabama 
delegation offered a resolution on January 17, 1863, calling 
upon President Davis to induce the various State legislatures 
to enact laws making debts thereafter contracted payable in 
Confederate notes. Alabama had been among the first to 
carry out this plan, for by an act of December 10, 1861, the 

1 Cf. Miss, act Aag. 2, 1861 ; fdso Miss, resolation T)ec 9, 1863. 

s N. C. ordinance Feb. 1862, no. 35, quoted in N C. Standard, July 7, 1863. 

* Houmat La,, Ceres, Jnlj 9, 1861. 

* Charleston Courier, Apl. 6, July 2, 1863. 


State legislature had provided that a defendant in a judg- 
ment coold force his creditor to accept an ofEer of payment 
in cnrreDt banknotes, or in bonds or treasoiy notes of the 
Confederate States, and at their &ce value. The State of 
Georgia tried stall other means to force the unwilling cred- 
itor to accept Confederate notes. The act of December 14, 
1863, provided that, in addition to the nsnal tazpej^r's oath, 
he must swear whether he had or had not refused any snch 
notes in payment of any claim due him. 

A few cases occur where legal tender bills were rejected by 
State legislatures or vetoed by the Governors. On Novembw 
24, 1862, a bill was introduced in the North Carolina Senate 
providing that when a debtor offered to pay his debts in cur- 
rent banknotes, State or Confederate treasury notes, and his 
offer was refused, interest upon his debt should cease. No 
action was apparently taken upon this bill; but a year later, 
on December 4, 1863, the North Carolina House of Repre- 
sentatives rejected a hill intended to make Confederate notes 
a legal tender. A similar biU was vetoed by Governor Brown 
of Georgia on December 15, on the ground that under the 
Confederate Constitution the States could make only gold and 
silver a legal tender; that on this account, and also because it 
impaired contracts, the bill was unconstitutional. 

Though the Permanent Constitution omitted the prohiln- 
tion to issue hills of credit, it forbade the Stetes, as the 
United States Constitution does, to make anythii^ but gold 
aud silver a legal tender and to pass any law impairing the 
obligation of contracts.' This clause of the Constitution the 
State legislatures frequently violated, as in the above cases. 
Others may be added. So, for instance, the Mississippi act 
of November 29, 1861, aimed to facilitate the circulation of 
the State treasury notes, authorized early in that year, by 
makiog them tax receivable. Tennessee had gone much 
further,' and had made its three millions of dollats of treas- 
ury notes "receivable as currency," and had also made Con- 

> Coaftd. Ptrm. Cmtt'n, I, 10, 1 ; cf. Conftd. Prm, Caufn, 1, 8, 1. 
' AppletOD, Amual Cycloptdia/or 1661, p. 631. 


. * ■ *' 

federate treasury notes ^* bankable." Virginia foHowed suit 
on July 1, 1861, by providing that when any bank i^rfused 
to receive on deposit, or in payment of debts due it;'Sx^U? 
treasury notes, the notes of such bank should cease t6'J5^\ 
received for taxes. In 1863 (October 14) the Virginia legis* . 
lature went still further, and provided that every contract 
made on or after October 20 for payment of money should be 
deemed to be for the currency receivable in payment of debts 
to the State when the contract fell due, unless it contained 
special provisions to the contrary. The Arkansas legislature 
adopted a similar policy on November 18, 1861, by passing 
an ''act to facilitate the circulation of ihe Arkansas war 
bonds and treasury notes," which provided that creditors 
who refused to accept them should have proceedings against 
their debtors stayed until two years after the close of the 
war. By an Alabama act of December 10, 1861, the suit 
of a creditor refusing Confederate or State notes was dis- 

Such direct attempts at legislation to force the unwilling 
sellers and other creditors to accept payment in paper money 
were supplemented in various ways. Creditors were threat- 
ened with all manner of harsh treatment. The vigilance 
committee of Charlotte, North Carolina, resolved* to report 
the cases of persons depressing Confederate and State treas- 
ury notes by refusing them, and publish the names of the 
culprits. At a public meeting at Macon, Georgia,^ the Mayor 
issued a proclamation warning such persons to desist or be 
arraigned "to answer for such offence — as the authorities 
may prefer against them." In Alabama a meeting of the 
citizens of Mobile County was called^ to form a society 
whose object should be, among other things, to discoun- 
tenance those who refused Confederate notes. The most 
effective threat was always enrolment in the army. A citi- 
zen of Charlottesville, Virginia, was arrested* for refusing 
to take Confederate notes in payment for some produce he 

1 Charleston Courier, Apl. 7, 1862. ' Ibid,, Aug. 8, 1862. 

* Ibid., Sept. 22, 1863. « Richmond Dispatch, Sept 12, 1862. 

• < 


had Bold-V' He offered to accept Yirginia bonkBotes, — at 
the tipie perhapB at 20 % premium in currency, — but was 
ft^reaUd. We are told that the " ProToet Marshal will diB- 
..";j«8e of the cane as justice may aeem to require." A Florida 
..'act of December 8, 1868, provided that any one refusing Con- 
federate money who is exempt from military service, should 
be reported to the authorities, and immediately placed in 

This Florida act aimed to make the threat more effective 
by prefixing a long preamble in which scathing epithets were 
applied to those who discredited the treasury notes. This 
practice of calling names was generally adopted by the news- 
papers, and a choice vocabulary of incisive terms was directed 
at the so-called unpatriotic and treasonable practice of those 
who, for selfish motives, were discrediting the government 
and injuring the cause of the South.' The feelings which 
prompted this practice were the same as those expressed 
toward all sellers in view of the enormous rise of prices, of 
which a full treatment will follow below.' 

We have seen that the Confederate government steered 

I clear of legal tender laws. This statement will call for quali- 

f fication when the subject of army impressments is reached.^ 

Under them articles were bought for the armies' use, at 

prices fixed by the government, and were paid for in some 

form of government note. 

The legal tender and quasi-legal tender laws enacted by 
the States had little effect, as little as the popular threats 
described above. Neither policy increased the currency of 
the notes to any appreciable extent. People either continued 
to refuse notes, and got on without them by reverting to 
barter ; or, if they accepted them, it was not because of any 
law or threat, but because they could at once pass them on 
in some speculation. To be sure, the State laws stood on 

1 Richmond Diipatch, ApLB, Jime4, lB6a; CharUum Conner, Mft/ 11, 18M, 
quoting Savannah Nemi; PtUriburgh Exprtit, Maj 30, 21, 1S6I. 

* See psgea 183 ft n. 

* See pagea 20s & u. 


the side of the debtor's paying his debts in depreciated notes, 
and the courts, after the first two years of the war, were in 
most of the States closed to the creditor. But very few time 
loans could have been made in the South during the war; 
there was little occasion for contracts of long duration. 

When the war was over, and the courts were again in 
active operation, some suits were brought to determine the 
rights of creditors to refuse Confederate notes during the 
war, most of them, however, to secure an equitable construc- 
tion of the term " dollar " in contracts executed during the 
war and still unpaid. The status during the war of the Con- 
federate and Southern States' governments added a puzzling 
element to the question. 

In Arkansas a decision was rendered which declared all 
contracts based on Confederate notes void, in view of those 
notes having been issued by a rebellious government.^ A 
Georgia court had already taken similar ground,^ adding this 
amusing bit of loyal constitutional reasoning: the Confed- 
erate notes were not bills of credit (and therefore were not 
forbidden by the Constitution on that score), because they 
were not issued by a sovereign body. Other courts were 
similarly affected by a horror of recognizing the existence 
of the Confederate government, and held that the word 
"dollar" in contracts drawn in the South during the war 
could not be construed to mean Confederate currency.* 

Such an extreme position was, however, rare. In a few 
cases where a debtor's offer of Confederate notes during the 
war was refused by the creditor and suits were instituted 
after the war, the court held that the notes were not a legal 
tender, and could properly be refused.* In other cases of a 
similar kind the courts held that the validity of contracts 
within the Confederate States should be tested by the de facto 
governments then existing, and that contracts for the pay- 

1 25 Ark. 574 (Dec. term, 1869). 

3 35 Ga. 330 (Feb. 18, 1868). 

> See 24 Ark. 210 (Dec. term, 1866). 

« 35 Ga. 11, 37 Ga. 16 (Dec terms, 1866, 1867). 


ment of Confederate notes vere enforceable;* moreover, that 
a person who refused to accept soch notes in July, 1864, 
because of their depreciation, should have accepted them.* 

In most cases, however, the coorts cat the Gordian knot 
by upholding the ordinances passed in several States after 
the war to enable the parties to introduce evidence as to the 
character and value of the property or consideration at the 
time the contracts in question were made.' 

The relatively small number of lawsuits that were based 
on the Confederate currency's affecting the oreditrar interests 
in contractual relations, and the divergence of the courts in 
dealing with them, would seem to indicate that loi^ time 
contracts were seldom entered into during the war. All 
business involving them came to a standstill. After the 
first issue of bonds was floated during 1861, the further 
issues were largely paid for in ptMluce, without the interven- 
tion of the currency. What treasuiy notes were in circula- 
tion, we shall see it was to the interest of the noteholder 
to pass on. The creditor class did not object seriously to 
accepting these notes, as they were a suitable tool in the spec- 
ulation everybody was drawn into. 

The large part of the creditor class that was interested in 
the currency as sellers of goods accommodated their prices 
to the conditions they found; they insured themselves against 
the uncertainties of the government's paper money policy by 
charging the buyera more, which practice a legal tender law 
would not have lessened, but rather strengthened. 

The futility of legal tender legislation in correcting the 
evils of an inflated paper currency was clearly shown in the 
history of our country during the last century; and the story 
of the "Continental " notes and the French ^^atngnaU" so 
often repeated by the Southern newspapers, must have played 
its part in deterring the Confederate Congress, if not from 

,, \^ ' I ' .! 

C, , '. *. ^ 1 41 AU. 423 (Jan. term, 1868). 

. tst -s It 1 19 Gratton, 331 (Va,). (Mch. 8, 1869). 

\ _. Vl ' *40A1b.5SS (Jan. term, 1S6T); IIFla-SlT; 94 Gs. 485 (Jane t«nD, 1865J; 

l'" 35 Gft. 27, H%<D«c term, 1866). flirfnonrf lOij, May 13, 186S. . ( . 



issuing paper money, at least from declaring it a legal tender. 
On the other hand, it was these earlier examples in France / 
and our country that the State legislatures copied uncon-f V 
sciously. Their attempts to prevent the discrimination be- V 
tween notes and specie, and to punish the outright refusal 
to accept notes, were mere repetitions of similar devices 
common during the American and the French Revolutions. 
Frightening persons into accepting government notes by call- 
ing them "enemies of the country," or threatening to publish 
their names, or to close the courts to them, were the old 
familiar attempts to win a circulation for a discredited note- 
issue,^ recurring in the South during the Civil War, and, 
incidentally, a few years later in Japan.^ 

^ Cf. Smnner, Financier Am, Revolution, I, 45-^4; White, Fiat Money in 
France {pasiim). 

* Soyeda, Hist'y Banking Japan, pp. 517-8 (in Dodaworth, Hitt'if Bank" 
ing, IV). 



SiATB Stat Lawi — Tu SotraiiuoN or Dun — Southkkk IxoBsninrus 
TO ntm NoBTH, 1861 — Co!fri«ciTion or NoKTaimR Fxopbktt add or 
Debt* oca thb Nokth — Fbdbrai. CoxraoAHOK MxAimiB — Staib 
ConTUCAitoH Laws. 

It is always difficult to distiBgaisti between I^al teoder 
laws and those intended to help the debtois in distress. In 
making paper money a legal tender the motive of assisting 
the goTemment in its efforts to meet its estiaordinaty ex- 
penses and the motive to relieve needy and clamorous debtors 
are seldom distinguishable. The two motives usually go 
band in hand; the latter hiding its true nature behind the 
former, the patriotic motive to sustain the government. 

Hov great that debtor interest was, it is impossible to 
state. As has been suggested, the war deranged business, 
and left litUe opportunity for long time indebtedness. The 
extent of the debtor interest based on transactions entered 
into before the war and during 1861, when business was still 
active, can only be surmised. Inferences, however, can be 
drawn from the stay laws and the sequestration laws passed 
daring the war, the former affecting debts due to fellow 
Southerners, the latter affecting debts due to citizens of the 

In the Confederate Congress, on August 9, 1861, James A. 
Seddon's motion was lost, making notes a legal tender, and 
providing that if they were refused by a creditor, a stay of 
collection by suit and execution should be granted until six 
months after peace.' No such stay law was passed by the 

1 Con/td. Archiva : Secret Joarnkl Coofed. Congnm. 


Congress, but legislation along those lines was left to the 
State legislatures, which willingly took the hint, and passed 
many measures to protect the debtor against the creditor. 

The first debtors to receive attention were those who were 
serving in the army. Mississippi began the policy of reliev- 
ing them from their obligations at home by enacting, on 
January 22, 1861, that it should be unlawful to prosecute 
any claim against a soldier, and enforced the law with heavy 
penalties. Arkansas followed suit, on May 23, 1861, by pro- 
hibiting the issue of writs of attachment against the property 
of any one enrolled in the army. Louisiana, on December 21, 
1861, and Virginia a few months later, ^ freed all in the mili- 
tary service from legal proceedings. Such laws remind one 
of the action by the Continental Congress, on December 26, 
1775, in recommending to the Colonial legislatures the pas- 
sage of acts prohibiting the arrest of Continental soldiers for 
small debts, namely, for those under $35, and prohibiting 
the attachment of soldiers' property for debts imless they 
amounted to $150. 

However excusable such leniency was to soldiers away 
from home and without the chance of profitable employment, 
the Southern States went much further in protecting the 
debtor. Early in the war the Virginia legislature provided, 
on April 80, 1861, that no execution should issue until other- 
wise enacted, except against non-residents or in favor of the 
State, presumably in the collection of taxes. During 1863 
the matter was further discussed in the State legislature,^ 
and on January 12, 1864, it was enacted that no process 
should issue under any judgment or decree rendered by any 
State court, nor be placed in the hands of a sheriff to be 
levied during the year 1864. 

In South Carolina a similar bill was passed on December 
21, 1861, though reported unfavorably by the legislative 
committee, and opposed on the floor of the State Senate as 
imnecessary and unconstitutional.^ As was to be expected, 

1 Virginia act Feb. 19, 1862; re-enacted Feb. 16, 1863. 
3 Richmond Examiner, Feb. 28, Sept. 30, 1863. 
S CharUiton Courier, Dec. 23, 1861. 


maoy Bbirked the paymeDt of their debts under cover of thia 
law; difficulty waa found in colleoting hotel bills and rent* 
Says one newspaper:' "This act gives such unrestrained 
license to offenders f^nst criminal and civil justice, that 
in the end it will be extremely difficult to restore order, har- 
mony, and a due observance of the law." 

In November, 1862, the Qovemor recommended the law's 
repeal, except so far as it applied to soldiers in the field. 
He saw no reason why at least those at home should not pay 
their debts.^ Notwithstanding his opposition and the evi- 
dent effect of the law, it was from time to time continued 
in force till the end of the war.* From one of these acts 
we are to infer that taxpayers were learning to avoid paying 
their taxes and hiding themselves behind the existing stay 
laws; for the act of December 17, 1863, provided that the 
collection of fines imposed by the Board of Road Commis- 
sioners for default in work on roads should not be affected. 

In Mississippi a law of August 5, 1861, suspended the 
collection of debts until twelve months after the war, except 
in cases of liabilities of public officials or in cases then pend- 
ing in court ; nor did the law apply to future contracts. Sub- 
sequent laws on December 19, 1861, and of the following 
January 29, applied the same principle to the collection of 
jufj^ments. About tlie same time Alabama, Florida, and 
Texas began to legislate on the matter, practically postpon- 
ing the collection of debts till after the end of the war." 
Incidentally it is to be noted that the attempt to continue the 
law in Alabama in 1866 was frustrated by the State Supreme 

The same fate had befallen a similar law in North Caro- 
lina. The act of May 11, 1861, providing that no execution 

> CharUnon Cmrier, Jon. IS, 31, IS6a. 

* Saitigh Standard, quoted in CharUttm Couritr, Jau. SI, IBGS. 

* ChariaUyn Courier, Nor. 87, 1868, 

* 8. C. Mta Feb. S, Dec. 17, 1863, Dec. S3, 1864. 

■ A1&. act Dec. 10, 1861 ; Flo. ut Dec 13, 1861 ; Tex. acta Dec T, 1S61, Jan. 
13, 18G9, Dec.3, 1863. 

* AJa. act Feb. so, ISGG ; 40 Ala. 77. 


should hold except in cases of debt in favor of the govern- 
ment, was at once held unconstitutional by the Supreme 
Court of the State at its June term.^ The court did not 
discuss the expediency of the act. The act, it held, impaired 
the obligation of a contract in depriving the creditor of his 
vested right of enforcing payment of the debt due him, and 
was hence declared unconstitutional. As a result, it was 
soon repealed, on September 12, 1861, b}"^ the State legisla- 
ture. That body in 1863, however, enacted a similar measure 
in spite of the court's decision.* 

Arkansas passed a stay law on December 1, 1862. The 
State Supreme Court, ^ a year or more later, held so much of 
the act unconstitutional as continued suits till the end of the 
war, being an impairment of the obligation of contracts. 

Barring the set-back the stay laws received from the 
courts in North Carolina and Arkansas, they were very 
generally operative during the war. Some opposition was 
expressed to them as being both imconstitutional and unneces- 
sary. Two leading newspapers, the Charleston Courier and 
the Richmond Hxaminer^^ voiced the feelings of a strong 
minority in opposing the prevalent policy of South Carolina 
and Virginia. The Richmond paper claimed that ^^the peo- 
ple were never more able to pay their debts than at the 
present time." 

The Southern policy of relaxing the collection laws and 
treating the debtor leniently during the stress of the war 
finds its counterpart during all the ^'hard times " the debtors 
of our country have had to undergo since Colonial days. 
During successive periods of depression, especially about 
1820 and after the crisis of 1837, it has been the custom 
to extend relief to the debtors by suspending sales on execu- 
tion, and in general by postponing bankruptcy proceedings,* 

1 8 N. C. 366 ; Newbem Progress, Julj 16, 1861. 

« N. C. act Feb. 10, 1863 ; cf. Moore, Hist*y N. C, H 313. 

* 24 Ark. 91. 

^ Charleston Courier, Jan. 28, 1862, cf. also ApL 6, 1863; Richmond Examiner, 
Mch. 10, 1863. 

» Snmner, HisCy Banking U, 5., pp. 121-2, 129, 149, 157, 162, 314, 370; Sum- 
Der, IlisVy Am, Currency, 81. 


a policy whose conBtitutionality and expediency have been 
equally questionable, and one which not seldom has led to 
conflicts between the legislatures and the courts, and has 
generally a^ravated the evils it aimed to correct. 

The scanty records in the South do not furnish a sufficient 
basis for an estimate of the extent of the debtor interest 
during the Civil War. That it was as persistent and as 
effective in procuring desired legislation as under previous 
similar conditions is a fair inference from the adoption of the 
above number of stay laws. 

Another closely related question, the solution of which 
we can also reach by inference alone, is this : Did Southern 
indebtedness to the Korth add strength to the secession 
movement in 1860 and 1861? That it did, the following 
paragraphs would indicate ; how much it added to the move- 
ment it would be rash to guess. The same questions are 
; involved in the causes of the American Revolution, among 
1 which must certainly be enumerated the desire of the Ameii- 
. cans to avoid the payment of their debts due to Englishnien ; 
bow weighty this motive was no one can say. 

A full month before seceding from the Union, Georgia 
passed a stay law, in which it was provided that no levy of 
attachment should be allowed unless the claimant declared 
under oath that the defendant was about to remove from the 
South or any county; Mississippi and Alabama passed stay 
laws within a month after seceding,' and the Virginia Con- 
vention was putting dlEBcuIties in the way of Northern mer- 
chants collecting their debts in Richmond at the time the 
State seceded.' These may fairly be styled suspicious cir- 
cumstances; but will be passed over as the necessary con- 
comitants of the commercial collapse of those months, itself 
caused by the fear of secession. 

We are very much in the dark as to the extent of Southern 
indebtedness to the North at the beginning of the war. 

1 Ga. act. Dec. so, 1S60, conUnned b^ Mt Mch. 9, ies&; cf. 34GB.SII; Miu. 
■ct Jan. 23, 1861; Ala. act Feb. 8, 1861. 
» JoDet, Diarn, I, 28. 


Some put the amount as high as 400 millions of dollars, and ' 
the debts in New Orleans alone at 80 millions. Others 
accepted the estimate of the New York Tribune, namely, 200 
millions, made in September, 1861, when the various Con- 
federate sequestration acts were already in operation, and had 
unduly magnified the importance of the Northern interests 
involved.^ The most careful estimate at our disposal was 
made by the United States Economist^ The writer antici- 
pated a general repudiation by the South of debts due the 
North. A large amount of such debts had been contracted 
in the spring of 1860, at a time of buoyant feeling ; the gen- 
eral depression of the fall of that year had compelled the 
Northern creditors to frequently renew such loans, and they 
were still unpaid when hostilities broke out. At that time 
the Economist estimated the outstanding indebtedness of the 
South to the North at 40 millions of dollars, three-quarters 
of the usual amount in the spring of the year. New Orleans, 
Savannah, Mobile, and Charleston had bought only two- 
thirds the usual amount from Northerners in the fall of 
1860 ; and during the following months, as the clouds gath- 
ered, credit was but sparingly given to Southern buyers. 
Unquestionably the Northern creditor was not caught nap- 
ping, and had prepared himself for the storm more thoroughly 
than some of the above estimates, which seem exaggerated, 
would indicate. 

We are led to suspect that this exaggeration was due to a 
misconception of the financial dependence of the South upon 
the Nortii. The Southern indebtedness to the North for 
advances of capital, especially in the shape of manufactured 
articles, was but one item in its dependence upon that sec- 
tion ; this was not strongly resented by the South, but rather 
accepted as inevitable in view of the impossibility of its 
supplying its own need of manufactured articles. The exi- 
gencies of the war fostered this feeling of resentment and a 

1 Pollard, Davii, 183-4. 209, 211, 213 ; Appleton, Annual Cydoptdiafor 1861, 
p. 147 ; iV. y. Tribune, Sept. 18, 1861. 

s Qnoted in New Orleani Price Current, May 1, 1861 ; cf. Richmond Dispatch, 
Sept. 24, 1861. 



desire for industrial independence,* a form of protectionism 
which every war in our country's history has bred. Before 
the war, however, this motive was still latent. The de- 
pendence upon the North which was more apparent, which 
avowedly constituted a grievance, and which played no small 
part in fomenting the desire for Southern independence, 
hinged upon the Northern bonks, which played so necessary 
and important a part in moving the cotton crop. The same 
questions are involved in the present financial dependence of 
ihe agricultural sections of the West upon the commercial 
centres, especially in the East. The cotton of the South was 
moved by drafts upon New York and London. The North- 
em and English banks advanced the desired capital in the 
shape of currency to the Southern cotton factors and planters. 
The latter keenly folt this "abject banking dependence,"' 
and hoped to escape it when they seceded from the Union. 
It is noticeable that the distinctively cotton Stet«s were the 
first to secede, that all of them did so before President 
Lincoln's inaugnration, and all of them, with the exception 
of South Carolina, — which had led the movement on Decem- 
ber 20, 1860, — within twenty-three days thereafter. We 
shall see how the complementAry notion of t^e indnstrial 
dependence of the North and Europe upon the South was 
fostered 1^ the conditions the war brought about. 
■>/' To return to the indebtedness of the South to tbe North 
in 1860-1 : It must have been these bankem' advances upon 
the cotton as it moved to the Northern and English markets 
which were the basis of the extravagant estimates cited 
above. Moreover, it is to be remembered that the Northern 
banks could not have suffered seriously by the repudiation of 
their claims upon Southern cotton men on the score of their 
advances, as they held sufficient collateral security in the 
cotton, which was practically consigned to them. 

Even with the above qualifications, the debtor interest in 

1 See pages MS A u. 

» MenhaW Mag., XLII, 318, 311, SM (Mch, I860) ; cf. Kettel, Sonihtm 
Weallh, ch. tU. 


the South must have been of sufficient weight to be taken 
into account among the factors which led up to the formation 
of the Confederacy. 

Some further light is thrown upon the subject by the 
sequestration laws of the Confederate Congress and the State 
legislatures. The day after President Lincoln's inaugura- 
tion Secretary Memminger addressed a circular letter to the 
Federal civil officers still in the Confederate States,^ ordering 
them to pay over to the Confederate Treasury any sums they 
held as due to the United States government, with which the 
Confederate authorities would arrange an accounting. 

A later Confederate act of May 21, 1861, forbade any one 
to pay a debt due to an individual or a corporation in the 
United States, — except in Delaware, Maryland, Kentucky, 
Missouri, or the District of Columbia, — and authorized the 
payment of such debts in specie or treasury notes to the Con- 
federate Treasury, in exchange for certificates bearing the 
same interest as the original contract; these certificates of 
the government being payable in specie or its equivalent at 
the end of the war. 

An act of August 1, 1861, referred again to sums held in 
the South to the credit of the United States government, and 
provided that such amounts paid to the officers of the former 
Federal courts should be deposited with the Confederate 
Treasury, in exchange for 5 % bonds, the payment of princi- 
pal and interest of which were made only by decree of the 
proper court. Similar provisions were made to cover moneys 
deposited in Confederate courts and left unclaimed during 
six months. On August 21 an act of minor importance 
called for the sale at auction of goods imported and still un- 
claimed at the custom-houses, in so far as such goods were 
too bulky to be stored. 

On August 30, 1861, the Congress passed an extreme 
measure, which confiscated all property within the Confed- 
erate States belonging to alien enemies on May 21, and three 
weeks before the passage of the law enacting that citizens of 

^ Cmfed. Archives, Mch. 5, 1861. 


the United States must depart or be treated as alien enemies, 
unless they became citizens of the Confederacy. The bonds 
of the Confederacy and of the several Southern States were 
exempt from confiscation; as well as the property of non- 
belligerent citizens and residents of the border States, whose 
adherence to the Southern cause was still thought possible. 
Tlie proceeds from the sale of the confiscated property the 
government was to use to indemnify those Confederate citi- 
zens who brought claims for property confiscated by the 
Federal government, or, as was provided for by an amend- 
ment on February 15, 1862, to indemnify those who had in 
general Buffered from acts of the Federal government. 

The Confederate Congress was ui^ed on June 26, 1861, 
by the VickAurg Evening Citizen to adopt retaliatory meas- 
ures for the Federal confiscation of Southern property; and 
Mr. Rhodes ' avers that the Confederate Sequestsration Act 
of August 30 was passed in retaliation for Federal confisca- 
tions. On the other hand, Mr. Blaine ^ states tbat the 
Southern policy became a precedent for later legislation in 
Washington. A comparison of the laws in question as to 
their character and the time of their enactment at both 
capitals will show that in a way both authorities are right, 
/ but that the laws framed in Richmond were much severer 
.' and more uncalled for than those framed in Washington. 
'■, Their severity was largely, perhaps, due to exaggerated 
'\ notions regarding possible wholesale Federal confiscation of 
Southern property, which were never realized.' 

From the above enumeration of confiscation acts it is seen 
that up to August 1, 1861, the Confederate government had 
claimed all United States government funds within the Con- 
federacy, but bad also gone much further and aimed to stop 
: the payment of all private debts due to Northerners and 
divert the payment into its treasury. Up to this time there 
had been no Federal legislation upon confiscation. On 

> Rhodei, Hia's U. S.. Ill, 464, 

« Blaine, Twenty Ytar$ nfCongrai, T, 349, 

' Jonei, Diary, I, 16 (Apl, 12, 1861). 


August 6, 1861, the first step in that direction was taken 
by enacting that any property sold to be used in aid of the 
Confederacy should be confiscated. This reasonable war 
measure was followed ten days later by the President's proc- 
lamation declaring goods imported from the insurrectionary 
States, which he named, forfeited to the Federal government. 
Confederate vessels were given fifteen days to leave Northern 
ports. Under this act seizures of Southern vessels in New 
York and other Northern ports continued during 1861. In 
most cases Southerners were only part owners; the other 
owners, Northerners, usually bid in the vessels at the auc- 
tions.^ The severe Confederate act of August 80, 1861, may 
have been passed in retaliation for previous Federal action, 
but it certainly went much further. In fact. Federal legis- 
lation confined itself to authorizing the confiscation of goods 
exported from the South, ^ the collection of abandoned and 
captured property, and the seizure of the property of the 
civil and military oflScers of the Confederacy and of the 
individual Southern States. The seizure of exported goods 
was a just war measure. The act of March 12, 1863, to col- 
lect abandoned and captured property in the insurrectionary 
States, and turn over the proceeds of its sale to the Treasury, 
sounded well on paper, but led to endless complications after 
the war, the United States Court of Claims dealing for years 
with the problem of establishing what property had been 
subject to capture, and listening to the claims of loyalty to 
the Union on the part of owners of confiscated cotton, who 
had been residents of the South during the war. Quite 
similarly, when that court was called upon to indemnify 
Northerners for the loss of property confiscated by the Con- 
federate government, it was found that, at the outbreak of 
hostilities, Northerners had tried to save their property in the 
South from confiscation by fictitious sales of it to Southern 

1 Merchantt' Mag., XLV, 526 (Nov., 1861). 

* U. S. act, Mch. 8, 1863 ; Proclamation, Apl. 2, 1863. 

< 5 Ct of CI. R., 588 (Dec. term, 1869). 


The Federal act of July 17, 1862, went farthest of any 
Northern confiscation act. It authorized the President to 
seize all the property of Confederate army and navy oflBcers, 
of the civil officers of the Confederacy and of the individual 
Southern States, and of abettors of the rebellion in the North; 
moreover, it freed slaves that reached the Federal lines. 
However severe, the Federal policy was distinctly more justi- 
fiable as a war measure than the attempt of the Confederacy 
at wholesale and indiscriminate confiscation of Northern 
claims upon the merchants of the South. 

Judge A. G. Magrath of the Confederate District Court 
for South Carolina, formerly a judge of the United States 
Circuit Court, held that the power to wage war involved the 
power to confiscate property, and declared the Confederate 
Sequestration Act of August 80, 1861, constitutional.^ There 
had been considerable opposition in South Carolina to a policy 
of sequestration, J. L. Pettigru, a Charleston lawyer, bitterly 
opposing it as a barbarous and useless measure.^ He with 
others brought suit to test the validity of the act, and, in 
arguing the case before the court, he emphasized the inquisi- 
torial and unusual powers granted to the government which 
demanded a disclosure of private debt relations. Mr. Petti- 
gru's position was that of a typical strict constructionist. 
He held that Congress had only those powers which were 
positively delegated to that body. These did not include 
the power to confiscate the property of enemies. Since the 
Revolution only the individual States could exercise that 
power. This line of argument was followed up by Mr. 
Pettigru's associate coimsel, Nelson Mitchell, who tried to 
prove that the policy of confiscating enemies' property had 
been discarded by the United States in accepting the treaty 
of 1794 with England, both parties to which agreed to refrain 
from the practice in case of war.* Two years later, in 1796, 

^ Moore, RebeUiwt Record, JH. 243-4 ; Charleston Courier, Oct. 21-5, 1861 
(arguments), Nor. 9, 1861 (foil text of dedsion). 

* Pollard, Davie, 184. 

• Art. X; the treaties with Bob'Tia, 1858 (art XXIX), Pangnaj, 1859 (art 


Justice Wilson of the United States Supreme Court had 
held^ that "by every nation, whatever is its form of gov- 
ernment, the confiscation of debts has long been considered 
disreputable." Another associate counsel claimed that the 
Confederate Sequestration Act was not justified as a retalia- 
tion for a similar Federal measure, because the Northern act 
was aimed solely at contraband of war and at articles used to 
aid the war. 

The representative of the Attorney-General and his assist- 
ants who argued in favor of the constitutionality of the act, 
necessarily departed from the familiar Southern strict con- 
struction view of the Constitution, and anticipated the posi- 
tion to which the United States Supreme Court was driven 
in upholding some years later the issue of legal tender paper 
money. The right to confiscate enemies' property was a 
sovereign right; "having, then, on this subject, Sovereignty, 
with all its attributes, the provisional [Confederate] Govern- 
ment stands on the same footing with France, Russia, or 
Great Britain, in reference to the exercise of the power 
granted." The right to confiscate must be granted; the 
exercise of that right they held to be a question of expedi- 
ency and policy to be determined by the Congress, not by 
the President or by the courts. These arguments were the 
very ones that prevailed with the Federal Supreme Court 
in 1871 and 1884, and led the majority of the Justices to 
uphold the constitutionality of legal tender acts as a proper 
exercise of the sovereign powers of the National government, 
by shifting upon the Congress the determination of whether 
the measures were expedient or not.* 

The Confederate court, in upholding the Confiscation Act, 
and thereby tacitly accepting the above interpretation of the 
sovereignty of the central government, violated the traditions ■ 
of constitutional interpretation upon which the Southern Con- j / 
federacy rested, and offered one of the many illustrations of 1 1 

Xni), Salrador, 1870 (art. XXVU), Pern, 1887 (art. XXVIU), contain similar 

1 3Dalla8, 281. 

s 12 WalL 556 (J. Bradley) ; 110 U. S. 438, 450 (J. Gray). 


: the £act that, under the preBsnie of war, the cherished States 
^ '. Rights doctrine waa thrown to the winda. The hopeless 
' ' opposition to the growing power of the centralized goTem- 
ment at Richmond waa apparent in the argmnents before 
Juc^ Magrath. The government's attorney regretted the 
issue of DDConstitntionalit^'. Daring a war against such 
odds there was no tnme, he held, to speak of the govem- 
Dient'e "usurpation," its "tyranny," "oppression," "injus- 
tice," "inquisition." This was the time to forego such 
epithets and the diacussiona they aroused, and to uphold 
the hands of the lUchmond authorities. On the other band, 
the attorney for one of the defendants deplored the use of 
aigomentfi that construed any attack upon an unconstitu- 
tional measure as an attack upon the government. " If the 
central agency in such a constitutioaal Govenunent could 
acquire poweis not previously poesessed through tbe excesses 
or usurpation of theit enemies, then the halls of legislation 
would furnish them the means of an attack as fatEil as it 
would be secure." 

Whatever the constitutional objections to confiscating tbe 
property of enemies, they are slight compared with tbe objec- 
tions on the score of the impolicy and injustice of such meas- 
ures. It does not speak well for tbe statesmanship of either 
the North or tbe South, that both sections tried to lay bands 
on each other's private property; but it is especially a blot 
on the history of tbe Confederate government that it ex- 
tended its confiscating policy so as to include the just debts 
due from its citizens to those of the North. 

In former centuries t^e mutual confiscation l^ enemies of 
debts due to each other's citizens was a common practice. 
So, for instance, in the wars of the seventeenth centuiy French- 
men confiscated Dutch goods; the Dutchmen retaliated by 
ordering debts due to Frenchmen paid to tbe Dutch govern- 
ment; tbe Danes pursued a similar policy toward Englishmen 
and Swedes; and Dutchmen toward Spaniards.' During the 
Napoleonic wars tbe practace was revived. France confis- 

1 C. van Bjnkenhoek, QwEttiona Jurit PiMid, Lib. I, e. VIL 


cated debts due to Englishmen : England retaliated in 1794 
by confiscating those due to Frenchmen.^ Since those dis- 
turbed times, the practice has very properly become discred- 
ited, and its reappearance during the Civil War is nothing .' 
to be proud of in our country's history. Even in the second i 
century b. c, the personal property of the Rhodians, confis- 
cated by their enemies, the Syrians, was restored to its 
owners on the establishment of peace.^ 

There was some agitation for minor amendments to the 
Confederate confiscation measures. A convention of cotton 
merchants and planters held at Macon on October 15, 1861, 
desired that, before turning over the Northern claims upon 
Southern debtors to the Confederate treasury, the damage 
done those debtors by acts of the Federal government should 
be set off; it also favored the act of August 30 taking effect 
from the time of its passage, not, as the law required, from 
May 21. Two years later it was proposed in the South 
Carolina legislature to sequestrate the notes of South Caro- 
lina banks, in view of their all being avowedly in the hands 
of the enemy,' but nothing apparently came of the proposal. 

In the Confederate House of Representatives E. Barksdale 
of Mississippi proposed an amendment, on November 9, 1864, 
aimed, as the similar Federal law was, at confiscating the 
property abandoned by persons who had gone over to the 
enemy. He claimed that such property did not come under 
the provisions of the original act, as the Attorney-General 
had decided that its owners were not "aliens." A few 
months later such a bill was passed and became a law on 
February 3, 1865. It provided tha,t any one leaving the 
Confederacy without the permission of the President or the 
General in command west of the Mississippi, should be 
treated as an alien and have his property confiscated. This 

1 1 Fhillimore, InUmat'l Law, 70 ; 34 Gea m, ch. 9, 79 ; cf . 6 Manle & Sel- 
wyn, 92 Ct. of K'g's Bench, Feb. 6, 1817 (the Danish sequestration in 1807 of 
debts dne to Englishmen). 

3 Polybins, History (Schweighanser ed., 1823), m, 492-^. 

' Charleston Courier, Nor. 30, 1863; Richmond Examiner, Dec. 4, 1863. 


recalls the seqnestrntion of the proper^ of the hnigris during 
the French Revolution. 

The evidence i& conclusive that the Confederate courts 
made every effort to cany out the provisions of the confisca- 
tiou acts. During 1861 the District Courts, especially the 
one of Judge Magratb, were busily eng^ed with cases aris- 
ing under these acts.* The results were meagre compared 
with the eza^enited notions of the immense sum of in- 
debtedness that would be transferred from Northern cred- 
itors to the Confederate government. In point of fact, the 
Southern debtor preferred to continue his debt relation to 
the North, as long as there was no chance of his being forced 
to pay; there was little to induce him to wipe out his 
indebtedness to the North, as the law bode him, by paying 
its amount into the Confederate Treasury. We are to infer 
from a bill introduced in the Semite by R. W. Barnwell on 
November 14, 1864,' that some debtors did buy Confederate 
bonds and remit them to the North in payment of their debts, 
but the practice must have been rare. 

In the reports of the Secretary of the Treasury the first 
mention of any revenue from confiscation occurs in the period 
January 1 to September 30, 1868. During that year and 
during the first nine months of 1864, — after which reliable 
figures are wanting, — the total revenue from that source 
foots up to 86,102,070.39, equivalent to perhaps $380,000 in 
gold at the time of collection. The policy was financially a 
failure, and the small sum it netted to the government no 
doubt represents the small amount of tangiUe and largely 
immovable property of Northerners that easily fell within 
its grasp. 

The individual States, as usual, followed the practice 
established by the Confederate Congress, and passed laws 
to prevent the collection of debts due the North. Alabama 
echoed the Confederate Confiscation Act of August 30 on 

> CharUtim Coarier, Ang. 13, 1863; Khod«i, Hisfg U. S., Ill, 46S; 3 Fed. 
Cuei, 976; U ibid., 357; 19 ifad., 317; 33 ibid., 31. 
' Richmond Examiner, Not. IS, 18W. 


December 10, 1861, by enacting that no suits to recover 
debts due an alien enemy on or before May 21 should be 
allowed. Similarly in Georgia a law had been passed ear- 
lier,^ forbidding the payment of debts due to governments or 
individuals in the North, and inviting Southern debtors to 
deposit the amounts of their debts in the State treasury in 
exchange for 7 % certificates. Under this act the suit of a 
New York firm to collect on a note due from a firm in 
Georgia was dismissed by the court. ^ A similar act was 
passed in Tennessee,^ but the usual result followed: debtors 
did not pay their debts, and the State treasury was not bene- 
fited. A Florida act of December 17, 1861, forbade a judg- 
ment for debt due an alien ; in Arkansas, by an act of May 
6, 1861, such debts were confiscated, as well as the personal 
property of such persons. In the same State it was enacted, 
on May 28, 1861, that all moneys of the United States gov- 
ernment seized for the use of the State should be held in 
trust for the payment of claims of Arkansas citizens against 
the Washington authorities. 

Another similar line of State legislation had reference to 
the payment of the interest upon State bonds. Virginia, 
whose debt was largest, was the first to prevent the Northern 
bondholder from obtaining his interest. A law of June 26, 
1861, stopped the redemption of the coupons held in the 
North, perhaps one-third of all outstanding. On July 1 
Tennessee followed suit by providing that interest payment 
should cease on bonds held in non-slaveholding States. The 
coupons of a Tennessee railroad falling due on the same date 
were honored only if the bondholders presented certificates 
from the State Comptroller stating that payment could law- 
fully be made, of which the legislature was the sole judge. 
Evidently only resident bondholders were to receive payment. 
Similarly, the Bank of Louisiana declared its dividend pay- 
able on August 1, 1861, only to resident stockholders.* 

^ Proclamation Governor of Ga., Apl. 26, 1861, Appleton, Ann, Cyclopedia for 
1861, 340; OjgTl Rec'da Rebellion, 4th S., I, 245-6. 
> 33 Ga. 89 (Aug. term, 1861). 

* Appleton, Ann. Cyclopedia Jbr 1861, 684. 

* Merchants' Mag,, XVI, 235 (Sept, 1861). 


Enoagh has beec s&id to indicate the part confiscatioa 
measures played in the war policy of the South. As had 
been done in the Revolutionaiy War, the attempt was made 
to add to the public funds the property of the disaffected and 
of alien enemies, aa far as it could be discovered. In neither 
case was the financial result veiy considerable. Moreover in 
both caaes did the attempt at political separation go hand 
in hand with a wholesale repudiation of debts due to aliens, 
the burden of which had been a factor in leading to that 

The su^iestive attitude of the Sichnumd Enquirer * after 
the Vii^finia banks had suspended specie payments in Novem- 
ber, 1860, throws light on the matter. The editor approves 
of the suspension in order to prevent specie, being drawn off 
to the Nortii. He writes : — 

" It must be remembered, that there are grave political as well 
as purely financial and commercial reasons operating at present 
to forbid the propriety of permitting an entire transfer of South- 
em specie to the vaults of (he Korthem banks." 

In February, 1860, a similar feeling was evidenced in 
Mississippi. A majority report of a legislative committee 
recommended that the question of the State's assuming the 
liability for payment of the repudiated Planters' Bank bonds 
be not opened in view of the aspect of political affairs. The 
minori^ of the committee held that the threatened separa- 
tion from the North offered the best reason for the State's 
strengthening her credit by assuming those bonds. ^ 

It should not be inferred from this that all debtors in the 
South welcomed the political upheaval as a means of escap- 
ing their obligations to the North; nor did they all take 
advantage of the opportunity offered of avoiding the payment 
of their debts. The New Orleans merchants and bankers 
formed an honorable exception to the general practice, and 

> Qnoted in the Banktrt' Mag., XV, 48! (Dee., I860}. 

* Banktrt' Mag., XIV, 868, 866, Msj, 1860. The hirtoiy of thesD repndiaMd 
bond* ia giren in BomiieT, Eiit'it Banking U. S., 381 ft m. 


were true to the high standards for which that city's finan- 
cial and commercial institutions have long been famous. 
Hugh McCulloch, Secretary of the United States Treasury, 
gives strong testimony to the high-minded action of the New 
Orleans banks toward their Northern correspondents at the 
outbreak of the Civil War.^ 

1 McCuUoch, Men fr Meantrts, 138; cf. Merchant^ Mag,, XUV, 413 (A pi., 



Tm Bahsb DnsiMO IS60 Aim 1861 — SnuwnioN w Spzcib pAiiasra — 
EiHurora IxrunoK ahd Isara of Siuix B±XKmom—Tas Bun- 
nro Busmu DttKuia tbb Wak— Cottdk Baku ua> Baxk PRMicn 
— Thb Barks' Atmtob* towaw) Trbasubi Hotm — Th« Sdipbnbion 
OF iHK Niw Oruam Bakkb — Bamc LoAm TO TSB GoTBunptnr — 
Tb* Banks' SrBOiB Sdppli — The Gotibkubjtt'b Sfjccis Som-T, 

The New Orleans banks embodied the best banking tra- 
ditions of the South. Before the war they had been care- 
fully managed, had weathered the crisis of 1857 without a 
general suspension of specie payments ; and after President 
Lincoln's election, when commercial credit collapsed and the 
banks throughout the country generally suspended, the New 
Orleans banks continued to meet their obligations in specie. 
During the winter of 1860-1, when secession was no longer 
a threat but had become an actuality, they wisely shortened 
sail for the coming storm by curtailing tiieir loans and in- 
creasing their specie reserve. The successive bank state- 
ments bring this out clearly. After the middle of 1860 the 
New Orleans banks, as usual, enlarged their assets by buying 
'short commercial paper and cotton drafts ; but immediately 
after the election of November 6, the bank loans fell oS 
rapidly, though the banks continued to buy drafts on cotton 
till March, 1861. This contraction of loans was naturally 
accompanied by a contraction of the banknotes outstanding, 
which continued throughout 1861, barring an increase of 
circulation during the first four months of the year. In 
general, the New Orleans banks prepared themselves for 
the coming storm by converting as many as possible of 


their cash assets into specie. On October 6, 1860, 26% of 
their total assets were in cash; on December 29 the percent- 
age had risen to 85 %, and on the following April 6, to 43 %. 
This was a notable achievement, comparable to the prepara- 
tions made by the New York banks in the winter of 1860-1 
for the outbreak of hostilities. Between October 6 and' 
April 6 the latter doubled their specie reserves, and did 
not expand but rather diminished their loans, deposits, and 

In Millions of DoUan 






























Short Loans 



























Distant Balances .... 

































Short Loans 
























Distant Balances 





• • 

• • 

■ • 

Merchant* Mag., XLIII, 4C 

16-7; XLIV, 89, 336; also New OHeam Price 


In MiUiau of DoUan 














Loans ...... 

DomeBtic Exchange . 



















Banktr^ Mag., XV., 753 (Mcli., 1861 ) ; Charleiton Sltrcmy, Not. 10, 
1860. Feb. 14. Apl. II, Majll.Jalj 13, Sept U, 1861 ; J/ercAanli' Mag., 
XLIV, 337 (Oct.. 18G0) ; Chnrlatoti Couritr. Sept, 16, 1861. 

The banks of South Carolina adopted a policy in marled 
contrast with that of the Louisiana banks. From the time 
that secession seemed inevitable to the outbreak of hostili- 
ties they increased their deposits and circulation, and but 
slightly reduced their loans. At the same time they did 
not materially increase their specie reserve. The divei^nt 
policies pursued by the Louisiana and South Carolina banks 
is further emphasized by the fact tiiat the former continued 
specie payment seven months after the establishment of the 
' Confederate govenmient, while the latter suspended a month 
before the South Carolina secession ordinance was passed. 

Of the condition of the banks in the other Southern States 

we have less detailed information. In general, banks in the 

1 South had grown more rapidly than in the North during 

: the three years preceding the Civil War, partly because 

: the South had escaped the worst effects of the crisis of 1857. 

The year 1860 had been a prosperous one, and the Southern 

crops had been large. However, aside from Virginia, there 

was no unusual speculation during that year. The banks 


were uniformly reducing their loans, and the banknote issues 
were contracting toward the fall of the year; the specie 
reserves were fairly constant, and, in the case of the Lou- 
isiana banks, as we have seen, they were markedly increased. 
At the time of President Lincoln's election the Southern 
banks, representing 20 % of the total banking capital of the 
country, held 25 millions of dollars, or 28 % of the banks' 
specie ; or, if we include with the Southern banks those in 
the border States Tennessee, Kentucky, and Missouri, 39 % 
of the banks' specie in the country was held by them, though 
they represented but 22 % of the countrjr^s banking capital.* 
This was no inconsiderable element of strength to the South- 
em cause, but one that was not fully taken advantage of. 

After the election of President Lincoln, and especially after 
South Carolina had taken the lead in seceding from the Union 
on November 20, 1860, the Southern banks suspended specie 
payments, the New Orleans banks holding back until Septem- 
ber 16, 1861. With a large specie reserve at their command, 
equal to nearly one-half of their note circulation, there was 
no urgent financial reason for suspension in the late fall of 
1860. Secretary Memminger declared, some months later,^ 
that the general suspension of the banks was a political, not 
a financial measure, was intended for the public good, and 
was not due to the pressure of speculation. This is a familiar 
excuse given for suspending specie payments in anticipation 
of financial difficulties or of a war, the avowed motive being to 
harbor the specie reserves. In the case before us, an interest- 
ing commentary upon the expediency of the policy is offered 
by the fact that the New Orleans banks, while holding half 
the specie reserves of the South, withstood the pressure to sus- 
pend, continued specie payments, and were the only Southern 
banks that materially strengthened their reserves. 

The Virginia banks were the first to suspend. During the 
fifties a very large number of banks had been chartered in 

1 New Orleans Price Current, Not. 21, 1860 ; N Y. Courier and Enquirer, Not. 
9, 1860; Finance Rep% 1861, Tables 35-6; Bankers* Afag,,XY, 417 (Dec., 1860). 
s Memminger's drcolar, Mch. 27, 1861, Charleston Courier, ApL 1, 1861. 


that State, and many branchea had been authorized. The 
provisions for the issue of banknotes were invariably liberaL 
These were taken advantage of by the bankeis, who played 
a part in the speculative eta of which the atUe-ieUum State 
debt of Virginia and its recent checkered hiatoiy is a reminder. 
On November 20 and 21, 1860, the Virginia buiks suspended, 
in company mth the New York banks. On the following 
March 1 the legislature legalized die auspension, and a year 
later extended it for another twelve months. Of coarse they 
never resumed during the war. 

The banks of Georgia also were qnick to suspend before 
the end of November. By an act of November 30, 1860, 
passed over tiie Governor's veto, the legislature legalized the 
suspension for a year, and by later acts ^ extended it during 
the continuance of the war. The suspension was first legal- 
ized in view of the embarrassing state of things and of the 
probable suspension of bonks in neighboring States. 

The North Carolina banks followed those of Vii^inia, and 
suspended specie payments in November, the legislature legal- 
izing their action ou the 24th, adding the proviso, however, 
that they should not curtail the abrogate amount of their 
discounts. Seven months later a State ordinance was passed 
which postponed resumption till the State repaid a loan of 
three miUlonB of dollars made to it by tJie banks. This con- 
nection between the suspension of the banks and lending 
some of their capital — in this ease three-quarters — to the 
State, is noticeable. 

The Alabama banks did not wait for the action of the 
legislature, but acted upon the request of the Governor to 
suspend specie payments and hold their coin for any possible 
emergency of the State, and suspended on December 17, I860.' 
Some banks in Mobile and one in Huntsville did not act upon 
this recommendation.^ This suspension was legalized by the 
State legislature on February 2, 1861 ; but a provision for a 

' G«. acta Not. 30,1861; Not. 29, 1869; Dec. 1,1663; Mch.9, 1865. 

* Dubote, Yanety, SS4 ; O/T' Rec'ds BtbeUion, 4th 8., 1, 31-2. 

■ Baaken' Mag^ XV, 584 (Jan., 1861) ; Ntvbtrt Progra; July 30, 1861. 


quid pro quo was added. The suspending banks were re- 
quired to subscribe to specified amounts of State bonds, to be 
paid for in coin if the government required. On December 
9, 1861, the suspension was legally continued till one year 
after the establishment of peace, provided, however, that the 
banks accepted Confederate treasury notes at par and limited 
their rate of discount to 8 % • Moreover, the suspending banks 
were compelled to lend the State $2,000,000 with which to 
pay the State's quota of the war tax of August 16, 1861, each 
bank to contribute to this loan in proportion to its capital 
Evidently the privilege of suspending was one the banks were 
willing to pay for. 

This practice of buying immunity from the claims of the 
note-holder by doing the State government a favor was a 
repetition on a large scale of a similar agreement entered into 
by banks with the State of Alabama during the next preced- 
ing commercial crisis. For on December 19, 1857, the suspen- 
sion of two Alabama banks had been legalized on condition 
that they paid into the State treasury $250,000 within three 
months.^ But the practice is not peculiar to the South or to 
the United States. We need only recall the suspension of 
specie payments in the history of the great national banks of 
Europe and its connection with bank loans to the respective 
governments. A close parallel to the Alabama case men- 
tioned above occurred in Italy in 1866, when by royal decree 
the national banks suspended ; but in return loaned the gov- 
ernment 250 millions of lira at 1 J % ; or rather, the govern- 
ment granted the bank the privilege of issuing iri-edeemable 
notes in return for the generous loan.^ 

The South Carolina banks suspended on November 28 and 
29, 1860. The State Convention legalized this action on 
December 29. At that time gold was already at 4 % premium 
in Charleston. A difficulty arose from the fact that the Fed- 
eral law called for payment of customs duties in gold. To 
relieve the importers, who were in a quandary, a resolution 

1 Samner, HisCy Banking U S., 434. 

3 M. Gninwald, Finanz-Archiv, XI, 85 (1894). 



was introduced in the Convention, authorizing the collectoiB 
in the State to accept South Carolina banknotes in payment 
of duties.' Ko action was taken, however. The suspension 
of the banks was extended by successive aots,^ the last one 
providing that the privilege to suspend should be forfeited 
by any bank which declared or paid dividends in gold or 
silver coin, or one that sold its specie to any one except 
the State or Confederate governments. 

The much less important banks of Mississippi and Florida 
presumably suspended specie payments before the end of 1860. 
Later State legislation legalized their action during the con- 
tinuance of the war,B in the case of Florida for the avowed 
purpose of relieving the community and affording a safe, 
adequate, and reliable currency. 

The suspension of the New Orleans banks is a stot^ by 
itaelf, best told in connection with the relation between the 
Confederate government and the banks and its attempts to 
force them to accept treasury not«s. 

At the outbreak of hostilities all the banks in the South ex- 
cept those in New Orleans and some in Mobile had suspended 
specie payments. This general movement was accompanied, 
as so generally has been the case in banking history, by an 
increase in the banks' business, primarily by an enlargement 
of their note issues. 

In Virginia many bank charters about to expire in 1861 
were renewed for twenty years, and some banks increased 
their capital. In Alabama during the last weeks of 1861 
four banks were chartered ; one of them, a savings bank, was 
authorized to deposit Confederate or State bonds with the 
State Comptroller as a basis for the issue of twice that 
amount of circulating notes, in denominations as low as one 
dollar. About the same time, on November 18, 1861, Arkan- 
sas repealed all acts prohibiting the circulation of banknotes 
of any denominations; the same act, however, le^lated 

' Ckarlettan Coarier, Dec. 31, 1860. 

» S. C. acts Dec. 31, 1861 ; Dec. IT, 1863. 

* Hiu. set Jan. IT, 1862; Fla. act Dec. U, 1861. 


against " shinplasters " and other irresponsible currency that 
was being issued by individuals and corporations. Georgia 
followed suit on November 30, by authorizing the suspended 
banks to issue small notes in denominations of between five 
and fifty cents in amount up to 3% of their capital — in- 
creased to 10 % on November 29, 1862 ; — the act, moreover, 
required the banks to keep one-third of this amount in circu- 
lation. Later acts^ allowed one bank to issue notes up to 
three times the amount of its capital, and granted the 
privilege of note issue to a savings bank. 

Louisiana withstood the demands for small banknotes, and 
in March, 1861, forbade the issue of banknotes in denomina- 
tions less than ten dollars, and in amount exceeding three 
quarters of the paid in capital.^ 

The neighboring State of Mississippi followed the majority 
of the Southern States in legalizing banknote expansion, 
and authorized issues in denominations as low as one dollar 
and in amount equal to the banks' capital, this privilege to 
cease one year after the end of the war, and in the mean time 
to be partly paid for by the banks accepting State treasury 
notes. In return, the banknotes were made tax receivable.^ 

In North Carolina banknote extension was less marked. 
By an ordinance of the Stat6 Convention on June 28, 1861, 
the banks were allowed to issue notes in denominations of 
less than five dollars, but were forbidden to enlarge the aggre- 
gate amount of their issues. In return for the privilege of 
issuing small notes, heretofore forbidden, they were required 
to lend the State 83,000,000 for one year at 6 %, being allowed 
to postpone the resumption of specie payments till the loan 
was repaid. While the banks incorporated at the beginning 
of the war were allowed to issue notes up to twice the amount 
of their capital, at least one bank incorporated during the 

1 Ga. acts Dec. 13, 1862 ; Oct. 17, 1863. 

2 Ann. Rcp't New Orleans Banks for Jan., 1861, in Bankers' Mag., XV, 750 
(Mch., 1861); Appleton's Ann. Cyclopedia for 1861, p. 431; La. act Jan. 20, 

* Miss, acts Dec. 16, 1861, & Jan. 17, 1862. 


war was forbidden to issue them until the re-establishment of 

In South Carolina the banks apparently at first avoided the 
issue of small notes ; but the distress resulting from the fixe 
in Charleston in the fall of 1861, and, a year later, the recom- 
mendation of the Governor — who ui^d an extension of note 
issues in view of its profitableness to the bank of South Caro- 
lina, and therefore to the State, a part owner of that institution 
— led to a general increase of small banknotes in denomina- 
tions even below one dollar.' 

In Virginia banknote inflation appeared early during the 
war. Already in April, 1861, the State Convention authorized 
the banks to issue one and two dollar notes in amount up to 
5 % of the banks' capital, just as had been done during the 
suspension of 1841.' Thebanks, legally relieved of the respon- 
sibility of paying their obligations, needed no urging to supply 
the community with irredeemable paper money. But even 
the above authorization was deemed insufficient, and nine 
months later a law was passed compelling the banks of the 
State to issue small notes in the above amount. Even this 
measure did not satisfy the growing demand for small change, 
and a few months later the banks were authorized to issue 
notes in denominations between one and five dollars and In 
amount up to 10% of their capital. Moreover, after ninety- 
days, each bank was compelled to pay out all sums of less 
than five dollars, and to redeem all its notes of that denomi- 
nation, either in specie — which was of course out of the 
question — or in the bank's own notes of small denomina- 
tions, provided it had not already small notes outstanding 
to the extent of 10 % of its capital.* It is evident from this 
thiit, however willing the banks were to inflate the currency, 
tlie general public — that is, the body of buyers — was still 

1 N. C. acts Feb. 25, IS61, & Dec IT, 1863. 

3 CharUston Courier, Ang. 24, Hot. 97, 1889; Feb. 19, 1863; S. C. acta Dec. 
21,1861, Fob. 6, 1B63. 

« Va. Otdinanre, Apl- 98, 1861 ; Sumner, Bin's Baniituf U. 5, 36*. 

* Va. aft Jan. 24, Mch. S9, VLkj 16, 1863; Ricbmimti DiipabA, Apl. IS, 1863. 
Cf. Charltston Courier, Not. 26, IS61, ApL 7, 1869. 


more anxious for a banknote redundancy, which would to 
their minds relieve the difficulty of rising prices. 

With the meagre data at our disposal we do not know 
to what extent the Southern banks met this demand for more 
currency by enlarging their note issue. In the case of North 
Carolina we have the means of establishing that increase ; or 
at least the fact that there certainly was such an increase.^ 
By inference from the above list of laws we may, moreover, 
fairly conclude that in all the Southern States there was a 
considerable banknote inflation, akin to the enormous issues 
of individual, corporate, municipal, and State notes to which 
reference will be made below.^ But the banknote inflation 
by no means kept pace with the overwhelming issues of Con- 
federate treasury notes, evidenced by the fact that banknotes 
after the first year of the war were invariably quoted at a 
premium in Confederate notes ; that is, their depreciation as 
expressed in gold was much less rapid than that of the gov- 
ernment notes. During 18G2 the gold dollar rose in value in 
government notes from 1.20 to nearly 3 ; at the same time 
banknotes rose from par to only about 1.25. By the end of 
1863 a gold dollar was selling for $20 in government notes, 
and for only about $3.25 in banknotes. During 1864 the 
price in banknotes never rose much higher than that figure, 
while in government notes it rose to fabulous heights. It 
should be added, however, that banknotes were not all 
quoted alike, but varied considerably according to the 
State they hailed from and the place where they were 

In Virginia the authorities made a faint-hearted attempt 
to compel the banks to reduce their redundant note issues. 
The savings banks, which had followed the example of the 
other banks in issuing notes, were the first attacked. As a 
result, the Virginia Savings Bank gave notice, in December, 
1861, that it would discontinue the issue and circulation of 

1 N, C. Convention, 1865 {Exec, Doc'a), Rep't Pub, Trea$W; Finance Rep% 
1861, p. 282. 

' See pages 149 & as. 


Bmall notes, and called in those outstandlDg. The other sar- 
ings hanks followed suit in the spring of 1862.^ 

In the (all of 1863 a further attempt was made to suppress 
the ctrciilatiou of banknotes in Virginia. In the House of 
Delegates a resolution was passed to inquire into the expedi- 
ency of authorizing the banks of the State to redeem their 
notes in Confederate currency and compelling holders of 
banknotes to present them for redemption within a limited 
time. The State Senate took up the same matter some time 
later, but apparently nothing came of it.^ In fact, it is clear 
that with banknotes quoted at a large premium in Confeder- 
ate notes, the holders of banknotes could not have \irged the 
passage of a law to compel the banks to redeem their notes at 
par in a much lees valuable currency. 

Toward the end of the war some Virginia banks redeemed 
their outstanding notes in gold, but of course only at a fraction 
of their face value. So, for instance, during the last months 
of 1864 the Merchauts' Bank of Lynchburg and the Bank of 
Commerce of Fredericksburg were offering to redeem their 
notes, five for one in coin ; ^ and during the last months of 
the war the Bank of Virginia and the Farmers' Bank offered 
redemption at six for one.* It is difficult to understand tho 
motives of the banks in pursuing this policy, unless they 
wished thereby to escape the danger of having their stock of 
specie confiscated by the government, — a real danger, as is 
proved by the pass^e of the last despemte loan act of the 
Confederate Congress on March 17, 1865, providing for a 
forced loan of one-quarter of all the specie in the country. 

The Southern banks did an active business during the war. 
We hear of none winding up their affairs, and, on the other 
hand, we find dividends paid with great r^ularity on bank 
stock until the close of hostilities, or, stricUy speaking, as 
long as we have any records of the Southern money market, 

1 Richmond Diipatch, Dec. 7, IMl. May 9 & T, 1862. 
' mcAmond Examiner, Sept. 26, Dec. 11, 1863. 
» Ibid., Not. IS, Dec. S3, 1S64. 

* Richmmd Engairer, Ucb. 10 it 16, 1865 i Eichmmd Di*piUch, Hek. U, imi ; 
K. y. Etrtdd, Hch. SO, 186S (Wuhingtoii deipstch). 


namely, till January, 1865. These regular dividends, — 
usually on the basis of from 6 to 10 % per annum, — as well 
as the frequent extra dividends, were paid in Confederate 
notes, and sometimes partly in notes and partly in coin.* 

Presumably the banks carried on a profitable business, not 
chiefly by making the usual advances to their clients nor by 
buying and selling drafts, — which line of ordinary business 
was suppressed by the war. This inference is borne out by 
the fact that the North Carolina banks at the end of the war 
were still carrying no inconsiderable amount of uncancelled 
commercial paper discounted before the State seceded, and 
that their loans made during the war were largely still un- 
paid. The amount of these two items was surpassed by their 
holdings in government bonds and treasury notes.^ The 
banks evidently found more opportunity to speculate in 
government funds than to buy commercial paper. Exten- 
sive speculation characterized all the commercial life of the 
South during this period of excessive inflation and violent 
price fluctuation. The above inference is strengthened by the 
fact that the savings banks were less able to enter upon such 
speculative business, and were therefore less profitable. We 
saw that the Virginia savings banks withdrew their note 
issues. At least three of them ^ wound up their affairs, and 
called upon depositors to withdraw their deposits. 

The nature of the speculation the banks were drawn into 
is indicated by the proposed cotton banks, many of which 
were actually established. During the winter of 1861-2 
many such schemes were discussed. So, for instance, a bank 
was proposed with a capital of 10 millions of dollars, all to 
be invested in Confederate bonds ; an equal amount of circu- 
lating notes were to be issued on the security of the bonds, 

^ The figures are called from the files of the Richmond Dispatch, the Richmond 
Examiner, the Charleston Courier, the Charleston Mercury, the New Orleans Price 
Current, and the Newbem Progress ; also from the N, C, Convention, 1865 {Exec. 
Doc's), RepH Pub, Treas'r, 

« N C. Convention, 1865 {Exec. Doc's), Rep't Pub, Treas'r. 

* Richmond Dispatch, Mch. 21 & 25, ApL 17, 1862; Richmond Examiner, Aug. 
8, 1863. 


and were to be coimteisigned by the goTemment, that i8,pre- 
sumablj guaranteed by It. The bank waa to lend the notes 
to planters at 4 %, on the security of their cotton, which the 
bai^ was then to transfer to the goTenunent under the pn>- 
visions of the produce loan, receiving bonds for it. On the 
security of these bonds the bank was to issue more notes and* 
repeat the circle ad infinitum.^ This was indeed an ingenious 
method of supplying the needs of the cotton planters for a 
circulating mediam and of opening to the bank a wide oppor- 
tunity for speculation. The planters were sorely in need of 
help. They had no market for their cotton; at least they 
coidd only dispose of it at ruinously low prices. It was 
least affected of aU commodities by the redundancy of the 
currency, and, expressed in gold, its price was after the mid- 
dle of 1861 continuously below the 1860 leveL Under the 
circumstances we naturally find the planters founding bank- 
ing institutions to supply themselves with a means of dispos- 
ing of their cotton. The Georgia legislature incorporated 
such a cotton planters', bank, on December 14, 1861, with a 
capital of 30 millions of dollars, to be subscribed for in cot- 
ton at 6 cents a pound — not much below its market price 
at the time — or in State or Confederate bonds. The bank 
was authorized to issue notes, to be irredeemable while the 
general suspension lasted, and eventually to be redeemed out 
of the proceeds of the sale of the cotton to be exported when 
the blockade was broken. The amount of the notes was at 
first fixed by the amount of the capital, but on December 13, 
1862, it was raised to three times that amount. The pre- 
amble of the original act naively states its object to be : "to 
give steadiness to the value of cotton, to make it available as 
a basis of a sound circulating medium for the relief of the in- 
dustrial interests of the country ... to guard the planters 
against unnvoidable necessitous sale of their cotton at less 
than remunerating prices." 

A similar plan was proposed in Mississippi, and was fol< 
lowed by a law incorporating banks at Jackson and elsewhere 

1 Correapondent in Richmmd Whig, Not. 27, I86I. 


on almost the same lines just indicated. The aggregate cap- 
ital to be subscribed for in cotton exceeded $5,000,000. Some 
of these banks were actually organized.^ 

In South Carolina the act of December 21, 1861, provided 
for such a cotton bank in every Congressional district. 
Planters were to subscribe at least a thousand bales to form 
one of these Cotton Planters' Loan Associations. On the 
security of this cotton they were authorized to issue five- 
dollar and larger notes at the rate of $6 for every hundred 
pounds of short, and $15 of long cotton ; these notes to be 
tax receivable, and redeemable in specie six months after the 
raising of the blockade. At least one such association was 
formed, for its charter was extended on December 23, 1864. 

There was some talk in the South during the war of adopt- 
ing a sjTstem of banking on the lines indicated by the Federal **" 
National Banks. The motive was, as in the North, a double 
one : to offer inducements to bankers to invest in Confederate 
bonds and thereby improve their standing, and also to furnish 
a more reliable currency than the government treasury notes 
supplied, though the second motive played a minor part. 
A system of free banking was proposed,^ in which the banks 
should be authorized to issue notes up to the amount of half 
their capital, securing redemption by depositing with the 
proper authorities State or Confederate bonds. In case of 
failure on the part of any bank to redeem its notes in specie, 
the government should sell its bonds and redeem the notes 
with the proceeds. Similar proposals were made elsewhere.' 
However, nothing ever came of them, for it must have 
been clear that the government's declining credit was not 
a possible foundation for the erection of a national bank- 
ing system. The 8 % bonds of the 15-million loan act of 
February 28, 1861, fell from the neighborhood of 90 in 
gold, where they stood early in 1862, to 65 by the middle 

^ Vick^hurg Evening Citizen, Not. 26, 1861 ; MiM. acts Jan. 17, 1862, amended 
Ang. 8, 1864. 

« Richmond Whig, Feb. 19, 1862 (corresp.). 

* Richmond Examiner, Oct. 10, 1862; Charkiton Courier^ Oct. 15, 1862; Rick- 
mond Enquirer, Jan. 16, 1864. 


and 40 by the end of that year. In 1868 they fell to one- 
tenth of their face value, and by the end of 1864 to one- 
twentieth and even less. Under these circumstances it was 
folly to expect these bonds, and others that fared much 
worse, to sustain a banknote issue or be bolstered up by 
the banks' demand for them. 

Another factor that must have worked against tiie estab- 
lishment of a national banking system was the very general 
feeling that any improvement in the banknote currency 
would necessarily react upon tiie treasury notes and depress 
them still fuither. Just as in the North, so in the South was 
the feeling strong against the banks controlling the currency. 
Some advocated suppressing the banking system, and deplored 
the dangerous dependence of the government upon it. Others 
advised rejecting banknotes and accepting only treasury 
notes, — a useless bit of advice as long as the former cir* 
culated at a large premium as compared with the latter. 
The usual popular jealousy of the banks cropped out. These 
were borrowing fi-om the public the resources the govern- 
ment was in such need of ; the treasury notes should dis- 
place the banknotes and reap the advantage.^ 

Beside the proposals for a centralized banking system on 
the basis of bond deposits, others were made, generally with 
a view to controlling the note issues within the Confederacy. 
Soon after the Treasury Department was organized, a cor- 
respondent suggested l^e incorporation of a bank on the 
plan of the Bank of England.^ Thirteen States were to 
subscribe one million dollars each ; another million was to be 
supplied by private subscription. On the basis of these four- 
teen millions it was hoped to circulate from twenty-five to 
foil7 millions of dollars of notes. Another correspondent of 

» Cf. N. Y. Herald, Jan. so, 1862 («dJL); RichinoBd Eiamriwr, Not. 9, 1861; 
CharltUon Courier, Apl. T, 1862 (coirsap.); Laogdoii Chores in Richmond Dii- 
patch, Sept. 9, 1863. However, a letter in the Richmond Whig, Dec SO, 18G1, 
holds that banknote are a better correDCf thaa treoenrj notee, and bankers 
better financien than legiaUtnres. 


the Treasury Department advised the formation of a Con- 
federate Bank with a capital of 50 millions, and a note 
circulation of three times that amount.^ A still more exten- 
sive project was suggested in 1862 ; namely, a treaty with 
a foreign power, on the basis of which one-quarter of the face 
value of the outstanding treasury notes was to be placed at 
the disposal of the Confederate government in specie — pre- 
sumably about $75,000,000 — by a foreign government, which 
in return was to be given the monopoly of note issue to the 
extent of four times that amount, the Confederate govern- 
ment to receive annually one-tenth of the value of the issue 
in payment of the privilege.^ Of course this plan was never 
carried out ; but we do hear of the South Carolina legisla- 
ture's incorporating a bank in December, 1864, to which 
French citizens were to subscribe the capital of 52 millions ^ 
of francs. Its notes were to be based on coin and made pay- 
able in Paris, and in Charleston with drafts on Paris.^ The 
chief aim of the bank was evidently to speculate in cotton. 

The Confederate treasury notes were not made a legal j fc. 
tender, as we have seen. The attitude of the banks toward \ 
them was, therefore, of the greatest importance. Their re- 
fusal to accept the notes on deposit would have impaired 
their standing as a circulating medium. The Virginia legis- 
lature soon passed an act — on July 1, 1861, — to compel 
banks to receive them. This act was unnecessary, for during 
July and the following months various bank conventions 
were held at Richmond, Atlanta, and Charleston,* where suc- 
cessful steps were taken to induce the banks of those centres 
to accept the government notes on deposit and in payment of 
dues to the banks. The Savannah banks followed suit in 
September,* agreeing, moreover, not to make any collections 

1 Con/ed, Archives: W. Yerger to W. P. Harris, July 14, 1861. 

« Con/ed. Archives : B. Melchior to G. W. Lee, Treasurer of the C. S., Sept. 22, 

• Charleston Courier, Jan. 11, 1865. 

« DeBow's Rev., XXXI, 100 (July, 1861) ; Charleston Courier, JtUy 25, 29, Sept 
6, 7, 16, 1861. 

ft Charleston Courier, Sept. 18, 1861. 


for their customers unless they were willing to accept such 
notes in payment. 

Elsewhere in Georgia and in some of Uie oUier Southern 
States the banks must have shown some unwillingness to 
accept treasury notes across their counter, for In Georgia 
and in Mississi^^ acts were passed to compel the banks to 
do so;' while in North Carolina the State Convention re- 
solved to investigate whether the banks were refusing the 
treasury notes of the State, and if so, to repeal the act legal* 
izing the suspension of specie payments.' 

The banks that had suspended before the outbreak of 
hostilities found it an easy matter, and not detrimental to 
their interests, to accept the treasury notes and help to give 
them a ready circulation ; at least the leading ones put no 
obstacles in the way. But tiie New Orleans banks, by per^ 
sistently maintaining specie payments during the first eight 
months of 1861, embarrassed the paper money policy of the 
Confederacy. They could not suspend specie payments and 
accept treasury notes without forfeiting their charter,* and 
they did not find it impossible or disadvantageous to continue 
solvent while the other banks of tiia South had suspended, 
repeating their experience of 1842.* 
j' Finally, in September, 1861, Secretary Memminger wrote 
/ - to the Governor of Louisiana,^ begging him to co-operate in 
V* ,' persuading the New Orleans banks to suspend, so that they 
might be able to accept treasury notes and give them cur- 
rency in that city. He enclosed aimUar letters to the Directors 
and Presidents of the banks. This position of the Secretary 
in urging the banks to suspend in order to facilitate the cir- 
culation of the government notes recalls the similar predica- 
ment of the United States Secretary of the Treasury in 1815, 

1 Ga. acts Nut. 30, 18S1. Not. 39, 1863; Min. act Dec 19, 1861, quoted in 
Appleton, Arm. Ci/clopediafir 1861, p. 476. 
" Neicbem Prograi, Feb. 5, 1863. 
' Ibiil.,Juij 30, 1B61. 

* Samner, Hiil-if BanHng U. S., 387. 

• Confed. Archiea; Secr'j Meraminger to Got, Moore, Sept. 11, 1S61, 


when the New England banks were the only ones to maintain 
specie payments.* 

The Governor of Louisiana let himself be persuaded by 
Mr. Memminger, who was anxious to sustain the 100 millions 
of notes recently authorized by the Congress. He issued a 
proclamation recommending that the banks be authorized to 
suspend, avowedly in order to be able to offer accommoda- 
tion to the planting interests, but actually to enable them 
to accept treasury notes, evidenced by the proviso he added, 
namely, that the banks should not issue their notes in excess 
of the amount of specie they held.* The New Orleans banks 
at once acted upon the Governor's recommendation on Sep- 
tember 16, 1861,^ suspended, and, as a result. Confederate 
notes became the circulating medium there. Presumably 
the Mobile banks that had held out with those of New 
Orleans suspended at the same time. The change in the 
policy of the New Orleans banks is well indicated by the fact 
that by the end of the year they held more than 9 millions of 
dollars in treasury notes.* 

We have seen how the Southern banks supplied the gov- 
ernment with the specie called for by the first loan of Febru- 
ary 28, 1861.* Their action at the time was praiseworthy, 
and the help they gave the Confederate finances very con- 
siderable. In another way the banks brought timely assist- 
ance to the government, by making temporary advances to 
it, to be repaid with treasury notes as soon as these could be 
prepared. This plan was first broached at the bank conven- 
tions held in June and July, 1861, and at once acted upon,^ 
especially by the banks of Georgia and South Carolina, 

1 Samner, Hisfy Banking U. S., 66. 

« Charleston Courier, Sept. 23-4, 1861. 

* Con/ed, Archives: Den^gre to Memminger, Dec 28, 1861; Charleston 
Courier, Sept. 26, 1861 ; Bankers' Mag., XVI, 316 (Oct, 1861) ; XVI, 393 (Not., 

^ Charleston Mercury ^ Jan. 7, 1862. 

^ See pages 7 & ss. 

Con/ed. Archives : Letters of Memminger, June 12, 25, 1861 ; Bankers* Mag^ 
XVI, 71 (Jalj, 1861). 



vhich advanced their notes to tbe amount of nearly 10 mil- 
lions of dollais at 5 % in anticipation of the issue of tceasoiy 
notes. The latter conld not be prepared &st enough to meet 
the growing leqaisitions npon the Treasory.^ The retnni of 
the loan was authorized by an act of December 19, 1861. 
In the mean time the printing-presses had caught up with 
the demand for the paper money, and an offer of the Charles- 
ton banks of a further temporary loan could be declined.' 
Similar temporary advances were made by the banks to the 
State governments, as, for instance, nearly half a million to 
Horth Carolina.' 

The cases of Alabama and North Carolina banks paying 
for the privilege of suspending by loaning the State a given 
amount * have already been cited. A similar case occurred 
in Virginia, where the banks had refused, in January, 1861, 
to supply the State government with sufficient specie to meet 
the next interest charge upon Virginia bonds. As a means 
of coercion, the act legalizing suspension, a few months later, 
made it conditional upon the banks redeeming such an 
amount of theii banknotes in specie as should be necessary 
to pay that interest. This redemption was to be made by 
the banks in proportion to their respective capital. In June 
there was substituted for this provision one calling for a loan 
by the banks to the government of one-fifth of their capital.^ 

The banks in the Confederate States must have held in 
the neighborhood of 25 millions of dollars in specie when 
hostilities broke out, or nearly 26 millions if we include the 
Tennessee banks." Of this amount the Louisiana banks held 
more than half, to which they added during the first months 
of the war, notwithstanding their being the only banks to 

• Kep't Seer"? Treaanrj, Nqt. ao, 1861. 

• CharU$tm Courier, Sept. 7, 1861. 

• N. C. Convention, 1865 (Erec. Doc't), Sep'l Pub. Trtat'r. 

• See pa)^» ias-9, 

' MeiMge Got. Va., Jan., lB61,in Appleton, .ilnn. Cyclopedia Jbr 186], p. 68, 
&in iiankeri' 3fag^XV,149 (Mcfa., IS61); Va. acta, Mch. 1, Jnnc 24, 28, 1861, 

• Finance Report, 1861, Table 37, p. 282 ; BankerM' Mag., XVI (JuDe, 1861) ; 
Day, Doum South, U, 207. 


remain solvent. Apparently the specie for the 15-million 
loan came largely from the banks of the other centres, which, 
it will be remembered, offered to redeem their notes in coin 
for that purpose. After suspending in September, 1861, the 
New Orleans banks continued to hold a large specie reserve . 
until the capture of the city by the Federal forces. When ! 
New Orleans fell in April, 1862, the banks transferred their i 
specie to within the Confederate lines, and deposited a part \ 
of it in the Confederate Treasury, the government giving 
them treasury notes in exchange or offering to return the 
specie six months after the establishment of peace with 8 % 
interest. Little choice was given the bank by this arrange- 
ment, for under orders of the Secretary of War, General 
Beauregard in May seized half a million dollars in coin 
belonging to the Canal Bank and deposited at Jackson, 
Alabama, and in the following October he similarly seized 
for the use of the government over two and a half millions 
of dollars deposited by the Bank of Louisiana in Columbus, 
Georgia.^ The latter amount figures as a "bank loan " in the 
financial reports of the government. In addition, $1,653,200 
were seized under a warrant of impressment issued by the 
Secretary of War on May 18, 1864, from various New 
Orleans banks, ^ which amount figures in this case more cor- 
rectly in the treasury reports as "coin seized." 

The New Orleans banks were caught between two fires, 
for General Butler forbade them to issue the Confederate 
notes they received in exchange for their specie. We are 
to infer that they increased their own issue of banknotes to 

The Confederate government, in seizing the banks' specie, 
followed the example of the State of Louisiana's seizing the 
United States Mint and Sub-Treasury at New Orleans on 

1 Confed, Archives: Offl Rec'ds Rthdlion, 4th S., I, 1130-1, 1147-53; 11, 
236 : Sec'ry Memminger to Vice-PrcB. Stephens, Jan. 16, 1863, Seer*/ of War to 
Gen. Beanregard, Oct. 14, 1862, F. H. Hatch to the same. May 18, 186% A. W. 
Bice to the same, Oct. 30, 1862 ; Bntlcr. Autobiography, 391. 

• Con/ed. Archives: Secr'y Trenholm to Pres. Dayis, Jan. 10, 1865. 

* Charleston Mercuty, Jane 18, 1862. 


VhyfTStlj 2, \¥^. TLe Sate oilCaiaed from dK fanoa 
tZ''/J,2fi~,^, and irrxa tl^ mux an icciimalatioQ of cnstoa » 
if/tnue U> tb« amotmc of fl47,oiC'.^}4. A Sate ardinuKe 
r>f M^P^b 4, ]>S'U, tzansfemd tbese $533,7^ to the Ccnfed- 
«nte TreaffTirj, the Congnn ten dajs later accepting with 
tiiotik* tiiH imtdi "v* genemoily tendered.*' That pan of 
tiiH Amf/rmt oliAained ftmn the Federal ilint fignied as the 
'^yilli'jfi fand " anvjAg the miscellaneoos items of Confed- 
ente government rersaioe. The other States transferred s 
mtuih Hinaller som, leas than fT5,0i>0, to the Confederate 
government as a result of their raids npon United States 
funds within their borden.' 

It will never Ije known just how moch specie flowed into 
tint government treasnry daring the war. On Febmaiy 3, 
1W2, an act was passed appropriating *2, 000, 000 for the 
[mrifjiKt of oTitaining some specie, which at the time was at 
2^)% premiritn or more; and during the last davs of the 
Confcleracy a desperate attempt was made to borrow coin. 
Jl'twever large the amount obtained by borrowing, taxing, or 
impn^ftMing, almont all of it must have been sent abroad to 
tbi; Oinfederate agents to enable them to make the desired 
piirr;IiaH(;ft of sliijin and munitions of war. From the nature 
of the case, we find little trace of these shipments of coin.* 

At the evacuation of Riclimond, the Confederate Treasury 
held bulf a million dollars in specie; during the previous 
wttukn its Hi>0(;ie liad Ijeen greatly reduced. WTien the gov- 
enjtndnt dnfmrtments were disbanded, this amount was car- 
ried HouUiwurd under guard through the Carolinas into 
(Jeorgin, and was used in paying the Boldiere. With it was 
also t4ik(tn some gold Ijclonging to the Richmond banks, — 
alfout 82!10,000, — which was deposited in a bank in Wash- 
ington, fitiorgia, after sulMtituting more cumbrous silver for 
till! gold. The coin is said to have been returned to its 

' Alililntoii, Atm. Cgdtptdiii/ar IBG9, p, 9B3. 

■ (;r, J<>ii<«, Iliurn, I, .nsi (Jdiis IG, 18G3) ; II, II (Aqk- 12, 1BS3). 

■ N. Y. Tinut, Jan. «, 1883 (5-1), itMement of W. Flulbrook, Chief Tdler 


We gather that the banks, notwithstanding the high- 
handed acts of the government in seizing their specie, pre- 
served a fair amount of their gold and silver. We have, 
however, no means of stating the amount, except in the case 
of the North Carolina banks, which at the restoration of 
peace in 1865 are reported to have held $561,505.36 in coin, 
as compared with a million or over at the beginning of the 
war.^ The amount saved from the general wreck in 1865 
was, however, insufficient to insure the banks* continued 
existence, except in the rarest cases. 

C. S.; Jones, Diary, H, 423, 431 (Feb. 16, 23, 1865) ; W. H. Parker in Richmond 
Dispatch, July 16, 1893, quoted in So. Historical Papers, XXT, 304 (1893) ; ibid,, 
EX, 542, 545 (1881) ; N, Y, Eve, Post, Maj 28, 1892, qnodng Atlanta Constitution,' 
Knox, Hist*y Banking, 534-5. 

1 N. C, Convention, 1865, Rep*t Pub. Treas'r {Exec, Do^s) ; Finance Bqt% 
1861, p. 282 ; Knox, Hisfy Banking, 557-60, 582. 



Tbb Aliaobd Scakoitt of CnaBmor— Fiat Hobh Norion— Statb, 
HimiOiPAL, AMD Local Txiabuxt Notis — CoBPOSATiom' Nora — 
Pbssobai. Bili4 or CKicrr — Honiuin to sdfpskh " SBisri.AS- 


TO Baktik. 

Few if any periods in history can offer examples of an 
inflated cuneDcy as conspicuous and mauy-eided as the years 
of the Confederacy. Nowhere else can be studied to better 
advantage the work of those forces which an orer-iasue of 
irredeemable paper money sets in motion as well aa the 
monetary notions and philosophy it engenders. 

The first of these notions to be considered — familiar to 
any student of monetary history — is the alleged scarcity 
of currency. Notwithstanding the prodigious over-issue of 
treasury notes and considerable increase in banknotes, com- 
plaints of the scarcity of currency and demands for more are 
persistently heard from the beginning to the end of the war. 
A few examples of this deep-rooted conviction may not be 

In May and June, 1861, we begin to hear that the circu- 
lating medium is scarce in New Orleans, that "money is 
not to he bad," and of the consequent distress arising from 
employers being unable to pay their employees.* Similar 
complaints are made in later years, and are sometimes coupled 

1 Coafed. Archive*: Deatgre to 8«cr'f MemmiDger, Haj 26, I86I ; RiUBeU, 
Piaartt <f Southern Life, 87 ; CharUttm Cowttr, June 18, isei. 


with an attack upon the "unpatriotic " practice of hoarding 
notes and thereby making them scarce.^ 

The Funding Act of February 17, 1864, framed to forci- 
bly reduce the redundant currency, was, when enacted and 
in operation, blamed for producing a scarcity. Many com- 
plained of suffering for want of money, — to be sure, not a 
complaint peculiar to this time and place, — and of a strin- 
gency in the money market, all of which could be remedied 
by having the Treasury Department "put out more money."* 

Another phase of this feeling that the government was to 
blame for the scarcity of currency was that the latter reacted 
on the government's interests in making it difficult to sub- 
scribe to public loans as well as to pay taxes, ^ the implica- 
tion being that the government should issue more notes, so 
that the people could buy bonds and pay taxes with them. 

This persistent demand for more paper money at a time 
when it was excessively redundant was the natural result of 
the inflation of prices, which drove the price of all the lead- 
ing commodities except cotton and tobacco far higher than 
that of gold, as will be shown more fully in the next chapter. 
With the price level, especially of general articles of con- 
sumption, constantly rising, it is easy to understand the 
popular feeling that the government note issues were not 
keeping pace with the movement. The paradox that a 
further redundancy of notes would create a still greater 
scarcity by driving prices still higher and putting commod- 
ities still further beyond the reach of the note-holder, was 
seldom understood. " The business wants of the country " 
were never satisfied, and were calling for more notes during 
the inflation of the Confederacy, just as they were in the 
North at the same time, and as they always had done in 

1 Richmond Examiner, Apl. 14, 1863, Aug. 27, 1864; PeUrtburg Express, Maj 
20, 1863 ; Jones, Diartf, II, 396 (Jan. 24, 1865). 

s Jones, Diary, II, 154 (Feb. 21, 1864) ; Richmond Examiner, Mch. 28, 1864 ; 
Atlanta Register, Jnne 24, 1864. 

* Con/ed. Archives: Den^gre to Memminger, Maj 26, 1861 ; Raleigh Progress^ 
Jane 23, 1864, Mch. 3, 1865 (latter quoting Richmond Examiner, Feb. 25, 1865). 


former periods of BUBpeusion in our histoiy.* Under similar 
conditions the pressure for more currency was alwajrs inevi- 
table and geBendlj irresistible. 

The hifitoiy of tbe French astignatt oCEeis an instructive 
parallel. We hear constant complaints of a lack of a circu- 
lating medium and a clamor for more notes, especially of 
small denomination.' Exactly the same ciy was raised in 
Austria during the fifties and in Russia during the next 
decade.' It is always the same story: as the irredeemable 
paper drives up prices, the public demands, and generally 
gets, more notes with which to meet this higher price level. 

The popular clamor for more currency is hard to distin- 
guish from the Jiat money doctrines which the Federal paper 
money policy called to life after the war. In fact, traces are 
not wanting of the prevalence of such fiat money notions in 
the South. A writer of prominence notes the common feel* 
ing at the time that gold is inconvenient, and only useful as a 
"basis " for a circulation; that the ideal circulating medium 
is paper money, which creates wealth.* Elsewhere' we find 
reference to the prevalent notion that the money of the peo- 
ple, whether coin or paper, should emanate from the govern- 
ment. It is characteristic of every inflated government note 
issue that it obscures and confuses the distinction between a 
coin and an instrument of credit, between the position of the 
government in minting metal and in issuing notes. Some 
who realized that a note issue is a banking function were 
still led to favor a government issue of irredeemable notes on 
the ground that they were superior to banknotes in stability 
of credit, — the old notion that the noteholder is secured by 
a first mortgage upon the entire wealth of the commimity, — 
in extent of circulation, and in permanency of amount. We 

1 Cf. Rhodes, aWy U. S..lV,i37; Snniner, Hill's Am. Currencg, SI9-20; 
Sumoer, nUt's Banking U. S., 265, 372 i Ballock, Mmet. H!$Cy U. S. (paisim). 

» White, Fiai Monty tn Franee, 28, 29, 44-6, 58 j Lt ifoniteur, V, 66S, VITI, 

* A. Wafcnet, RuhucS* PapimBohrang (1868), 13, 15-16, 69, 

* Et;eI«<ton, lUcolketioni, 99. 

' CharlaUm Courier, Apl. 23, 1862. 


also find the notion, common under similar distorting mone- 
tary conditions, that the amount of the circulating medium 
should not fluctuate, but remain constant. The corollary is 
self-evident: "to be convertible into coin, and to serve the 
purposes of a paper currency for domestic trade, are incom- 
patible things." ^ Here we have in embryo all tlie stock of 
notions of "greenbackism," that monetary philosophy which 
in after years befuddled so many minds, and played such an 
important rSle in the country's political history. 

For an earlier appearance of the fiat money doctrine as a 
concomitant of an over-issue of irredeemable paper money we 
look to England during the restriction period at the begin- 
ning of the nineteenth century and to France during the 
Revolution. Rabaud's speech in the French Assembly on 
April 17, 1791,^ would have reached equally sympathetic ears 
if it had been delivered in the Confederate Congress. A 
depreciated and redundant currency was to his mind a bless- 
ing in disguise, in that it stimulated trade and commerce. 

As was to be expected, the growing redundancy of Con- 
federate treasury notes and the attendant rise in prices stimu- 
lated the issue of similar notes for the purpose of circulation. 
Individuals as well as corporations, public and private, pro- 
vided with the necessary paper and machinery, vied with 
each other and the central government to supply the popular 
demand for more currency. The State governments are the 
first to be considered. 

Alabama started the ball rolling as early as February 9, 
1861, before the Confederate government had launched its 
paper money policy, by authorizing the issue of one million 
dollars of State treasury notes. In the following year the 
amount was first doubled, then raised to three and a half 
millions, and the denominations fixed at one dollar and less ; 
an issue of 5% treasury notes was also authorized in lieu of 
bonds. ^ In 1864 these State notes were quoted at a premium 

1 Charleston Courier^ Apl. 23, 1862 ; cf. Charleston Mercury, Apl. 10, 1862; Rich* 
mond Dispatch, Oct. 28, 1861, quoting Lynchburg Virginian ; Our Currency, 5, 7, 15. 
« Le Moniteur, VIII, 228-9 ; cf. White, Fiat Money in France, 10, 47. 
* Ala. acts Not. 8, Dec 4, 9, 1862. 


in the Confederate notes which were about to be discredited 
by the Funding Act of February 17. The latter were eagerly 
offered in exchange for the former,* evidently in order to 
escape the effect of that act. The State authorities stopped 
this exchange, and, when the Funding Act was behind them, 
a law was passed on December 13, 1864, pToviding for an 
issue of an indefinite amount of State notes redeemable in 
Confederate notes. Arkansas^ was also liberally supplied 
with State treasury notes, which, as in the case of Alabama, 
were receivable for taxes. 

Florida went to great lengths in the issue of State treasury 
notes. With a banknote issue in circulation at the begin- 
ning of 1861 not far exceeding $100,000, the legislature did 
not hesitate to authorize 9500,000 in treasury notes, and in 
denominations between $1 and $100. This issue was fol- 
lowed before the end of the year by another of the same 
amount with which to meet the State's quota of the war tax. 
In 1862 a further issue of 8300,000 was put out, $50,000 to 
be in denominations of less than one dollar, increased to 
$100,000 in 1864, when also a further issue of $350,000 was 

The State of Geot^ia apparently delayed until 1862 before 
it embarked on the policy of issuing notes. One issue, in 
amount $1,000,000, was in a large variety of denominationa 
between five cents and four dollars, and redeemable in Con- 
federate notes; this was at once followed by an indefinite 
issue of notes to meet deficiencies in the State revenue, 
authority for which was repeated a year later, when a further 
one of small notes was provided for.* On the basis of all 
these laws nearly 18 millions of dollars in State notes were 
outstanding in the fall of 1864, 8 millions of them being 
small notes, the rest bearing interest;^ all of them were 

• MoBtgomerg DaHj Adntniaa; Feb. 25-6, 18M. 
' Ark. acts Not. U, 18, 1861, 

• Fla. acU Feb. U.Dec. 16, 17, 1861; Deo. 13, 1862; Not. 30, 1863; Dec. 7, 

• Ga. .Trts Dec. 9, IS, ISB! ; Dec. 12, U, 1863 ; Knox, lliit'y Banking, 581. 

' Rrp-t Comptrdter-Gen't Ga., Oct. 16, 1864, JuyuMo ChrmicU 4- Stnlind, Oct 
17, 1864. 


redeemable in Confederate treasury notes, the time of re- 
demption, however, being pushed off till 1866 by an act 
passed March 9, 1865. 

Before the capture of New Orleans the Louisiana legisla- 
ture had authorized an issue of $7,000,000 in State treasury 
notes.^ After the capture the record of that body's doings 
is meagre. We know, however, of an authorized issue of 
$300, 000 in small State notes, and of a bond issue to take up 
the outstanding notes.^ 

Mississippi, like Florida, had an insignificant banknote 
currency in 1860; and, like that State, Mississippi went to 
extremes in issuing and circulating State treasury notes. A 
long series of laws provided for these issues,* the motive 
being either to supply the State with war revenue, or to 
assist the needy planters by making advances on cotton. In 
January, 1861, shortly after the State's secession, one million 
dollars in interest-bearing notes were authorized. Two acts 
at the end of that year provided for five millions of dollars 
more in notes to be redeemed out of the proceeds of the 
cotton pledged by the planters. This issue was exhausted 
in supplying the wants of the 8587 planters who asked for 
advances.* Early in 1862 a further issue of $2,600,000 was 
created for the defence of the State. This was followed in 
April, 1864, by an issue of small treasury warrants, redeem- 
able in State treasury notes. In August, 1864, a further 
$2,000,000 were authorized, later and earlier laws providing 
that the notes could be reissued, and could also, like the 
Confederate notes, be funded in bonds of the State. 

North Carolina presents much the same picture with its 
bewildering list of laws authorizing the issue of State treas- 
ury notes.^ The State began in May, 1861, with $3,250,000 

1 La. act Jan. 23, 1862. 

3 La. acts Feb. 8, 11, 1864 (" msurgent" State legislature). 

* Miss, acts Jan. 26, Not. 29, Dec. 19, 1861 ; Jan. 29, 1862 ; Dec. 5, 1863; Apl. 
5, Aug. 9, 12, 13, 1864; Mch. 3, 1865. 

* OjBTI Rec'ds Rebellion, 4th S., 11, 925 (Gov.'s mess., Nov. 3, 1863). 

« N. C. acts May 11, June 28, Sept. 8, 20, Dec 1, 1861 ; Jan. 25, Dec 20, 
1862 ; Dec 12, 1863; May 28, Dec. 15, 1864. 


notes of variouB kinds, in denominations from five cents to 
one hundred dollars, redeemable in 1866. In the following 
month authority was given for the further issue of $200,000 
in small notes (10-50 cents), and also for the issue of a large 
block of bonds which the banks were to buy and base an 
issue of small banknotes upon, now forbidden. At the end 
of September, 1861, the State Comptroller reported an out- 
standing circulation of $3,357,810.50 in State treasmy notes. 
About the same time the legislature authorized further issues 
to the amount of 31,800,000, part of which were made 
redeemable in 1867. It is to be noted that tlie State was 
following the example of the Congress in pushing oS further 
and further the time of redemption. In December, 1861, it 
also adopted another device of the Congress, namely, inter- 
est-bearing notes, which were authorized to the amount of 
$3,000,000; the interest feature, however, was repealed in 
the next month. A year later, in December, 1862, another 
issue of $3,000,000 in large, and $1,400,000 in small treas- 
ury notes was provided for; and still a year later one of 
$400,000 in small notes, this time redeemable in 1870. 
In the following spring, in May, 1864, another hatch of 
$3,000, 000 in notes of all denominations from 5 cents to $3 was 
forthcoming, their redemption being postponed till two years 
after the establishment of peace. Even this future date was 
not remote enough, and in tlie last weeks of 1864 a law was 
passed practically making all notes redeemable in 1876, a 
trifling with the terms of the contracts which we can afford 
to leave unnoticed. When the State Treasurer took up the 
broken threads after the close of hostilities, he found that 
over 8J millions of treasury notes had been issued during 
the war, and that $5,246,336.25were still in the hands of the 
public; three-fifths of this amount were in notes of denom- 
inations between 5 cente and $3.* 

The Virginia legislature was busily engaged during the 
first two years of tlie war in authorizing successive issues of 
State treasury notes.^ In March, 1861, a beginning was 

1 N. C. Conoenlion, 1869 {Exec Doi^i) Bep't Pub. Treai'r. 

9 Vft. acta Mch. ]t, Apt. 30, June !8, Dec. 4, 30, ISCl ; Mch. 31, Ma7 U, 186!. 


made with $1,000,000 in large denominations, bearing inter- 
est and redeemable in one year, but reissuable within two 
years. In April the amount was doubled, and in June the 
amount was increased to $4, 000, 000, half of it in notes bear- 
ing no interest. In December another issue of $4,000,000 
in non-interest-bearing notes to replace those bearing interest 
was authorized. In the following March a further issue of 
$1,300,000 was made; and in May it was provided that all 
notes under previous acts might be reissued in denomina- 
tions as low as one dollar. A later attempt to increase the 
issue of State treasury notes failed in both houses of the 
Virginia legislature,* one member objecting to the bill on 
the ground "of the great expense it would be to the State, 
owing to the high prices of paper, printing, and clerks,"^ 
another ^ on the ground that it would drive out specie. The 
Governor's message of January 7, 1863, indicates that 6 
millions of dollars in State notes had been issued in 1861. 
During 1862 more were redeemed than were issued, so that 
presumably at the end of the year about 4J millions were 
still outstanding, a figure which was apparently not much 
swelled during the rest of the war. 

The amount of State treasury notes issued by all the States 
and outstanding at any time cannot be determined. Mr. 
Memminger estimated, in his report of January 10, 1863, 
that the circulation of such treasury notes and of banknotes 
did not exceed $20,000,000. But this figure must have been 
far within the truth, as is evidenced by the authenticated 
figures given in previous paragraphs. 

The cities of the South followed the example of the States, 
and issued municipal treasury notes to serve as a circulating 
medium. Richmond began as early as April, 1861, a city 
ordinance authorizing $300,000 in 26 cent, 50 cent, $1, and $2 
notes, exchangeable for Virginia banknotes. This action was 
legalized by the State legislature in the following spring,* 

1 Richmond Examiner, Mch. 20, 25, 31, 1863. 

« Rid,, Feb. 17, 1863. 

8 Ihid., Mch. 24, 1863. 

« Richmond ordinance ApL 19, 1861 ; Bankenf Mag,, XV, 939 (Jane, 1861); 



when the amount waa increased to half a million. The notes 
had been well received, and had proved an "immense conven- 
ience " in making change; so much so that the legislatore 
aaw fit to extend the privilege to all cities with a population 
of 2000, and to three others, the limit of issue in each cit^ 
being twice the aver^^ amount of State taxes assesaed in the 
particular city during the three previous years. Counties 
and towuB were also empowered to issue notes, but, like the 
cities, they were obliged to retire one-sixth of their issues 
during 1863 and each succeeding year. Moreover, the banks 
were called upon to receive and pay them out Early in 
1863 1 we hear the usual complaints that the 9500,000 Rich- 
mond notes are insufficient for the wants of the increased 
population. The legislature, however, did not listen to the 
demand for a further half million, but forbade any increase 
of that form of currency on September 22, 1863. 

In Charleston, the great fire in the fall of 1861 offered the 
opportunity of issuing municipal notes, the State legisla- 
ture on petition of the city council authorizing an issue of 
$300,000 in small denominations, one-third of the amount in 
denominations below one dollar. In 1863 the legislature 
authorized their redemption in Confederate notes or South 
Carolina banknotes, but yielded to the pressure for more 
currency in 1864, and authorized an issue of half a million 
during the rest of the war.^ Presumably the city govern- 
ment took full advantage of its note-issuing privileges, for 
of its estimated revenue in 1863, nearly one-quarter was 
based on the issue of notes.* It was no new experieuce for 
Charleston, for already in the War of 1812 the city had issued 
bills of credit.* 

We hear of other cases of cities' issuing notes, especially 
in small denominations, Pensacola and Augusta being the 

12 W&IL 351 ; Vft. acts Hcb. 19, 39, Uaj 15, 19, 1S6S ; EiAmcnd Ditpatek, Ajd. 
26, ISSS. 

' Richmond Eiamimr, Jul 14, IBS3. 

* Charlatm Courier, Dec 7, 1861 j 8. C. acta Dec. 31, 1861 ; Feb. 6, 1S63 j 
Dec 93, 1 B6t. 

» Charlettm Courier, Jan. 24, Oct. 3J, 1858. 

* SnmiMr, Sufs Banking U. S., ST. 


leading examples.^ No doubt many more could be found, 
presenting the same picture that we invariably find in times 
of irredeemable paper money, in Italy, in France during the 
Revolution, and in the North during the Civil War,* when 
the mxmicipal and other local governments were rivalling the 
central authorities in the issue of paper money or were defy- 
ing them by assuming that privilege. 

Private corporations naturally followed the lead taken by 
public corporations in supplying the eager public with paper 
currency, and among these the railroads stand fiist. They 
issued large amounts of small notes, — often evidently with- 
out legal sanction, — which gained a wide currency.* Georgia 
granted " banking privileges " in the old sense of the words 
to two railroads,* authorizing the issue of notes for between 
five cents and one dollar, redeemable in current banknotes, 
and secured by the railroad's property and by the faith of 
the State, the latter being actually invoked by the noteholder 
many years after the war. In Mississippi during the winter 
of 1861-2 the various railroads of the State were authorized 
to issue notes in considerable amounts, which were redeem- 
able in Confederate notes or banknotes and receivable by 
the railroads in payment for transportation. Evidently the 
railroads lived up to their opportunities, and put a large 
amount of notes into circulation, for after the war they were 
compelled by law to accept the outstanding ones in pay- 
ment for transportation charges ; however, each railroad was 
obliged to receive only its own issues.*^ 

Beside the railroads many other corporations, like turn- 
pike companies, factories, insurance companies, and savings 
banks supplied their share of notes to the already redundant 

1 Fla. act Dec 17, 1861; Ga. act Not. 26, 1861 ; La. act June 20, 1863; Charles- 
ton Couriefy Dec 17. 1861 ; Merchants* Mag,, XVI, 892 (Nov., 1861). 

3 A. Wagner, System d. deutschen Zettelbankgesetzgebung (1870), p. 67, note; 
Le Afoniteur, VIII, 229-30 (Apl. 17, 1791); Bankers' Mag, (N. Y.), XVIl, 316 
(Oct., 1862) ; XVII, 823 (ApL, 1863). 

« Richmond Dispatch, Mch. 21, Apl. 7, 1862; Fla. act Dec 13, 1861 ; Charles- 
ton Courier, Dec 4, 1861 ; Merchants* Mag,, XVI, 392 (Nov., 1861). 

* Ga. acts Dec. 17, 1861, ApL 10, 1863 ; N. Y. Times, Jan. 7, 1900. 

« Miss, acts Dec 20, 1861 ; Jan. 18, 22, 28, 1862 ; Nov. 22, 1865. 


currency.^ In the case of one manufacturing coDcem in 
Georgia, we are told that it had 1^ general request under- 
taken to issue change bills in the fall of 1861, in order to 
obviate the great scarcity of stiver coin. Similarly in 1864 
an institution in South Carolina undertook to issue small notes 
to meet the wants and objections of fanners and producers, 
" who cannot sell under the extant condition of the cur- 
rency," namely, in view of the uncertain effect of the Fund- 
ing Act recently passed. The notes were redeemable in 
July, 1864, in the new currency created by that act, and 
were well received.* 

The practice of issuing and circulating notes was not 
hmited to large concerns. Every individual who saw his 
way to unloading his promissory notes on the community, 
did so, and figured as a public benefactor in supplying the 
scarcity of small change resulting avowedly from the despi- 
cable habit of hoarding small silver coins. Katurally these 
"sliinplasters" were signed and circulated chiefly by men 
who had dealings with a wide class of buyers, to whom they 
had to give change in transactions. So, for instance, the 
tobacconists, grocere, barbers, innkeepers and milk-deal- 
ers figured prominently in this class,' and often made their 
notes redeemable in the goods or services they habitually 
offered. There must have been an enormous mass of such 
personal bills of credit afloat, as there always are under sim- 
ilar circumstances, when the conditions of the government 
and bank currency invite competition in Uie issue of notes by 
all who can possibly get them into circulation. These were 
the conditions in the North as well as in the South, though 
the issue of "shinplasters" was more common in the latter 
section owing to the greator confusion of the currency. 

I Richmond Disjiaieh. A^\.2\,\S62; Ga. act Dec. IT, I8G1; Mim. net. Jan. SS, 
1862; N. Y. Htrald. Feb. 9, 1862 ; Dankert' Mag. (N. T,), XVI, 827-8 (Apl., 
1862) ; Knox, Ilisl'y Banking, 580. 

* Charleilim Courier, May 3, 1864 ; C^arttOm Mereuri/, May S, 1864. 

» Ci. Bankers' 3/03. ( N.' Y.). XVI, 827-8 (Apl., 1862); Richmond Examiner. 
Oct. 31, Nov. 5, 7, 1861 ; Richmond Diipatch, Dec 7, 1861 ; Jan. 18, Hch. 6, ApL 
19, 21, S4, May 26, 1862 ; Richmond Enquirtr, Feb, 12, 1863 ; Charletton Courier, 
Jao. IB, Ang. 12, Oct.7, 1862; Mch.9,1861; SaeUm Prognu, 3a\j iO, \9&\. 


The experience with these " shinplasters," or personal 
notes issued to circulate, was, as usual, a repetition of ear- 
lier experiences in the United States with this curse of every 
deranged currency system. Professor Sumner describes in 
full the circulation of corporate and individual notes during 
the War of 1812. We are told that — 

'' Fi*actional notes ranging from six and a quarter 4;o fifty cents 
were also freely injected into the currency. Individuals and cor- 
porations, barbers and bartenders, as well as manufacturers and 
capitalists, the solvent and the insolvent, further variegated the 
assortment of *• shinplasters ' by liberal contributions, some pro- 
fessing to call for money and others for services." ^ 

Later, during the financial revulsion of 1837-40, a new 
crop of "shinplasters" appeared; "those abominations," 
Niles tells us, " are becoming as plentiful, and will prove as 
troublesome, as the frogs of Egypt," which prophecy proved 

During the period of suspension in the sixties, Italy was 
flooded with similar issues of individual and corporate notes. 
The government could not prevent municipalities, savings 
banks, manufacturers, labor organizations, religious institu- 
tions, pawnbrokers, and tradesmen in general from issuing 
the small notes the community called for in the absence of 
fractional coins that had been driven out by the issue of 
government paper.* 

The Confederate Congress took no steps toward repressing 
the circulation of notes other than the central government's 
issues. The Continental Congress had at least — on Feb- 
ruary 15 and November 22, 1777 — earnestly recommended 
to the States to avoid further issues and to call in all notes 
above fl, meeting their future wants out of tax revenue. 
Its successor, the Confederate Congress, hardly felt inclined 
to wound the particulaiistic feelings of the States by interf er- 

1 Sumner, IlisVy Banking U. S., 64-5 (qnoting Woodward, Hartford Bank) ; 
cf. also ibid., 83, 85, 92. 

« 52 Ntles Register, 193 (May 27, 1837) ; Sumner, /. c, 273. 
* M. Grunwald in Finanz-Archiv, XI, 93-5 (1894). 


ing with one of their {avorite methods of meeting expenses. 
The military authorities apparently had no sach compuno- 
tions, for we have evidence of General Winder's suppress- 
ing with some sacceas the issue of " shinplasters " in 

The State legislatures made at least aji attempt to prevent 
the circulation of peisonsl and corporate notes, but evidently 
without much success. A Virginia act of October 1, 1861, 
forbade such issues under heavy penalties. A similar pro- 
hibition had been made by the State on April 3, 1838. 
Large amounts were issued notwithstanding, and in the fol- 
lowing spring, on March 19, 1862, a further attempt was 
made to compel the withdrawal of notes issued without au- 
thority of law. Still another efEort was made in the same direc- 
tion on October 6, 1862 ; but finaUy, on September 22, 1863, 
only future issues of such notes were forbidden, and those 
previously issued were tolerated, provided they were not re- 
issued when redeemed, 

Florida forbade the issue of circulating notes by individuals 
or corporations as early as February 14, 1861, from which we 
may infer that even then such notes were outstanding in con- 
siderable numbers. The prohibition was repeated on Decem- 
ber IS, 1861. Four days before, Alabama had enacted a 
similar measure ; and we are told that in North Carolina the 
issue of " shinplasters " was an " indictable offence." ' In 
Mississippi an act passed in 1863 ^ taxed unauthorized 
issues of change bills 100%, but left the issues of cities 
and towns uutouched, A similar law of Arkansas, dated 
November 18, 1861, had forbidden the issue of irresponsible 
paper by individuals or corporations, but had allowed the 
banks to issue banknotes of any denomination. Finally, a 
Louisiana statute forbade unauthorized issues of notes as 
currency. It was said at the time : " People must have 
an instrument of exchange, and neither Grand nor Petit 

1 Bitfimond Ditpatch, Apl. 19, IB62 (advert.)! May 7, 1862. 
' Nfmbern Progrest, July 20, 1861, quoting Weiltm DtnuKTot. 
' MiM. ftct Jaa. 3, 1S63 ; Keatiag, Ifemphii, Mb. 


Juries can ignore the inevitable law of necessity." ^ We 
know that the New Orleans Grand Jury indicted sixteen 
persons for issuing " shinplasters," * but we know of no 
conviction for the offence. Reference need hardly be made 
to the similar attempt to suppress unauthorized issues of 
notes in the North during the Civil War, and in the United 
States during the War of 1812.8 

From unauthorized issues of notes to counterfeits is a short 
step, as was illustrated in 1837 by the familiar story of the 
New York counterfeiters who escaped conviction by claiming 
to be a bank.* This experience was repeated in the South in 
the appearance of numerous bogus banks in the fall of 1861, 
whose note issues must have been very extensive.* 

About the same time a batch of unsigned government notes 
was stolen, signed with fictitious names and circulated. The 
culprits were arrested.* 

Counterfeit banknotes and treasury notes began to appear 
early in 1861, and are occasionally mentioned during the rest 
of the year,^ but in 1862 they appeared in much larger num- 
bers with the increased redundancy of the currency, just as 
they did in the North.® In both sections the depreciated 
currency and the consequent confusion gave the greatest en- 
couragement to such unlawful practices, as has always been 
the case under similar conditions, for instance during the 
French Revolution, during the American War of Independ- 
ence, in Austria in the first years of the nineteenth, and in 
China in earlier centuries.^ We gather that the cost of 

1 Charleston Courier, Jan. 29, 1862 (New Orleans corresp.). 

3 Petersburg Express, Feb. 11, 1862. 

« Cf. Bankers' Mag. (N. Y.), XVH, 256 (Oct., 1862) ; XVH, 475 (Dec., 1862) ; 
XVni, 245 (Sept., 1863) ; Sumner, Hisey Banking U. 5., 65, 83, 85. 

« 52 Niles Reg., 164 (May 13, 1837), quoted in Sonmer, HisVy Banking U, S,, 

* Richmond Enquirer, Oct. 3, 1861 ; Richmond Examiner, Oct 31, 1861. 

* Charleston Courier, Sept. 1, 2, Oct. 1, 1861. 
T Ibid., Mch. 13, 19, Aug. 7, Nov. 2, 1861. 

8 Rid., Jan. 20, 1862; DeBow's Rev., XXXIV, 330 (Sept., 1866); Bankers' 
Mag. (N. Y.), XVU (passim). 

* Revolution de Paris, 2* ann^, no. 77, p. 648 ; 4« ann^, no. 135, p. 266 ; Con- 


paper in the SoutJi and the difficolty of engiarmg it set the 
only practical limits to the making and ciiculation of coun- 
terfeits, which were very numerous, especially during 1862 
and 1863.' The Congress was obliged to pass laws ^ reliev- 
ing of liability those Confederate officials who received such 

The Congress also provided heavy penalties for counter- 
feiting, for instance in the treasury note act of August 19, 
1861; but Hiough we hear of one counterfeiter being exe- 
cuted," the death penalty was presumably infiicted as rarely 
as it was for the same offence during the American Revolu- 
tdon,* which bears out the statement that under such cur- 
rency conditions as prevailed in the South during the Civil 
War, government not^ and banknotes shaded off imper- 
ceptibly into unauthorized issues, these shading oS again 
into counterfeits, and that the popular conscience was fully 
awake to this fact. 

The popular feeling against Southern counterfeiters was 
not as strong as against the Korthemers who were said to 
have taken advantage of the poorly executed Southern notes 
and supplied the invading Federal troops with imitations. 
In one case, however, such Northern counterfeits turned out 
to have been made in derision of Confederate notes.' Other 
cases are mentioned ^ which make it clear that the practice 
complained of did prevail to some extent. We even hear of 
Federal prisoners in Richmond auccessfuUy manufacturing 
and circulating Confederate notes.'' 

tineaMl Coagcew: Apl. 30, Jaae 2*, 1776; Samner, Hiit'i/ Ant. Currency, 313; 
Journal Afiati^uf, St 8., T, IV., p. 243, Hi & paiiim (1837). 

' Peitnlrurg Eipreii, Jane 4, 186!, Jan. 13, 1863; EicAmond Ditpattk, Ang. 
93, as, 37, SB, Sept. 10, 1863; Coiunbat, Ga.. EnqviTtr, June U, 1863; UtrnphU 
Appeal, Oct. 14, 1863 (qaoting Richviond Whig)- 

' Confed. acts May I, IBSS ; Jan. 3D, 1S64. 

* Richmond DitpatiJi, Ang. 23, 1869. 

* Sumner, Financier ^ Finaare, An,. Rer'n, I, 68-9. 
» Richmond DUpalch, Apl 15, 16. 1862. 

* Ibid., Jnne 30, Ang. 19 (Prei. Davia's meu&ge, Aug. 18, 1B62), Attg. 30, S3, 
1863; Banktri' Mag. (N, Y.l, XVII, 163-4 (Aug, 1862); Conled. act Oct 13, 

T ShnitleS, A Year mith the BOtlt, 396. 


The same practice is recorded during our Revolutionary 
War, when the British "counterfeited the [Continental] bills 
and passed them through the lines, "^ just as some time 
before Russia's dishonest neighbors were accused* of flood- 
ing the country with counterfeit copper coins. But the best 
example of the practice is found in the French Revolution, 
when it is credibly reported that great masses of counterfeit 
assignats were produced by foreigners, especially in Eng- 
land, and smuggled into France. France retaliated later by 
counterfeiting and circulating in Berlin Prussian token coins, 
which at the time were much debased.^ 

The Confederate authorities could not prevent the circula- 
tion of counterfeits, whether they were the product of South- 
em or Northern ingenuity. They were similarly helpless 
against the invasion of Federal currency. Wherever the 
Northern troops advanced, the Federal "greenback" fol- 
lowed, and found its way into general circulation not only 
in the disputed territory of the border States, but also in the 
leading centres of the Confederacy. Drafts on New York, 
Philadelphia, and Boston were advertised for sale in Rich- 
mond in the spring of 1862,* and till the end of the war 
"greenbacks " were dealt in. At times their price was regu- 
larly quoted in Richmond, and the notes were publicly dis- 
played in the brokers' oflSces.* This, to be sure, aroused 
feeling against the brokers, and the authorities were urged 
to take steps to suppress them and the circulation of North- 
em currency, but " greenbacks " continued to pass from hand 
to hand in the South, and became more and more acceptable 
as the Confederate currency declined in value. During the 

1 Sumner, Am. Currency, 45, 

* Horn, Hiat'if Banking Russia^ 343 (Dodsworth, Hist'if Banking, II). 

« Blanc, Hiit, de la Revolution, XI, 392; De Goncourt, Soci€t€ Jran<f, pend. la 
Rivdution, 179; Le Moniteur, XI, 443 ; XV, 18, 49; XXI, 198; Pertz, Leben vou 
SUin, II, 110. 

* Richmond Dispatch, Maj 14, 28, June 7, 1862. 

^ Richmond Examiner, Mcb. 26, Dec 17, 1863, Jan. 4, 1864; Jones, Diary, I, 



last year of the war they must have been veiy geaetally in 
circulation in the Soutii.^ 

In 1863 the Vii^inia legislatore discossed tiie advisability 
of forbidding their ciiculation,' but apparently nothing came 
of it. The Confederate Congress, howeyer, took up the 
matter seriously. A bill was introduced in April, 1868, to 
prevent the sale of United States treasury notes, but action 
was postponed till the next session, when a number of similar 
bills were presented and discussed. It was churned by one 
Representative that the circulation of "greenbacks" had 
done more harm to the Confederate States than the Federal 
arms; that it had spread disaffection, and stimulated trade 
with the North. The House passed a Kll, on December 24, 
1863, to suppress their circulation; and after discussion in 
the Senate, it passed that body and became a law on Febru- 
ary 6, 1864.' Its provisions were simple; they forbade 
under heavy penalty any hanker, broker, or other person to 
deal in United States currency. Two exceptions were made. 
The law did not apply to United States postage stamps, nor 
to any one acting on behalf of the Confederate government 
or by authority of the President or the head of a department. 

In fact, as we shall see,* the government was interested in 
speculations based on the sale of cotton and tobacco for 
"greenbacks." The latter must have accumulated in the 
Confederate treasury, and were evidently obtained in the 
open market. A notice published at the end of 1864 ' states 
that Federal currency may be disposed of on good terms and 
without violating the above law by presenting them to the 
government agent at a certain Richmond banking house. 
In the last days of the Confederacy the surplus Federal cur- 
rency in the treasuiy of one of the military departments was 

I Richmond Examiner, Jan. 2!, 1S64 (Sen. A. T. Capertou !q Che Confed. 
Cong.) ; ibid., Dec. 19, 1863 {edit); OJ'l Bet'dt ReUUim, let S., XL VI, pt !, 
p. 1397 (Mch. 10,1865). 

* Richmond Ditpatdi, Sept. 14,1863; fiicAmemf £zani'iier, Dec 21, 1863. 

* Richmond Exaimner, May 1, 2, Dec 8, 11, 23-5, 1863 ; Jan. 22, 186*. 

* See pages 253 & as. 

* Richniond Examiner, Deo. 10, 14, 1864. 


used to pay off the Confederate soldiers at the rate of $1 in 
"greenbacks " for $16 in Confederate notes. ^ 

Postage stamps were current as a circulating medium in > 
the South during the war. At times they circulated widely ; 
when the demand for small change was particularly urgent, 
as in January, 1863; at other times people refused to take 
them, as in May, 1862, when, we are told, people were 
"eager to spend those they had on hand," a true analysis of 
the motives actuating noteholders whenever the currency is 
growing redundant.* In 1864^ the post-oflBce met the de- 
mand for small change with an issue of half a million 20- 
cent postage stamps. At first they were freely received, 
then no one wanted them, and the post-oflBce did not offer 
to redeem them. A similar demand for small change made 
postage stamps circulate in the North during the war, which 
survived in popular language in the expression "stamps " as 
a synonym of "cash." Italy had the same experience during 
its period of suspension in the sixties.* 

The introduction of the enemy's currency and its ready 
circulation in the South are suggestive of the utter collapse of 
the Confederate circulating medium. The various kinds of 
currency in the South became so debased and deranged that 
the people were driven back to earlier forms of trade, and 
were compelled to revert to barter in order to escape the 
hopeless confusion due to the paper medium of exchange. 
In the fall of 1862 already we find an iron-manufacturing 
concern in South Carolina announcing that it will barter 
given quantities of nails and iron for given quantities of 
bacon, leather, flour, com, and other products.^ A similar 
notice appears in a Richmond paper a year later.* We also 

1 Ojgri Rec'di Rebellion, 1st S., XLIX, pt. 2, p. 1254 (Apl. 19, 1865). 

' Richmond Dispatch, Jan. 18, 1862; Petersburg Express, Maj 23, 1862; Rich' 
mond Examiner, Jan. 14, 1863 ; Nashville American, Dec. 25, 1877, quoted in N. Y. 
Times, Dec. 27, 1877. 

« Ibid., Apl. 13, 1864. 

* M. Gmnwald in Finanz-Arduv, XI, 94 (1894). 
' Charleston Courier, Nov. 12, 1863. 

* Richmond Examiner, Sept. 3, 1864. 


I hear ^ of tenpenny nails passing current in North Carolina at 
5 cents apiece. Toward the end of the war resort to harter 
most have been very general.^ Payments were made in kind, 
just as taxes and subscriptions to goTemment loans were so 
often paid in produce. In isolated cases the utter break- 
down of the paper currency led to its beii^ discarded in 
fovor of coin which was smu^led across the border. Re- 
calling this experience, a Southerner states that "at the end 
of the war we had this advantage [in Texas], that while the 
rest of the South was loaded up with wortiiless Confederate 
scrip, we had for a year or more been practically on a gold 

1 Pelenburg DaUg Ntm. Hch. 31, 1863. 

■ Egglteton, BteoO^eliatM, 104; Off'l Rtt^di IMdUmt, IK S.,:SIA,pt.*, p. IIM 
(G«n. E. B. Smith to Prw. Dstu, Dec 13, 1864) ; DsLmu, BiM CapiuU, 134. 
* N. Y. Ett. Pott, Not. 10, ISM, qnotiog L. C. Atkiiu. 



Amount of Notes in Cibcui^tion — Thb Gold Febmium and its Fluc- 
tuations — Prices of Commodities and thbib Movements — Prices 
IN Currency and in Gold — Wages and Salaries — Legislation 
TO LIMIT Prices — Price Contentions — Moyxmsnt to suppress 

It is impossible to state even approximately how many 
Confederate treasury notes were outstanding at any time 
during the war, partly owing to the paucity of reliable 
sources of information, and partly because we have no means 
of telling how many of the call certificates and interest- 
bearing treasury notes were treated like an investment and 
locked up by the public, and how many were treated as cur- 
rency and passed from hand to hand. Judging from the 
most reliable sources, the Reports of the Secretary of the 
Treasury, we conclude that something over $1,000,000 in 
treasury notes were in active circulation during Jime and 
July, 1861; that the amount rose to above $30,000,000 
before the end of the year; and passed $100,000,000 by 
March, 1862, $200,000,000 by August of that year, and 
reached something like $450,000,000 by December, 1862. 
By the fall of 1863, at least $700,000,000 of treasury notes 
must have been in circulation, which sum must have been 
increased by several hundreds of millions of dollars before 
the end of the war, though the figures after the fall of 1864 
are purely conjectural. 

Add to the above all the scraps of information available 
upon the outstanding unfunded indebtedness of the Con- 
federacy, and we conclude that the greatest increase in the 


amount of treasuiy notes issued and outstanding ocomred 
during ihe last months of 1862, ^ain during the second half 
of 1863, and, speaking by inference, once more during the 
last months of the war. During the flist months of 1863 
and again during the first mouths of 1864 there was a 
decided falling off in the amount of notes outstanding, due 
to the two funding laws, of March 23, 1863, and of February 
17, 1864, which forcibly reduced the amount by compelling 
noteholders, under penalty of a heavy tax, to exchange their 
notes for government bonds. 

Even if we knew the successive amounts of Confederate 
treasury notes in the hands of the public during the war, 
this would signify little, as they formed but a part of the 
currency; the State, municipal, bank, corporate, and indi- 
vidual notes formed the other, and, as we have seen, no 
inconsiderable part. 

The rise and fluctuations of the gold premium can be more 
easily and accurately established. It first appeared in April 
and May, 1861,' was quoted regularly from July on, and 
reached fabulous heights before the end of the war. Owing 
to the size of the figures involved, the usual method of quot- 
ing the premium — that is, the excess over one dollar in 
currency obtained for a gold dollar — is less convenient than 
the one of quoting the equivalent of one gold dollar tu cur- 
i-ency dollars. 

There were local differences in the gold premium at one 
and the same time, but these differences were necessarily 
small. In general, the growing infiation of the currency was 
uniformly reflected in the premium on gold, which gradually 
rose till March, 1862, and then progressed by successive 
leaps in April, September, and November, 1862. There- 
after it rose more and more rapidly till August, 1863. Dur- 
ing the following months the rate of acceleration was less. 
After reaching a maximum in February, 1864, — a gold 
dollar was temporarily quoted at 30 in currency, — there was 

1 DtBow't liev., II, 330(1S«6); iV, 0. Price Current, Mayl, 18,22, 28, 1861; 
Cenftd. ATchive$ : Jqo. Fruei & Co. to Seer*; Memminger, ApL ST, 1861. 



a decided decline till the middle of 1864, when the last 
upward start was made, the fig^ures reaching 61 : 1 in March, 
1865, and 1000 : 1 at the end of the following month. This 
movement of the gold premium corresponds roughly with 
the amount of government notes outstanding in each pe- 
riod. The relatively rapid increase in the issue of notes 
after August, 1862, during the last months of 1863, and 
again during the last months of the war, is reflected in the 
rapid increase of the gold premium at those three times. 
When the amoimt of outstanding notes remained stationary 
at the beginning of 1863, there was a somewhat slower 
advance of the gold premium during those months; while 
the shrinking of the outstanding notes during the first half 
of 1864 is distinctly reflected in a temporary decline of the 

Average Monthly Value in Curbenct of One GtOld Dollar. 







Jan. 1.2 

Jan. 8. 

Jan. 21. 

Jan. 53. 

Feb. 1. 

Feb. 1.2 

Feb. 8.3 

Feb. 23. 

Feb. 58. 

Mch. 1 

Mch. 1.3 

Mch. 4.1 

Mch. 22. 

Mch. 61. 

Apl. 1 

ApL 1.5 

ApL 4.5 

Apl. 21. 

Maj 1 

May 1.5 

May 5.2 

May 19. 

Jane 1. 

Jnne 1.5 

Jnne 7. 

June 17. 

Julj 1. 


July 1.5 

July 9. 

Jnly 20. 

Aug. 1. 


Aug. 1.5 

Ang. 12. 

Ang. 22. 

Sept. 1. 


Sept. 2. 

Sept 12. 

Sept 23. 

Oct. 1. 


Oct. 2. 

Oct. 13. 

Oct 26. 

Nov. 1. 


Not. 2.9 

Not. 15. 

Not. 80. 

Dec. 1. 


Dec 2.9 

Dec. 20. 

Dec 38. 

The table is based especially on the market reports in the Richmond, 

Charleston, and New Orleans papers; it differs slightly from similar 

tables prerionsly published. Cf. N. C. act Mch. 12, 1866 (acts 1866, ch. 

39), which fixed a scale of depreciation of Confederate currency; 34 Ga. 

487 (1866) ; Appleton, Ann, Cyclopedia for 1865, p. 188 ; N. Y, Eve, Pott 

(corresp.), Aug. 4, 1896. 


This general dependence of Uie gold pFemium upon the 
amount of notes outstanding m similarly illusttated dur- 
ing the periods of irredeemable paper money in England, 
1801-19, in Italy, 1866-74, in Russia, 1851-62, and in 
Austria, 1852-76. In these countries the gold premium was 
high in the years when the amount of notes in circulation 
was lai^e; and correspondingly low when small amounts 
were circulating.' But a closer examination of the Italian 
experience indicates that, while the gold premium rose most 
rapidly during the years 1866-8 and 1871-4, when the cir- 
culation of notes was increasing moat rapidly, and declined 
rapidly during 1868-70, when the notes outstanding varied 
little in amount, no close connection can be established be- 
tween the fluctuations of the gold premium and the amount 
of the currency. The premium, instead of even roughly 
registering the varying amounts outstanding, fluctuated more 
or less independently, and recorded with accuracy the popu- 
lar estimate of each important military and political event 
and its bearing upon t^e eventual outcome of the Italian 

The history of the gold premium during the period of the 
French assignats bears the same interpretation. The enor- 
mous increase in the amount outstanding after the middle of 
1795 is reflected in the accelerated rise in the gold premium 
from that time on; but the fluctuations of the latter seem to 
have reflected still more accurately the varying prospects of 
a return to a state of peace.' 

In the North during the Civil War the course of the gold 
premium only remotely suggested the amount of notes out- 
standing at any time. The premium rose most rapidly, or, 
in other words, the notes sank in value most rapidly, at the 
beginning of 1863, recovering again during the second quar- 
ter of that year, declining after August, 1863, to their lowest 

» WeUi in Jahrh./iir Ndiional-OehonomM f- Statittih, XXXVIII, 151 & u. 

> Compare the elaborate tables and explsttstions of M. Gmnwald in Fi'nanz- 
ArcMa, XI, 103 iV6di). 

• Cf. C. Cathberton, Ecmomic Rti:, Vm, 489 {Oct 1898); Tluerf, French 
Bti^» (Shoberl trausl.}, Ill, 303. 


point in the summer of 1864, and rising again during the 
last months of the war.^ The value of the "greenback " was 
much more a barometer of popular feeling as to the eventual 
outcome of the war than a gauge of their amount in circula- 
tion, for the latter did not materially increase after July, 

1863, and certainly not after July, 1864. In fact, the gold 
value of the Federal " greenback " ran closely parallel with 
the gold value of the Federal bonds during the war. This 
is also true of the Confederate bonds and treasury notes. 
These two sets of parallel fluctuations were evidently caused 
by the changing credit of the two governments concerned. 
They reflect the popular feeling on both sides as to the prob- 
ability that the war would come to a successful close, as was 
suggested by the editor of the Richmond Ilxaminer on April 
1 and August 7, 1863 — not the feelings aroused by the daily 
or weekly returns from the seat of war, which are seen re- 
flected in daily and weekly fluctuations of the bonds and of 
the gold premium, but the more deliberate public opinion, 
mathematically expressed by the average quotations during a 
series of months. The same results would be obtained from 
a study of the price of consols and the gold premium in 
England during 1801-19.2 

An examination of Table I. on page 172 suggests that the / ^ 
Confederate credit was declining most rapidly in the spring j! 1ft>*^r 
of 1862, in the midsummer of 1863, in the first months of || 

1864, and in the first months of 1865, namely, at the times 
when the Confederacy was approaching a crisis; at these 
times the credit of the North was rising relatively fastest, 
and its hopes of ultimate success were brightest Conversely, 
the North was most despondent of success, and the South 
coiTespondingly sanguine, in the summer of 1862, the first 
months of 1863, and the summer of 1864, which feelings are 
registered in the decline of the North's and relative improve- 
ment of the South 's credit at those times. 

1 See table on page 167. 

« Cf. Weisz in Jahrb. Jur National- Oekonomie ^ Statistik, XXXVIII, 154-6 



These nps and downs in popolar feeling were tlie neces- 
saiy result of the changing aspect of the war. After the 
inaction of 1861, the spring of 1862 was signalized by the 
fiist series of Federal successes. The Northern troops estab- 
lished themselves firmly on the South Atlantic coast, by 
occupying Roanoke Island, Newbem, Beaufort, and Norfolk ; 
the Southern hope of breaking the Federal blockade with an 
improvised navy was frustrated by the ''Monitor;" in the 
interior, Forts Henry and Donelson had fallen, and General 
Johnston's army had been driven hock; and, above all, the 
Confederacy had lost New Orleans, and had been cut off 
from easy communication witb the trans-Mississippi States. 
Into this period of Confederate reverses fall the first suspen- 
sion of the writ of haheaa corpus and the first conscription 
' act, which called all male whites between the ages of eighteen 
and thirty-five into military service. 

The Federal successes in the spring were not, however, 
followed up by others in the summer of 1862. On the con- 
trary, the hopes of the South were raised, while those of the 
North fell, indicated by the more rapid decline of Northern 
than of Southern credit during those montha. Vickshurg 
successfully withstood the efforts of the Federal forces to 
open up the Mississippi River, while the failure of the 
Peninsular campaign had a most depressing efFect on the 
North. Then followed the second battle of Bull Run, 
General Bn^'s operations in Kentucky, and General Lee's 
first advance into Maryland. Similar influences, depress- 
ing Northern and encour^ing Southern feelings, remained 
operative till well into the year 1863. 

With the summer of that year, however, the second crisis 
in the war was reached, when General Grant successfully 
invested and captured Vicksbui^, and General Lee's inva- 
sion of Pennsylvania was brought to a close by the battle of 
Gettysburg; and these Federal victories depressed the gold 
premium in the North, and raised it in the South. At that 
time desertions were particularly frequent in the Confederate 
armies; and the strong Union sentiment evidenced at the 


time in the western counties of North Carolina points in the 
same direction. 

Again, in September and October, 1863, the hopes of the 
South were somewhat raised, and the spirits of the North 
were correspondingly depressed, by the successes of General 
Bragg about Chattanooga and those of General Lee in Vir- 
ginia ; but, with the Republican victories at the polls of the 
North in November, and with the decisive Federal victory at 
Chattanooga, the gold premium in the South rose rapidly, 
while in the North its rise and fluctuations were small. 
This crisis in the affairs of the Confederacy was again met 
by a conscription act, an act for heavy taxation, and the 
famous Funding Act, — all of the same date, February 17, 
1864. The Funding Act succeeded, as we have seen, in re- 
ducing the amoimt of notes outstanding, and in correspond- 
ingly depressing the gold premium. But during the same^ 
months, especially during the months from June to Septem- 
ber, the gold premium in the North rose to unprecedented 
heights, which suggests that there must have been other 
factors beside the Funding Act operating to depress the pre- 
mium in the South. These factors it is easy to find in the 
victory of the war party in the North Carolina elections in 
July, 1864, in the failure of the Federal troops under Gen- 
eral Grant and General Sherman to make any rapid advances, 
and perhaps in the nomination by the Northern Democrats, 
for the presidency, of General McClellan.^ 

This temporary encouragement to the fortunes of the Con- 
federacy gave way before the hopeless condition which con- 
fronted the South after the re-election of President Lincoln 
in November, 1864, and after the advance of General Sher- 
man, the capture of the few remaining seaports, and the final 
campaign of General Grant about Richmond. During these 
months the gold premium rose in the South more rapidly 
than at any other time during the war, the gold dollar rising 
in value in currency from $26 in October, 1864, to $53 in 
January and $61 in March, 1866. The corresponding value 

^ Cf. Jones, Dica-y, II, 275 (Sept. 1, 1864) ; also 1, 186 (Nov. 9, 1862). 


^ [I 












5= :5 













2 3SS 



23 = 1 













1 : : : 




■s " 

^ ^ 
















C4 V 01 ?4 ?S n ff? 
















3 = SKiiSS 











i """ 

i — " 
" " as?" 

- isS" 
J " las" 


II ll 


c2 :a 

of a gold dollar in Federal 
"greenbacks" fell from its 
highest point, in November, 
$2.60, to the lowest point, in 
Mareh, $1.48. 

We now turn from the rise 
and fluctuations in the price 
of gold to those of the price 
of commoditieB in general. 
The monthly index number 
representing the varying price 
of a niunber of commodities 
of wide consumption is given 
in Appendix I. The partic- 
ular twenty-two commodities 
were chosen, becaiise their 
prices were most regularly 
and consistently quoted in 
the available market re- 
ports of the time, indicating 
that these commodities were 
among those most regularly 
dealt in, and hence that 
the variations in their prices 
fairly reflect the operations 
of economic laws. The price 
of bacon and flonr can be 
most frequently obtained, 
as they were very generally 
handled on the Southern mar- 
kets ; on the other hand, 
trustworthy quotations of the 
price of tobacco and cotton 
are much rarer, as transac- 
tions in which these products 
figured were correspondingly 


The prices of commodities Tailed greatly in different parts 
of the South during the war. Aside from the difEerences 
due to a scarci^ of the given article in one and an abundance 
of it in another market, the city markets, such as those of 
Richmond, Charleston, and New Orleans, give different re- 
sults from those in rural sections, such as of North Carolina. 
Food articles were, as a rule, higher in price in the cities 
named; while the opposite was true of imported articles, 
such as salt and coffee, especially toward the end of the war. 
In spite of these differences in prices, the figures in the 
Appendix represent the lypieal monthly price of each of the 
twenty-two articles in the South, as compared with the 1860 
level. In obtaining these figures little reliance was put upon 
the official schedules of prices, published by conunissions in 
Tarioua States and sections, according to which impressed 
goods were to be sold to the government. These were inva- 
riably below the actual level of the prevailing market prices, 
and are chiefly useful in pointing out the local differences in 
prices in any one month. 

For convenience, the monthly index number may be re- 
duced to a quarterly average, and most of the commodities 
may be combined into groups. These have been reduced to 
gold prices, on page 175, and brought into comparison with 
the similar figures for the North. 

A study of these figures shows that the currency price of 
commodities rose with the rise in the price of gold, but gen- 
erally much higher. Moreover, each unusual rise in the 
gold premium in the South was not coincident with, but 
was followed by, a general rise in the prices of commodities. 
Thus, the effect of the rapid rise of the premium in the 
spring of 1862, the summer of 1863, the first months of 1864, 
and the first months of 1865, noted and explained above, was 
exerted upon the price level of commodities some time later. 
In the North ' the currency prices of commodities responded 
more quickly to 8 sudden rise in the gold premium. Periods 
of high prices were in general coincident with, and did not 
» cr. p. 173. 



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p— ^ »- CO 

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t« 00 






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01 p« 

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<o 00 

^ Ok 
00 "♦ 

10 p^ 
t^ o 

04 -* 
Ok -* 

r* CO 
»^ 04 

Ok no 
CO ^ 




r» p- 


01 m 

04 CO 

01 04 

p^ Ok 
10 (O 

00 94 

1^ CO 

«o 00 
<o 10 

04 0« 


04 10 

m S 

P^ <0 Q CO 

MM o<o 

»^ ^ CO "* P » 

p— ^iN • CO 


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Ok r* 

00 r* 

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00 to ^o 00 «P Ok eo «3 *^ 10 00 

00 p^ 00 CO 000 000 000 p^ Ok 

St^cd ^'oQ ^95 ^GO ^GQ Ss'go 




31 II- 











follow, the periods when gold was at its highest; for in- 
stance, in the summer of 1862, the first months of 1863, and 
the midsummer of 1864, which — as was pointed out above 
— were the months of deepest depression in the North. The 
difference in this particular between the North and the South 
may perhaps be best explained by the higher industrial 
y/ development, the greater rapidity of circulation, and the 
larger markets and transactious of the North. This expla- 
nation is home out by the fact that the currency prices in 
the Southern cities responded more quickly to a rise in the 
gold premium — for instance, in the summer of 1863 and in 
the fiist months of 1864 — than did the prices in the rural 
markets of North Carolina. Similarly, daring the period of 
irredeemable paper money in Austria after 1866, the fiuctua- 
tions in the currency value of silver were not immediately 
reflected in the course of prices and wages.' 

The excessive speculation encouraged by the derangement 
of prices and their violent fluctuations will be considered in 
another connection.' Here we are concerned with pointing 
out the effect the war had upon the prices of different classes 
of commodities. In general, cotton and tobacco, whose sup- 
ply was wholly or partially monopolized by the South, fell 
^in price (as expressed in gold) below the level of 1860; 
coffee, the supply of which was wholly derived from abroad, 
rose to the greatest height, followed more or less closely by 
sugar and molasses ; while meat products and cereals stand 
between these two extremes, according as their conditions of 
supply approximate to those of the one or the other. In 
Russia and in Italy a similar result followed upon their 
issues of irredeemable paper money.' In the North, too, 
during the Civil War, sugar, molasses, and tobacco outran 
gold. The price of cereals, on the other hand, did not rise 
to coiiespond with the rise in gold, and the price of meat 
products fell much further behind. It is noticeable that the 

I Jahrh.Jiir Nationai-OdemmmU ^ StalMk, XXTm, SIS (1877). 

■ S»epBgeaS30*M. 

• Wjigner, AujiitcA* FapUrwaSnoig, 100; Finanx-Arthw, H, 87 (1894), 


leading agricultural staples — cotton in the South, cereals 
and meat products in the North — were least affected by the 
inflation of the currency in either section, and fell in price 
below the 1860 level. 

Coffee, an imported article in both sections, rose (as ex- 
pressed in gold) above the 1860 level in the North as well as 
the South. This was due not to the disturbance caused by 
the war, but to conditions affecting its production elsewhere, 
for coffee rose to great heights in the world's markets during 
1861-5. This explains in part the enormous rise in the I 
price of coffee in the South. The full explanation is found I 
in the fact that, being a commodity obtained exclusively by 
importation from foreign sources, which were at the time 
almost completely cut off, coffee became very scarce, and its 
price rose higher than did that of any other of the enumer- 
ated commodities. It rose rapidly during the first two years 
of the war, as the Federal blockade became more and more 
effective, and especially after the Federal troops had cap- 
tured New Orleans and some of the Atlantic seaports in the- 
spring of 1862. It reached its highest point at the end of 
1862, then fell off rapidly during 1863, recovered temporarily 
in the early part of 1864, but soon resumed its downward 
course. A reasonable explanation — a partial one, at least 
— of the apparently anomalous fact that coffee was dearest 
in the second and not in the last year of the war, is that, 
with the gro^ving scarcity of the article, the consumption of 
it declined still more rapidly, and substitutes took its place. | 
Indeed, after 1862 the army rations no longer included I 

The gold price of sugar and molasses fluctuated very much 
as did that of coffee, though not so violently. It reached 
a high point in the winter of 1862-3, and again in the spring 
of 1864, but fell off rapidly after those dates, as did the price 
of coffee. As these products were very largely supplied 
from abroad, the blockade drove the price up, toward the 

1 Re/fulatioM Subsiitence Dep't, 1862, p. 7; Off'l Rec*da Rebellion, lit 8., 
XXIV, pt 3, p. 1055; XXVII, pt. 3, p. 536; XXXII, pt 2, p. 608. 



end of war, nearly as high as it droTe that of coSee, and 
sugar and molasses no longer figured in the rations of the 

The price of meat products did not rise as high as that of 
sQgar and molasses, since the supply of them was derived 
largely from home production ; but it fluctuated with that of 
the latter, reaching a low figure in August, 1S62, and a high 
figure in the first half of 1S64. The supply of cereals, too, 
was relatively more abundant in the South, especially as the 
war progressed, and the farmers turned from raising tobacco 
and cotton to raising food products. Consequently, the price 
of cereals remained more nearly at the level of 1860, though 
it fluctuated somewhat, more or less in conformity with t^e 
fluctuations of the groups already discussed. 

Of the enumerated commodities, tobacco and cotton were 
the only ones that fell below their gold value in 1860. They 
lagged behind in the general inflation of prices, evidently 
because the efficiency of the Federal blockade destroyed the 
market, and thereby depressed the price of these two leading 
articles of Southern export lu the North, cotton and tobacco, 
two leading articles of import, rose far above their gold value 
in 1860. This divergence of the price of cotton and tobacco 
in the North and the South as a result of the war and its 
commercial restrictions was the basis of the wild speculation, 
especially in cotton, and of the extensive trade carried on 
between tlie two warring sections, of which mention will be 
made below.* 

The relative movements of the gold prices of cotton in the 
North and in the South reflected — as did the similar move- 
ments of the gold premiums — the changing popular feeling 
in both sections as to the prospective close of the war. Two 
lines drawn to indicate the movements of these two sets of 
figures — as given on p^e 175 — diverge from the beginning 
of the war till the spring of 1862, the price of cotton rising 
in the North and falling in the South. The lines converge 
in the spring of 1862 and again in the beginning of 1864; 

> S«e pages 236 & a., S53 £ n. 


they diverge in the summer of 1862, at the begimiing of 1863, 
and especially in the summer of 1864. The first two periods 
were, as we saw, characterized by decisive Federal gains, — 
on the Mississippi in 1862, and at Chattanooga in 1864, — 
which, working together with other circumstances, made it 
appear to both sides that the end of the war might be near, 
and caused the price of cotton in both sections to approach 
a common level, especially by its rapid fall in the North. 
The lines diverge at those times, as during the summer of 
1862, the early part of 1863, and the summer of 1864, when 
the prospect of an early close of the war, and therefore of 
getting the Southern cotton to a market, was dimmed by the 
delays in the Federal advance. 

The same method of mathematically weighing public opin- 
ion during the war as to its eventual outcome is offered by 
comparing the general trend of gold prices in the North with 
the corresponding movement in the South. A general index 
number for either section, based both on a simple and a 
weighted average, can be constructed.^ The lines plotted 
to indicate these two sets of figures do not run parallel, but 
converge and diverge during different periods of the war, 
converging at those times when events in the military, the 
political, or the financial field discouraged the South, and 
correspondingly encouraged the North in the general belief 
that the war was approaching an end; diverging at those 
times when Federal reverses, or similar events in other than 
the military field, raised the hopes of the South, and led to 
the belief on both sides that the war would be protracted. 

The two lines diverge during the first two years of the war, 
when the lack of success on the part of the Federal troops 
made it more and more doubtful whether the war would 
come to an early end. The lines converge from the first to 
the third quarter of 1863, — namely, during the Vicksburg 
and Gettysburg campaigns, and while the South was meeting 
its difficulties with a conscription and a funding act, and was 
facing discontent in North Carolina. They diverge again 

1 See Table m, page 173. 


from the third quarter of 1863 to the second quarter of 1864, 
as is the case during each of the preceding winters of the war, 
when the Federal advances were delayed and the Korthem 
troops were unable to quickly follow up their previous suc- 
cesses. Finally, they converge from the second quarter of 
1864 to the end of the war, as the victories of Generals Grant 
and Sherman made it more and more evident that the Con- 
federate government was doomed. 

f The disintegration of the industrial orgfmization of the 
South far surpassed that of the political organization. As 
a result of the paper money policy, and that of impressing 
goods for the army, the exchange of commodities was much 

I hindered. Food supplies avoided the markets; the urban 
population and the army suffered from want, while there was 
an abundance of provisions in the country districts. Com- 
plaints were constantly made ^^ainst the grasping farmers 
who were said to be withholding their produce for still 
higher prices. They were said to be the chief extortioners, 
and to have grown rich by former sales of their produce. 
A few upheld the farmers, and proved that they were far 
from making large profits; that, on the contraiy, they, as 
a class, were suffering from the concomitants of the war, 
a deranged currency, a system of impressments, and a tax in 
kind.i The farmers were of course not the only ones accused 
of avarice in overchatging buyers. All merchants and shop- 
keepers, in fact every one who had goods or services to sell, 
^ j came in for a share of abuse. The "godless Shylocks " were 
< held up to public execration. Sermons were preached and 
the police invoked against greed, extortion, selfishness, and 
covetousness ; ' and the Governor of Vii^nia thundered at 
1 Cf. Charlatan Courier, Hch. 3, Jnlr 31, 1862; Richmond ExamtMr, Oct. 8, 
IS63: Aag. ST, IS64<edit.); ifem^iAii Jppeo/, Oct. 2S, 1863 (corresp.) ; PtttrilmTg 
Expnu, Oct. 31, 1863; Jdqm. Diary. I, 346 (Ju. !6, 1863); 1, 172 (Mch. 11, 
1863); 11,93 (Sor.S, IMS); N. C. Slandard, Feb. 12, 1864 (ediC) ; oj'l See'dl 
RtUUion, lit B., XLTI, pt. S, pp. 1220-1 (Jm., 186S). 

* CharltMton Cnirwr, Sept. 13, 19, 1861; Mcb.3, Apt. 25, 1863; Sept. 9, 1663; 
Sidkmond Ditpateh, Hch. S4, Apl. 11, 30, Jnoe II. Aug. 21, Dec. 5, 1862; Pelert- 
burg EiprtM, Jmie 18, Dec 16, 1863; StUM, NatH BeaUudc, 3S-34. 


the unpatriotic extortioner, who was pursuing his heartless 
traffic and amassing wealth, and to whom the war was a god- 
send. The Governor even recommended the re-enactment of 
the Virginia law of 1777 aimed at preventing forestalling, 
engrossing, and other evils of a deranged price level. The 
Governor of Alabama had issued a similar proclamation in 
the faU of I86I.1 

As is usual during a period of deranged currency, the 
salaried and wage-earning class suffered severely. Wages 
and salaries responded but slowly and imperfectly to the/ 
inflating influence of the redundant currency, and their/ 
nominal rise was far outstripped by the rise in the price of 
commodities. The similar experience in the North during 
the Civil War has been carefully studied on the basis of the 
exhaustive material at our command.^ In the South the 
material is scanty, but what evidence there is points clearly 
to the fact that the price of labor advanced much more , 
slowly than did that of commodities, and that the salaried 
class — for instance, the government officials — found it 
specially hard to make both ends meet.' 

These civil officers of the Confederate government finally 
gained the ear of the Congress, and had their salaries doubled i 
on January 80, 1864, a very slight concession to their needs, ( 
in view of the enormous inflation of the price of necessaries, 
and in view of the fact that the increase applied only to sala- 
ries below $2000, those between $2000 and $8000 were 
increased only 50%, and those above $3000 not at all. More- 
over, only the government employees in Richmond were con- 
cerned. A later law, that of June 14, 1864, granted a further 
increase of one-third to those in Richmond, and of one- 
fourth to those employed elsewhere. The Congress also cor- 
respondingly increased the annual salaries of its own members. 

* Richmond Examiner, Sept. 8, 1863 (Meas. Gov. Va., Sept 7, 1863) ; Ojfl 
Rec'ds Rebellion, 4th S., I, 701-2 (Mess. Got. Ala., Oct. 25, 1861). 

^ Report of Aldrich Commission, 6td Cong., 2d S., Sen, Rep't, 1394, pt. I ; cf. 
F. W. Taussig, Yale Review, U, 244 (Nor., 1893). 

* Richmond Examiner, Feb. 23, 1863 (Mr. Andenon in Va. H'se of R.) ; Jonei^ 
Diary (passim).. 


At the oatset the Provisional Congress fixed the amount at 
$2500 ; the Permanent Congress, in 1862, raised it slightly to 
82760, and doubled it in 1864.' Further attempts were made 
to increase the Congressmen's salaries, but tbej failed.* In 
the State legislatures we find some efforts were successfully 
made to raise the salaries of the civil servants.* 

The soldiers in the field were not treated with equal coa- 
sideration. By an act of March 6, 1861, the Coofedeiate 
I Congress fixed the monthly pay of privates in the army at 
I 811. As prices rose, this mei^^ pittance was complained of, 
not so much by the soldiers themselves, as by their friends in 
the State legislatures and in pnblic meetings.* The Con- 
federate House of Representatives passed a bill in April, 
1863, to increase the monthly pay to 815, bat no legislation 
resulted till June 9, 1864, when the amooat was raised to 
'■ 818. A few weeks later, on June 30, 1864, the Federal 
Congress similarly increased the pay of privates from 813 
^to 816. 

The rise in the cost of living led to many attempts by 
legislation and otherwise to fix a maximum price for leading 
commodities. When martial law was declared in the spring 
of 1862, the military authorities boldly fixed the limit of 
prices to be asked for articles of necessity like beef and pork, 
bacon, flour and meal, coffee, sugar, and salt We have the 
record of such price schedules in New Orleans and Rich- 
mond.* About the same time an elaborate tariff of prices 
was fixed for the States beyond the Mississippi,' refusal to 
accept them being made punishable. 
In South Carolina the legislature attempted to forbid 

1 Act* Uch. II, 1S«1, Meh. !S, 1SG3, Jane 37, 1864 
> Richmond Eaminer, Dec 3, 13, 1864. 

• lUd., Dec. 17, 1853, Jan. 81, 1864 (V«.) ; G». acta Not. 86, Dec T, 11, 1863. 

• Rickmmd ExamiiKr, Apt SI, 1863 (Ga. legial.) ; Oct. S, 1863 (V». Sen.) ; 
Dec 18, 1863 (FU. lej^L); N. C. SUmdard (pnuim); Ridmond Examner. 
Apt IS, Ms7 1, 1863. 

• Charltttm Courier, Apl. 4, 1863 (qaoting Ntw Orleant Priee CtttreiU); 
DeBoa't Eev., 11, 68 (1866); Riekntond Examiner, Aug. 38, 186! ; JoDM, Diarg, 
I, 138 (May 33, 1863). 

• OJ"l Ree'dt SeMlion, lit S., XT, 783 (June 8, 1863). 


extortionate prices by the threat of fines and imprison- 
ment, juries to determine the reasonableness of the prices 

The familiar device of price convention was also adopted 
to counteract the influencesT {Eat were driving up prices. 
When organized by the class of buyers, these conventions 
amounted merely to organized attempts to browbeat sellers, 
especially farmers, to reduce their exorbitant prices to a 
figure set by authority avowedly according to the cost of 
production. When organized by the class of sellers, these 
conventions passed resolutions in which the membei-s pledged 
themselves to accept pajrment for goods at reduced prices, 
not to hoard specie or banknotes, and to invest their surplus 
earnings in Confederate bonds.^ It is needless to say that 
Southern patriotism did not often express itself in this way. 
In one instance at a public meeting in Monroe County, 
Georgia,^ the farmers offered their surplus produce to the 
government at prices averaging about one-third of those in 
the open market. Such cases were rare. Usually it was the 
buyers who noisily declaimed against the extortionate farm- 
ers and their lack of patriotism,^ and insisted that the re- 
dundancy of the currency was as much due to high prices as 
vice versa. 

Frequent efforts were made to legislate both in the Con- 
gress and in the State legislatures against extortion. In the 
former, various bills were introduced in 1868 and 1864 ex- 
tending the impressment prices to all transactions, — that is, 
compelling the farmers especially to sell their produce at the 
prices set by commissioners in each State. None of these 
bills became a law, and one of them was adversely reported 

1 S. C. ftct Feb. 6, 1863 ; Charleston Courier, Dec 15, 1862, Feb. 10, 14 (text of 
above act), 1863. 

2 qgri Rec*d8 RebeUion, 4th S., II, 809-10 (Sept. 17, 1863) ; Charleston Courier, 
Sept. 22, Oct. 13, 16, 1863 ; Richmond Examiner, Ang. 28, 1863 ; Richmond En- 
quirer, Oct. 6, 1863. 

' Charleston Courier, Jan. 23, 1864. 

* Petersburg Express, Sept. 23, Oct. 6, 1863 ; Richmond Examiner, Jan. 2, 1864 
(Got. Smith of Ga., inangnral address). 


OQ by the Senate Jadiciaiy Committee, and was defeated in 
the Senate by a large vote.' 

The opposition to snch a measure was partly on constdtn- 
tional grounds and partly on grounds of expediency. Some 
leading newspapers had before this time opposed the policy 
as Bnre to do more harm than good. Some claimed correctly 
that high prices were a stimulus to Southern indoatries, 
and that any attempt to forcibly lower prices would lessen 
production, as had been the result of impressing goods at 
government prices.* 

In the Virginia legislature bills to suppress extortion were 
frequently discussed. Such a bill was considered early in 
1863, those who &vored its passage as usual blaming the ex- 
tortioners and speculators for the extravagant prices prevail- 
ing at the time, which, it was said, compelled the government 
to increase its note issues. An observer declares that no 
action would be taken by the legislature, as most of its 
members were formen, therefore sellers, and not anxious 
for a reduction of prices.' In the following autumn a similar 
bill was considered.* One State Senator opposed the bill on 
the ground of its futility, arguing that production should be 
encouraged, not disconr^fed, in order to cure the evils 
of extortion. He maintained his position notwithstanding 
the demands and instructions of public meetings of his 

In North Carolina similar bills were considered, one as 
early as the fall of 1861, to punish with fines and im- 
prisonment attempts to buy provisions in order to sell at 
" unreasonable prices." This and later bills were, it seems, 
never enacted. The oj^wsition to the policy they repre- 
sented very properly hinged on the dread that its adop- 

1 BSchnend Ezaniinrr, Dm. 15, IB63 ; Kot. II, IB, 15, Dec 3, ISM; BaUigk 
Pra^eu, Not. 11, 14,38, 1864; JoDM, A'ory, 11, 329. 

1 KnoxvilU DaUg RtgitUr, Ute. U, 1862; Jonea, Diary, H, 63 (Oct 5, 1663) ; 
MtmphiM Apptal, Oct 36, ST, S9, 1863. 

■ Kc/tmoad Examiner, 3ui. 30, 31, Feb. i, 9, 1863; Jones, Diary, I, S53>^. 

• Richmmd Ezamiitr, Oct. 3, 8, 9, 13, 14, 1863; JoDH, Diary, n, 68, 
76, 77. 


tion wonld encourage farmers to hoard their produce still 

The futility of attempts to lower prices by legislation or by 
conventions, except by the removal of the cause of the infla- 
tion, the redundant currency, was clearly shown in the finan- 
cial history of the American Revolution.* An even closer 
parallel to the experience of the South is presented by the 
history of price regulation during the French Revolution. 
We hear the same outcry against the unpatriotic farmer, who 
asked exorbitant prices for his produce. In 1793 maximum 
price laws were passed to counteract the inflation of the paper 
currency, which were repealed in the following year, but not 
before their disastrous effects were felt. Farmers withheld 
their produce from the markets, shops were closed, and busi- 
ness in general was paralyzed.^ The petitions presented to the 
French Assembly asking that body to fix the price of grain and 
to suppress the intermediaries between producers and con- 
sumers find their counterpart in the legislative history of the 
South during the Civil War.* And the few who boldly opposed 
such a policy, on the ground that no law could compel a 
farmer to raise and sell produce at a price fixed by the gov- 
ernment, if that price were unremunerative, were heard with 
little favor. The deputies who pointed out that a maximum 
price law would drive grain out of the market, and those 
who offered as the only remedy of the prevailing difQculties 
the removal of the assignats^ had their speeches interlarded 
with cries of " A bas " and similar expressions of dissent.* 

1 N. C, Standard, Nov. 27, Dec 8, 1863. 
' Cf. Sumner, Financier Am, Revol'n {passim), 

» Blanc, Hist, de la R^voi'n, XI, 407-8, 410-11, 422; Thiers, French RevoTn 
(Shoberl transl.). 11, 256, 358, III, 124-5 ; White, Fiat Money in France, 55, 61. 
* Le Moniteur, XIV, 431, 517, 603, 639; XVI, 175, 222. 
» Ibid., XVI, 245, 271, 280, 281. 




TSB CiHTKAL Gotskmhkbt'i Wak Powbrs — Cohicription — Debeb- 
Tiom — iMPBBBSiatHT — Stath Riohts SsKTiifBirTS— Opposition to 
Pbksideiit Davis axd hib CAsmt — Tax Powbbs op thb Prbsipeiti 


Pbacb Pabtibs ta Gbobqu axb Noktb Cakouna. 

Refeeesce has been made to the Confederate reverses in 
the spring of 1862, and to their effect upon the government's 
credit. The capture of Fort Henry and Fort Donelson in 
February of that year was a great shock to the Southern 
cause, and led to the enactment by Congress of a. law on 
February 27, 1862, which authorized President Davis to 
suspend the privilege of the writ of habeas corpus and declare 
martial law in such districts as he thought in danger of 
attack 1^ the enemy. The act extended this power to him 
V during the "present invasion," but, by a law of April 19, it 
was limited to thirty days after the next meeting of the Con- 
gress; it was also coniined to arrests made by the central 
authorities and for offences against the Confederate States. 
On the basis of this authority President Davis at once, on 
March 2, declared martial law in Richmond and within ten 
miles of that city, suspending the writ of habeas corpus, 
superseding the civil authorities, with the exception of the 
mayor, by military authorities, and closing the distilleries 
and liquor stores.' During the following weeks similar proc- 
lamations were issued in the exposed and disaffected counties 

' 0^1 Rafdi RtbtUioB, lit 8, LI, pt, 8, p. 488 ; Pollard, DavU, 516 ; JonM, 
Diars, I, US (Mch. 5-9, 1862); Charltiton Courier, Mch. 3, ISA!; Ptttrtburs 
Expraa, Mch. *, 1863; Bbodw, Bin'y V. S., IH, Ul-S. 


of Virginia, in Memphis, and elsewhere;* and two months 
later further Virginia counties were added, also the part of 
South Carolina between the Santee and Edisto Rivers, which 
included the city of Charleston.* 

At first the military despotism was not complained of. 
Here and there a voice was raised against suspending the 
power of civil authorities, as, for instance, by Vice-President 
Stephens himself,^ who insisted that the military should be 
subservient to the civil authority. But the Congress was 
not deterred from renewing, on October 18, 1862, the same 
privilege in the hands of the President. During the pre- 
vious sumn\er, however, an unsuccessful attempt had been 
made to modify the provisions for declaring martial law.* 

During the next session of the Congress in the spring of 
1863 there was some agitation for and against the principle 
of suspending civil jurisdiction,* but nothing was accom- 
plished till the following winter's session, which placed on 
the statute books so many desperate laws to meet the des- 
perate condition of the Confederacy at the time. After 
considerable discussion the suspension of the writ of habeas 
corpus was, as before, extended during the invasion and to 
three months after the beginning of the next session of the 
Congress, namely, August 1, 1864. However, the Congress 
evidently wished to curb the despotic powers of the mili- 
tary authorities, for the suspension was limited to cases of 
treason, conspiracy, desertion, communicating intelligence to 
or trading unlawfully with the enemy. ^ 

The act had aroused much opposition, especially, as we 
shall see, in North Carolina ; and when it expired by limita- 
tion on August 1, 1864, it was not renewed. From that 

1 Offl Reeds Rebellion, let S., LI, pt. 2. pp. 493, 502, 517 ; Petersburg Expreu, 
Mch. 15, 1862; Fisher, Yankee Conscript, 76. 

3 Moore, Rebellion Record, V, 332; Charleston Courier, Maj 12, 1862. 

> Moore, Rebellion Record, Snppl., I, 676; Jones, Diary, 1, 163 (Oct 3, 1862). 

• Jones, Diary, I, 150, 157-8, 166, 169 (Ang.-Sept, 1862). 

» Richmond Examiner, Mch. 2, Apl. 13, 27, 1863. 

e Act Feb. 15, 1864; N. C. Standard, Jan. 19, Feb. 23, 1864; Mooze, Rebel- 
lion Record, X, 227 ; Charleston Courier, Dec. 3, 1864. 


Uttrn ffB no Mtthori^ extrtcd to wi^ieiid die WRt of iaitmg 
f/rrjfu*. In Mfty, V^A, tbe Senftte Jodkiaiy Committee bad 
n^aV^ aguiwt tbe adrisaUIit}' of le-eDaetti^ tbe mspen- 
oi/Mi,' A we«k l*ter' the molatioD of tbe Nortb Carolina 
lefp*lat<ire was pnaented to tbe Senate protesting against 
iiocb a m*»Mans. 

In (ifu/TffiB tbe feeling agauMt tbis last act to antborize tbe 
tMpemiUm <A ciril aotboritj' wai particiilaiiy bitter. We 
be*r of the legislature's nnapimonsly paasii^ a resolntioii 
which provirled that a justice of any court refusing to grant 
ft writ of habeas corpus should forfeit $2500 to tbe aggrieTod 
{KUty.* dffvenior Brown of Geoigia cbampioued tbe same 
cause in his meas^e in March, 1864, but deprecated a con- 
flict Urtwecn tlie State's and the Confederacy's authority.* 
The Atlanta CoTutituUojialisi supported bim in his opposition 
to the military despotism. But no one took stronger ground 
than Vice- ['resident Stephens did in his famous address to 
tiw Georgia legislature on March 16, 1864,' in which be 
declared tlie government's policy to be unwise, unconstltu- 
tional, and dangerous to public liberty. He advised the 
Htate to invoke tbe Congress to repeal the obnozioos act, 
and in the mean time to await the court's decision upon its 
constitutionality. As a result, the legislature did pass a 
resolution on March 19 condemning the suspension act, de- 
claring it an assault upon popular liberty, an unwarranted 
uflnrfiation of i)owcr, and void. It should be added that an 
attempt was made to adopt a resolution condemning the 
notion of the CongrcsB, and forty-ono members of the legis- 
lature Higndd a protest against the above condemnatory reso- 
lution, holding that the suspension of civil authority was 
within the pnwura of the Congress, and that tbe courts 
should decide upon the constitutionality of the act.** 

■ Kirkmonil Krami'iur, Jano I, 1864. 

■ ihl,l., Juiia B, IRMi llaUlgl, Pragrai, lSt.j SS, 97, ISM. 

• Hirhmimd Kramitur, Fob. 9, IHU. 

• ClutrtfMim CwinW, Mch. U, Iflfiij Raltigl, Progrtu, Mch. 1«, IBM. 

* KttMgh l*mgr*tM, A|i1. fl-T, IBM ; Clergluid, Sifpkttu, T«I. 

* OJTl litc'J* Ii4bfUi<m, *(tL a.. Ill, STB (A. H. Stepheni to H. V. JohDMn) | 


It was fully realized by the authorities that it was worse 
than useless to attempt to foist this war measure upon the 
people in the face of such determined opposition led by such 
distinguished men as the Governor of Georgia and the Vice- 
President of the Confederacy.^ In other States than Georgia 
a similar opposition to the military tyranny of the central 
government was expressed. Governor Clark of Mississippi 
voiced this feeling in April, 1864, and was sustained by the 
State legislature's passing a resolution objecting to the Con- 
federate act in question.^ In Virginia the newspapers took 
the same ground.' 

During the last session of the Confederate Congress, which 
began on November 7, 1864, the question of suspending the 
writ of habeas corpus was once more discussed. Governor 
Brown of Georgia, however, again protested vigorously 
against an increase of powers being granted to the Presi- 
dent,^ and the Virginia Senate ^ considered the advisability 
of protecting the citizens of the State against the encroach- 
ments upon their rights by acts contemplated by the Con- 
gress. That body took up the matter at length in secret 
session. The Senate passed a bill authorizing the President 
to suspend civil authorities, but the House of Representa- 
tives — in which J. M . Leach of North Carolina and H. S. 
Foote of Tennessee, the leader of the opposition to the 
administration, were particularly active — refused to con- 
cur.^ During the last days of the Congress, the House of 
Representatives changed its attitude, and, at the President's 

Rakigh Progress, Mch. 28, ApL 6, 1864; Charleston Courier, Mch. 23, ApL 2, 
1864; Richmond Examiner, Mch. 17, 1864. 

1 Of I Reeds RebeUion, Ist S., LII, pt 2, p. 648 (J. L. M. Cnrry to Seer*/ War, 
Mch. 28, 1864). 

« Charleston Courier, Apl. 7, 1864 ; Mias. lesol'ii, Apl. 5, 1864. 

• Richmond Examiner, Feh. 9, 1864; Richmond Whig, Dec. 10, 1864 (quoting 
Augtuta Chronicle 4r Sentinel), 

« Richmond Examiner, Dec 5, 1864, Got. Brown's message (nerer transmitted 
owing to the advance of the Federal troops). 

^ Ibid., Dec. 14, 1864. 

« Ibid., Dec. 6, 17, 19. 21, 23, 1864; Richmond Whig, Dec. 26, 1864; Raleigh 
Progress, Dec 6, 8, 9, 1864 ; Feb. 7, 1865. 



request, suspeDded by a close Tote the writ of hahetig corpus ; 

but, on this occasion, the Senate refused its assent by a vote 

of 9 to 6.1 

The Confederate govemment, in Buspending the functions 

' of the civil authorities at various times and places during 

the war, did not employ this extreme war measure with the 

■ stringency characteristic of the Bimilar line of policy adopted 

by the Federal government. In the North the relentless 

declaration of martial law was much more effectively and 

harshly used as a means of cowing the opposition and re- 

, straining the disloyal,' and met with a much greater popular 

j support than would have been possible in the South, in view 

i of the particularistic States rights notions prevalent in that 

* section. 

In North Carolina those sentiments were most strongly 
held, and led to a dangerous outbreak against the war powers 
of the central govemment at Richmond, not only in view of 
the suspension of the writ of habeas corpus, but also in view 
of the other war burdens put npoa that State by conscrip- 
tion, impressment of goods for army purposes, and by heavy 
taxation. In the fall of 1862 Governor Vance sounded the 
alarm in his message to the State legislature,' in which he 
declared the suspension of civil authorities to be a dangerous 
precedent. It granted the President too much power. He 
could see no good but many evil results from the Confederate 
act of October 13, just passed. The Governor's attitude 
met with general support. 

No conflict between the Confederate and State authorities 
arose till the following year, when the North Carolina 
Supreme Court decided * that it could issue writs of habeas 
corpus, and so secure the release of persons arrestad and 

» Raiagh PniffTat,tSch. IT,18,S9, tS6S; Joriei,Dutry,II,4!H)(Mcli.l5, 1865); 
CampbaU, Rtmimictnca, 50, M ; JV. Y. Tima. Mch. 21, 23, 1865. 

* S. Q. Fishar in Political Scimct Quarterly, IH, 454 (Sept., IB88) ; Rhodes. 
Bitfy U. S.,m, 486, IV, 239,234,417; C. S. Bet Mch. 3, 1663 ; Prei. pToclam'n, 
Sept 24, 1862, Jnl; 5, 1864. 

» Raleigh Pngrett, Hot. IT, 87 (edit.), 1862. 

* N. C. Standard, Jnua 16, 36, July 14, 1663. 


held by the Confederate authorities. The conflict between 
the central and the State governments became serious. A 
private soldier was discharged on the ground of being above 
the age included in the conscription laws. He was arrested 
by the Confederate authorities, but released upon habeas 
corpus proceedings brought in the State court. He was 
again arrested by the military authorities, and this time 
released by a squad of State militia under orders from Gov- 
ernor Vance.^ In return, a few weeks later a sheriff was not 
allowed to pass the military lines in order to serve a writ of 
habeas corpvs. This was looked upon as a triumph of the 
military authorities over the State government, and aroused 
much feeling in the legislature against the Confederate gov- 
ernment's ignoring the State Supreme Court.* Later in the 
year, a like conflict between the civil and military authori- 
ties^ resulted in a substantial victory for the former, the 
Secretary of War disapproving the encroachment upon the 
rights of the State authorities. 

From the middle of 1863 on many public meetings were 
held, especially in the northwestern counties of the State, 
protesting vigorously against the suspension of the habeas 
corpus^ as well as against the other excesses of the military 
despotism at Richmond. Such a meeting was even held in 
the city of Raleigh in May, 1864.* At the election of the 
previous fall voters were appealed to by the various candi- 
dates for office on the plea that they stood for opposition to 
this tyranny. Later, this bitter feeling in North Carolina was 
intensified by the growing impression that the suspension of 
civil authority was aimed at North Carolina with a view to 
suppressing the alleged disloyalty of that State and prevent- 
ing its seceding from the Confederacy.* 

The State legislature gave utterance to this feeling by 
passing protest after protest, condemning the policy of super- 

1 N. C, Standard, Jane 16, 1863. 

« Ibid., Julj 7, 14, 1863. 

« Ibid., Not. 10, 17, 1863. 

* Ibid., especiallj Joly-Sept, 1863, Jan.-Feb., ApL-June, 1864. 

^ Ibid., Maj 24, 25, 1864. 


sedmg civil with milltaiy authority as inadvifiable and Dot 
calculated to Btrengthen the Southern cause, or oa the 
ground of ite uncoDStitutionali^ in OTerthrowing State sot- 
ereignty and civil libert^.^ Sbrong langu^e vsa used by 
the opponents of a centralized government, which, it was 
intimated, would not be allowed to enlarge its powers as it 
threatened to do.' A State law was passed on May 28, 
1864, to secure the serving of writs of habtat corpus. The 
underlying motive was well expressed by a member of the 
State Senate: ' "instead of a confederacy of free and sover- 
eign States, we have established a most powerful consoli- 
dated militazy despotism." The contradiction involved in 
a "confederation " of sovereign States wiping war under s 
central authority, and the impossibility of effectively wag- 
ing war except under a despotic military government, was 
brought out clearly in this Kortb Carolina episode. Evi- 
dently Governor Vance came to see that he could not cham- 
pion the cause of the South and at the same time be an 
uncompromising States rights man. Until 1864, however, 
he figured as the exponent of the rights of North Carolina 
as against the encroachments of the Confederate authorities. 
In his correspondence with the Richmond officials he de- 
plored the suspension of the writ of habeas corpusy and even 
intimated that, if the State courts held it to be unconstitu- 
tional, it would be resisted.* He also proposed to sustain, 
with the militia if necessary, the North Carolina courts, 
which, in the spring of 1864, were still granting habeas 
corpus and dischaiges to applicants among those who had 
furnished sabstitutes under the conscription laws, and were 
now drawn into the army under the act of January 5, 1864, 
which the State court held unconstitutional." 

1 BaleigK Progrea, H»j !S, 37, Dec 10, 11, 13, 1S64; Jbd. 17, 1869; N. C 
reaol'D, Feb. 6, 1665. 

* Ibid. Dec 10. 1864, (edit.). 

* N. C. Standard, JtUB 10, 1864. 

* OJ"l lUe'd* Rebellion, l*t S., LI, pt. a, p. BIB (Got. Vance to Free. Davii, 
Feb. 9, IBM). 

* JoDU, ZHari/, U, 163 (Mch. 3, 1864). 


We shall see that the growth of the North Carolina peace 
party compelled Governor Vance, after some vacillation, to 
side with the Confederate authorities. 

Another cause of discontent, especially in North Carolina, /^ . i* 
was the adoption by the Confederate authorities of a policyv|-^^<i^f\^Tl 
of conscnption in order to fill the ranks of the Southern «^ wm^ 
armies. At first these were recruited by voluntary enlist- 
ment. The Congress, on March 6, 1861, authorized the 
President to call into the military service as many troops as 
he might deem necessary. On the following January 23 he 
was further empowered to call upon the States for troops 
to serve three years or during the continuance of tlie war. 
Bounties were offered to such volunteers by various local 
political divisions ; and on December 11, 1861, a Confederate 
act was passed offering $50 to volunteers for three years' ser- 
vice, granting to those re-enlisting the further favor of a 
60-day furlough with free transportation to their homes and 
return. Bounties were relied upon to swell the armies, it 
will be remembered, during the Revolution and in the North 
during the Civil War.^ The policy was continued during 
the war by the South, ^ but was found insufficient; and the 
Congress soon thought best to bring compulsion to bear, and 
authorized the President on April 16, 1862, to call out all i 
male whites between the ages of eighteen and thirty-five for 1 
three years' service; those who had previously volunteered 
were compelled to serve three years from the date of their 
original enlistment. 

On September 27, 1862, the President was further author- 
ized to call out those between the ages of thirty-five and 
forty-five. He delayed doing so till July 15, 1863,^ evi- 
dently because the immediate danger of a Northern invasion 
in the fall and winter of 1862-3 was postponed till the defeat 
of General Lee at Gettysburg in July, 1863. At the next . 

i ContiDental Congress, acts June 26, Sept. 16, 1776; June 22, 1779; IT. S. 
acts Mch. 13, 1863; Jaly 4, 1864. 

s Acts Jan. 16, Apl. 10, 16, 1862; Feb. 13, 17, 1864. 
s Moore, Rebellion Record, YII, 210; Jones, Diary, I, 381 (Jolj 16, 1863). 



crisis in the afFairs of the Confederacj', after the battle of 
Chattanooga, the eonfloription act of February 17, 1864, in- 
creased the number of coDScripta by including all male whites 
between seventeen and fifty years old. However, t^ose be- 
tween seventeen and eighteen, and those between forty-five 
and fifty, were to be enrolled in a reserve force for home 
defence, and were not to be required to serve outside of 
their respective States. 

Negroes were employed in building the fortificatdons about 
Richmond; • later in the war they were more and more incor- 
'porated into the army; and by an act of February 17, 1864, 
all male negroes between the ages of eighteen and fifty were 
declared liable to work in building fortifications, producing 
war materials, or in some capacity in the army hospitals. The 
Secretary of War was, moreover, authorized to employ not 
more than 20,000 slaves, paying the owners an agreed price 
for their services, and indemnifying them in case the slaves 
escaped or were killed. If the number could not be obtained 
in this way, he was to impress them, free negroes to be 
taken first, and consideration being given to owners of a 
small number of slaves. 

Toward the end of the war the pressure to fiill the depleted 
ranks of the army became so great, that, at the direct instiga- 
tion of President Davis and of Governor Smith of Virginia, 
and with the hearty approval of General Lee, an act was 
passed by the expiring Congress on March 13, 1865, enroll- 
ing slaves in the Confederate army, each State to furnish its 
quota, but not exceeding one-quarter of its slaves.^ 

The North was also driven to recruit ita forces by con- 
scription, though the policy was adopted a year later than in 
the South, and was never driven to such extremes.* 

The power to conscribe is ever3'where the attribute of a 

» Jones, Diorv, I, M7 (Jan. U, 1863). 

* Biehmond Examiner, Dee. 9, 18M (Got, Smith'i meMtkgs, Dec. 7); Jonei, 
Diary, II, 3.M (Dec. 13, 1864); «a-3 (Fpb. 18, 1865); Rakigli Progra*, Mch. 

■ U. 8. &CU Mch. S, Jime 15, 1863; Feb. 24, 1864. 


strong central government. Its exercise by the Confederacy j 
necessarily aroused all the States rights feeling latent in the / 
South. When the Congress was framing the first conscrip- 
tion act in the spring of 1862, the anomaly of a league of 
sovereign States waging war under the supreme leadership 
of the Confederate authorities, necessarily overriding the 
powers of the individual States, was clearly presented. 
Senator Oldham of Texas did not believe that the Congress 
had the power to draft persons into the military service, 
except through the intervention of the States. Senator 
Wigfall of Texas, who expressed himself as leaning strongly 
to the States rights doctrine, still could not admit that the 
Southern States were joined in a "loose league." * The diffi- 
culty of reconciling a strong military power with a loose 
federation of independent and sovereign States was clearly 
in his mind. 

The Attorney-General aimed to overcome the constitu- 
tional difficulty involved by upholding the conscription act 
of April 16, 1862, in an opinion delivered soon after its pas- 
sage. The question of the relation between the Confederate 
and State authorities was fully considered, and decided in 
favor of a strong central war power.' Judge Magrath of the 
Confederate District Court a month later sustained the con- 
stitutionality of the act.^ The courts of various States also 
upheld the constitutionality of conscription as a necessary war 
measure. Among these were the highest courts of Georgia, 
Alabama, Virginia, and Texas.* The Georgia court* men- 
tioned the two views held of the powers of the Confederate 
government: some holding that conscription was within the 
range of powers delegated to the Congfress, which was abso- 
lutely sovereign; others claiming that the central govern- 
ment was "wholly devoid of the attribute of sovereignty." 

1 Charleston Mercury, Apl. 2, 1862 (C. S. Senate, Mch. 29, 1862). 

* Att'7-Genl Geo. Daris to Pres. Davis, May 16, 1862 {Att'y-Genl's Opinioni). 

* Charleston Courier, June 30, 1862. 

« 33 6a. 347; 16 Gratton, 470; 26 Tex. 386; 38 Ala. 429; 34 Ga. 28; OfH 
IUc*ds Rebellion, 4th S., II, 177. 

* 34 Ga. 139. 


The Alabama court combined these views by holding that 
the power to declare war and raise armies was one of the 
attributes of sovereignty which for good reasons had been 
delegated to the Confederate government. 

In practice, the conscription could not have been fully 
applied. Aa was the case in the North, many bought exemp- 
•■ tion by supplying substitutes. The price paid in August, 
1863, was $5000, and at the time it was claimed on the 
authority of official records that 60,000 substitutes were serv- 
ing in the army.^ Some months later laws were passed ^ for- 
bidding those liable to military duty to hire substitutes, and 
compelling them to serve in the army despite their having 
previously furnished substitutes. The idea prevailed that 
the rich, for whom tlie war was being waged, were buying 
exemption from service in tlie army; while the poor, who 
had no slaves, and therefore had loss at stake, were unable 
to free themselves from service.* This legislation led to 
suits to test its validity, the petitioners claiming that by 
accepting substitutes the government had entered into a 
contract to relieve them from further military service. The 
State courts, however, refused to accept this interpretation,* 
and, in the case of Texas, declared that the Congress could 
violate a contract, even though a State was forbidden by the 
Constitution to do so. 

Many escaped military service by claiming- to belong to the 
exempted classes provided for by law. Within a week of 
the passage of the first conscription act, on April 21, 1862, 
another was passed exempting from its operation large classes 
of persons. Beside those physically unfit for military ser* 
vice, all Confederate and State officials were excluded; as 
well as all persons engaged in marine, river, or railroad trans- 
portation; in iron mines, furnaces, and foundries; in woollen 
and cotton factories, — at the discretion of the Secretary of 

' Richmond Examiner, Ang. A, 1863. 
' Acts Dec 38, 1B63 ; Jan. 5, 1864. 

* JoQ«i, Dian), II, 30 (Sept. 1, 1863) j North, Five Ytart in Tezat, 167. 

• Moore, ReW/ion Record, VIII, 329; PrtmW? Eiprett, Ang. 30, 1863; 16 

Gnitton, 470; 33 Ga. Sappl. 39; 39 AIa. 367; !7 Tex. 719. 


War; all ministers, printers of newspapers, and teachers with 
twenty pupils or more ; all oflBcials of hospitals and asylums, 
and one apothecary in each drugstore. These liberal exemp- 
tions were furtlier extended, on October 11, 1862, so as to 
include one white overseer for every twenty negroes on a 
plantation, — a provision thought necessary to guard against 
the withdrawal of whites from the country districts, and to 
insure the largest production of food products. The same 
act also drew the line of exemption more strictly by limiting 
the number to be exempted in a newspaper oflBce or on a 
railroad ; it also exempted only those postmasters that were 
appointed by the President; and declared those State offi- 
cials subject to conscription who were by State law subject 
to service in the militia, — a neat way of meeting States 
rights objections. 

Evidently the pressure to avoid conscription was very 
great; many sought to obtain exemption through the officials 
of the War Department or through the influence of Congress- 
men; some, it was said, through bribery; others hid them- 
selves behind the provisions regarding the exempted local 
officials and mail carriers, whose number was enlarged in 
1863.^ The exemption of State officials gave room for a very 
general evasion of the conscription laws, and was amended 
on May 1, 1863, so as to include only those who the Gover- 
nors of the States asserted were indispensable to the govern- 
ment of their respective States. In the later amendment of 
February 17, 1864, the President was given joint power with 
the governors in determining the number. Another class of 
exemptions that was amended by both these laws was that 
of the white plantation overseers. The 1863 act exempted 
one owner or overseer on each plantation with twenty slaves, 
provided he paid a tax of $500; the later act substituted 
another proviso, namely, that such as were exempt should 
furnish to the government within one year 100 pounds of 
bacon for every slave, or its equivalent in other provisions 

1 OjBTI Rec'ds Rebellion, 4th S., H, 415; Jones, Diary, I, 243 (Jan. 21, 1863) ; 
Acts Apl. 2, 4, 1863. 


ot in breadstuff, and sboold contract to sell Iiis marketable 
Bniplns of prodace to the government st the price set by the 
State commissions under the impiessment acts. 

The number of each overseers relieved from military ser- 
vice most have exceeded 4000, for we are told on credible 
antbority * that their number east of the Mississippi River 
was 3645. The total number exempted in this section is 
put at about 100,000; of these 61,167 were physically dis- 
qualified, 18,785 were State officials excosed by the various 
Governors, 3086 were ministets, and 4982 were railroad 
employees. The exemption of so many minor State officials, 
such as justices of the peace and constables, led to an ex- 
tensive and acrimonious correspondence between the War 
Department and the Governors of the States, especially of 
I Korth Carolina, always ready to uphold the digni^ of her 
I sovereign powers. 

Dissatisfaction with these wholesale exemptions was ex- 
pressed in President Davis's message at the opening of the 
last session of the Congress in which be recommended abol- 
ishing all exemptions and conscribing all those able to bear 
arms, — a proposal declared by a North Carolina editor to 
strike at the root of civil liberty.' Governor Smith of Vir- 
ginia followed with a like proposition aimed particularly at 
limiting the number of minor State officials, like justices of 
the peace, exempt from service, such being most numerous 
in North Carolina, as he claimed.' It was about this time 
that Governor Smith himself was gaining notorieQ' by grant- 
ing exemptions to similar Vii^inia officials, constables, sher- 
ifEs, and other minor officers.* 

However numerous the exempts were, they were outnum- 
bered by the desertere from the Confederate ranks. Deser- 
tions began to attract general attention in the spring and 

■ BiJei^ PrajrvM, Jm. 31, ISSS; Me JtnM, Diary, U, 33S (Xot. 11, 1864); 
OSn Rue'di RiMKom, 4tli S^ III, 8«»-70, lilt. 

* ItaUigk Pngra*. Nov. 1, 16, ISM. 

* Richland Examintr, Doc S, IBM. 

* J0D««, Dlarj, n, 33S (Nov. IT, 1864). 


^-summer of 1868. Pollard estimates ^ that by midsummer of 
that year one half to three-quarters of the Confederate forces 
had deserted and were stragglers, — a palpable exaggeration. 
As was natural, these deserters collected in the western 
counties of North Carolina, where they were diflBcult to, 
apprehend, and where they were protected by the open hos-' 
tility of the people to the military despotism at Richmond. ' 
Governor Vance made some efforts to prevent desertions, and 
was drawn into a correspondence with the War Department, 
which only gave both parties an opportunity for mutual recrim- 
ination; the Secretary of War reproaching the North Carolin- 
ians for tolerating the desertions, and their courts for virtually 
annulling the conscription laws by granting writs of habeas cor- 
ptts; Governor Vance repljring with protestations of North 
Carolina's loyalty to the Southern cause and with a refusal 
to coerce the courts. The State, he claimed, was in danger of 
being overborne by the Confederate authorities.^ Deserters 
continued to collect in western North Carolina, and an attempt 
was made by Confederate troops to capture them, which only 
resulted in fanning the flame of discontent in the State.^ 

Beginning with the last of 1863, the number of deserters 
in Alabama grew rapidly. The northern part of that State 
became the gathering place of such disaffected soldiers, styl- 
ing themselves "Southern Yankees," and apparently defying 
all efforts to scatter or arrest them.* Similar bodies of 
" Tories " collected in the neighboring counties of Mississippi 
and Louisiana.^ Other States,^ like Georgia and South 

1 Pollard, Daris, 326. 

2 Ofl Rec'ds Rebellion, Ist S., LI, pt. 2, p. 707 (Got. Vance*8 proclam'n, May 
11, 1863) ; p. 709 (the same to l^s. Davis, May 13, 1863) ; p. 714 (Secr'y War 
to Gov. Vance, May 23, 1863) ; p. 715 (Gov. Vance to Secr'y War, May 25, 1863) ; 
4th S., II, 674, 732-4, 741, 769-74 (July-Aug., 1863) ; Jones, Diary, 11, 34-6 
(Sept. 6, 7, 1863) ; II, 42 (Sept. 12, 1863). 

« Jones, Diary, II, 28 (Aug. 31, 1863) ; Raleigh Progress, Sept. 12, 1863 (edit.). 

* Jones, Diary, I, 182 ; Ofl Rec*ds Rebellion, 1st S., XXVI, pt. 2, pp. 549-57 ; 
XXXII, pt. 3, p. 681 ; XXXIII, pt. 3. pp. 746-8, 761 ; 4th S., II. 253, 638. 

6 Ibid., 1st S., XXXII, pt. 3, pp. 625-7 ; 662-3, 71 1-13 ; XXXHI, pt. 3, p. 755 ; 
4th S., II, 717 ; Jones, Diary, II, 86 (Nov. 2, 1863). 

• Ibid., n, 28 (Aug. 31, 1863); 34-5 (Sept. 6, 1863); Ojff^l Rec'ds RebeUian, 
4th S., II, 361. 


Carolina, also had difficulty in restnuning the bands of 
deserters that collected within their borders. 

Notwithstanding the efforts of the gOTemment to quell 
disaffection in the ranks and prevent desertions, the latter 
continued in increasing proportions during the last year of 
the war, when many were compelled to desert not only from 
want of food and clothing, but also from the necessity of 
providing for their families.* 

The popular opposition to conscription did not confine 
itself to fuming protests gainst the " Military Despotism " 
or against the disregard of States rights,^ but led as, in the 
case of the suspension of the habeas corpus, to dangerous 
confficts between Confederate and State authorities. In his 
message recommending the passage of the first Conscription 
Act, President Davis had foreshadowed the possible embar- 
rassment from such a conflict,' and was soon after drawn 
into one with the Georgia authorities.* The State courts 
had upheld the Conscription Act, but Governor Brown de- 
clared it to be unconstitutional, and refused to permit it to 
be carried out in Geoi^ia, defying the Confederate author- 
ities. A majority of a joint committee of the State legisla- 
ture echoed the Governor's sentiments by declaring that the 
Congress had no power to conscribe citizens without the con- 
current action of the States; the minority report declared it 
to be impolitic to oppose the action of the Congress. This 
feeling of opposition to the growing military tyranny was 
stimulated by Vice-President Stephens in his address .before 
the Georgia legislature on March 16, 1864," already referred 

1 Act Jan. 22, IB64i OJ'i Ree'dt RAeUioH, 1st S., XLn, pt. 3, p. 1169; 
Lt, pt. S, p. 1038 (Gen. Lee's orders, & Gov. Vance's proclam'n, Aug., ISG4) ; 
p. 1064; XLIU {pattim); XLVI, pt S, pp. 1141 & as.; J. E. Johnston, JVarra- 
liM, m-A; Cftmpbell, Reminiieaictt, S7-8, 30. 

s 34 Gs. 139; Moore, EebtUim Btcord, SappL I, 3»2; Richmond Exaniiner, 
H«7 2. 1863. 

■ HooTe, RAtUion Record, 442-3. 

* Pollard, Davh.lU; Peteriburg Exprat, Sept. !G, Nor. 27, 1862; New Eng- 
land Mag., XI, 372 {Hot., 1891); Raleigh Progreii, Dec, 1, 1862; Off"! Rtc'dt 
BeAel/i'on, 4th S., I, 1116-20, 1I2B-9, 1133, 1154-6; U, 2, I0&S9., 128 & 6S. 

* RaUigh Progrett, Apl. 6, 1864; CleTeland, Stephem, 761. 


to, in which he declared the whole system of conscription / 
radically wrong and clearly unconstitutional. 

In North Carolina the opposition to conscription was even ^ 
more bitter. Public meetings held in August, 1863, and 
again in January, 1864, protested vigorously against the 
military despotism it engendered. These meetings were all 
held in the northwestern counties of the State. Their chief 
complaint was that North Carolina had already furnished 
more than her share of Confederate troops, and until the 
other States filled their quotas, conscription of North Caro- 
linians was deprecated, especially when carried out by non- 
resident officials.^ Popular feeling was also strong against 
the exemption of a planter with twenty slaves,^ — a natural 
position for the inhabitants of western North Carolina to 
take, where the slaveholders were in the minority. The State 
legislature gave expression to the general resentment against 
the military oppression of the Confederate government by 
formally protesting against the policy of conscription, and 
later by passing a law in direct contravention of the act of 
the Cong^ss, exempting millers, blacksmiths, and others 
from military service.^ 

Governor Vance of North Carolina sided with this popular 
movement against the encroachments of the central military 
powers. In his correspondence with the War Department 
he took frequent occasion to enter a protest against them. 
In 1863 he was particularly incensed by the conscription of 
local magistrates, calling it an annihilation of States rights. 
A little later he was indignant with a letter received from 
the Department intimating that the State courts were pro- 
tecting deserters, and that the State was lukewarm in her 
attachment to the Southern cause. In 1864 the War Depart- 
ment again complained to him that a State judge was dis- 
charging from the service men who had supplied substitutes, 
on the ground that the acts of the previous winter were 

^ iV. (7. Standard, Aug., 1863, Jan., 1864 {passim). 

3 J. T. Leach to constitaents, ibid.. Sept 8, 1863. 

* Richmond Examiner, Jane 9, 1864; Jones, Diary, U, 439 (Mch. 4, 1865). 



tmcoDstltntional, to which Governor Vance leidied that he 
stood read^ to niiii"t^y'" the dignity of his conits, bat also 
ready to leave the qnesdoa of the constitationality of the 
laws to the State Supreme Court, which was to meet in 
Jane, 1864. Soon after, he repeatedly advised the Depart- 
ment to meet the prevalent feeling in North Carolina hy bos- 
pending conscription in the moantainoos western counties, 

,but to no purpose.' 
,»b Another way in which the bordeos of the war became 

. intolerable was in the prevaleot s^tem of govemment im- 
pressmento; The army did not rely for its supplies upon a 
voluntary sale of prodoce by feirmers or dealers. At first, 
however, no compulsion was thought necessary to indoce 
them to sell, but later the Congress was persuaded that the 
govemment coald avoid paying the ezorlntant prices de- 
manded, and passed a law on March 26, 1863,* providing for 
boards of assessment to determine the valae of impressed 
goods, if the owner and military aathonties could not agree 
upon a price. The President and Governors co-operated in 
appointing such commissions to periodically publish official 
price schedules which the impressing officers followed in 
procnring supplies for the army. This policy aimed at 
encouraging an increase in the production of cereals and 
live stock, and the sale of the surplus produce to the gov- 
ernment.' We shall see below with what success this policy 
was carried out. 

The price schedules were advertised in the newspapers, 
and were frequently amended, invariably by raising the offi- 
cial prices. However, these were always put below the level 
of the prevailing market prices, at first only slightly, but 
before the end of the war far below.* 

1 Qfl Bte'di RtbeUioK. 4tb S., n, 81, 87, IM-T, 379, 787 ; Jone«, Diarg, 1, 299 
(Apl. 14, 1863); I, 340 (June 3, lS63)i U, 162-3 (Hch. I-l. 1864) ; 11, 1»0 (ApL 
21, 1664) ; N. C. Standard, Jnly 23, 1864. 

* Amended bj teU Apl. S7, 30, 1863; Feb. 16, 17, June 14, 1864; Mch. 18, 
1865 ; Atfg-Gen'i opinion, JdI; 3S, 1863. 

* President's uUreea to people, Richrumd Eiamijier, Apt. 16, 1863. 

* Typical price echednlce are fonnd in the Richmond Exantinrr, May 29, July 
S3, Oct. 2, 1863, Aag. 4, Xut. 1, 1864; Chartaton Courier, Sept. 22, July 9, Oct 


We have, of course, no means of telling the amount of 
goods impressed by the military authorities during the war. 
The enormous issues of paper money went largely to making 
such purchases. We hear in 1863 and 1864 of large sup- 
plies collected by impressment in various depots,* but at the 
same time we hear of the great difficulty General Lee and 
the other generals found in securing subsistence for their 
troops.^ As the armies consumed the food on the farms 
within their reach, the fundamental difficulty of finding 
farmers who would raise and seU produce for a price forced 
upon them, far below the market price, and one at which 
they could not profitably raise the produce, however extrava- 
gant the figure appeared, became insurmountable ; and toward 
the end of the war supplies became very precarious, and the 
troops suffered greatly. The system of impressment broke 
down completely; nothing could be bought by the govern- 
ment except with gold; but the government held no consid- 
erable amount of specie, and could only obtain it by the same 
system of impressment.* 

The immediate effect of the above system of impressing 
goods, that is, of forcing the producers to dispose of them 
to the government at prescribed prices, is summed up by 
General J. E. Johnston * when he says that " no one would 

3, 1863, Oct 25, Dec. 27, 1864 ; Jones, Diary, I, 337 (May 31, 1863) ; N. C. Stan- 
darrf, May 29, Aug. 4, Oct. 6, 1863, Dec 18, 1864; Knoxville Register, June 26, 1863; 
Off*l Rec'ds Rebellion, Ist S., XXVI, pt. 2, pp. 206-7 (Sept. 4, 1863) ; XXXIV, 
pt. 2. pp. 811-12 (Jane 1, 1864) ; XL, pt. 3, pp. 766-8 (July 8, 1864) ; XLII, pt. 
2, pp. 1152-3 (Aug. 1, 1864); XLII, pt. 3, pp. 1350-1 (Dec 30, 1864); Augusta 
Chronicle ^ Sentinel, Feb. 3, 1865 ; Gen'l Orders Adj.-Gen'Vs Off., May 18, July 21, 
Aug. 24, Nov. 7, Dec. 7, 1863. 

1 Off^l Rec'ds Rebellion, Ist S., XXX. pt. 4, pp. 491-2 (Aug. 12, 1863) ; pp. 547-9 
(Aug. 25, 1863); XXXIX, pt. 2, pp. 742-^ (Aug. 1, 1864); XLV, pt. 2, pp. 737-8 
(Dec 15, 1864) ; N, C. Standard, Sept. 8, 1863. 

a Off'l Rec'ds RebeUion, Ist S., XXX, pt. 4, p. 550 (Sept. 4, 1863) ; XXXIII, 
pp. 1094-5, 1098-9, 1113-14, 1117, 1162 (Jan.-Feb., 1864); XL VI, pt. 2, p. 1040 
(Jan. 12, 1865); p. 1211 (Feb. 9, 1865). 

» Ibid., Ist S., XLVIII, pt. 1, pp. 1383-4 (Gen. E. K. Smith, Feb. 11, 1865) ; 
XL VI, pt. 2, pp. 1233-4, 1258, 1289 (Gen. Longstreet to Gen. Lee, Feb.-Mch., 
1865); Campbell, Reminiscences, 44, 47, 54 (Mch., 1865). 

* J. E. Johnston, Narrative, 423 ; cf. Offl Rec'ds Rebellion, 4th S., Ill, 594-7, 
662 (Aug. & Sept., 1864), (H. V. Johnson to Secr'y Trenholm). 


sell to the govemment, . . . when he could get from his 
. neighbors twice the government price for his horses or grain." 
There are few things more difficult to do than to compel a 
man to sell against his wishes. This was fully illuatrated in 
the case of the Southern farmer, who Buccessfally met this 
attempt of the government to coerce him by simply with- 
holding bis produce from the market, preferring rather to 
hold it than to holding a mass of depreciating paper.' As 
tie Richmond Examiner put it: "If the government induces 
the producers of grain and meat to bury it in the ground to 
keep it out of the way of its commissaries, the starvation and 
subjugation of the country are certain events."* The editor 
went on to show that the more the government seized with- 
out payment at the market rate, the higher would rise the 
price of produce. In fact, the producers had to insure them- 
selves against the chance of impressment by adding to the 
price they asked iu the open market. In March, 1863, the 
government seized the flour in the Richmond mills and ware- 
houses; as a result the price of flour rose next day from $30 
to $40 a barrel.' 

A further effect of this attempt to compel producers to 
supply goods to the government at its arbitrary price was the 
discoun^ement it offered to production. Farmers naturally 
reduced their crops of cereals, when they were in danger of 
losing these to the government at an unremunerative price;* 
so that production diminished, certainly in some parts of the 
Confederacy, and not as a result of the ravages of the war, 
The latter, of course, disastrously affected the border sec- 
tions. Further light ia thrown on this matter by the policy 
of discouraging the growth of cotton and tobacco, to which 
the farmers turned, these being articles less liable to govem- 

1 JoDM, Diary, I, 194 (Not. 31, 18GS) ; Offl Bee'dt RAeltion, lit S., XXIX, 
pt.S,p. 913 (Nor. 11, 1B63); XXXIH, pp. 1113-14 (Jan. SI, IBM); XLVIU, 
pt. 1, pp. 13BI-3 (Feb. II, ISSS); MoDteiio, BeminitetntxM, ib-i. 

* Richmond Examiner, Mch. 1 1, 1863 (edit). 

* Jonea, Diary, 1, 367 (Mcb. 4, 1BG3) ; cf. Saeataah Repvbliaai, Hch. 39, 1863. 

* Richmond Examina; Mcb. 14, 1863 (edit.) ; Og'l Rac'dt Eebdlion, lat S., LI, 
pt. 3, p. 1064 (Mch. S, IB6»). 


ment seizure, and also offering tempting opportunities for 
speculation. But of this more below. ^ 

By turning to a system of impressment with which to 
supply the armies with food, the Confederate government 
reverted — as it did in the produce loan and tax in kind — 
to earlier industrial forms of exchange. In so doing it lost 
every advantage that accrues from the highly developed 
modem market and credit system. By interfering with and 
setting aside the free exchange of goods in an open market 
with a view to securing a sufficient and cheap supply of food, 
the government in reality deranged the conditions of supply 
so as to lessen the available amount But more than this: 
by forcing out of activity the usual, automatic, and regulat- 
ing factors of an open market, the government necessarily 
encouraged the kind of wastefulness which the modem in- 
dustrial system aims to correct, and which it reduces to a 
minimum the more complicated its development becomes. 
In the South we have clearly presented the antithesis be- 
tween industrial and military motives, their irreconcilable 
character. Moreover, the supply of food to the armies, a 
military necessity, was the more successful, the more it was 
actuated by industrial motives ; the less room given to indus- 
trial forces as distinct from arbitrary military decrees, the 
less satisfactorily was the commissary department managed. 
The army suffered from want of food, though in the country 
at large there was no serious lack of it. 

We hear of immense wastefulness in impressing goods, of 
collecting more goods than there was shelter for, of heaping 
up supplies at inaccessible points.^ But especially frequent 
are the references^ to depots of provisions being neglected 

^ See pages 233 & ss. 

2 Jones, Diary, II, 191 (Apl. 22, 1864); Charleston Courier, Dec 2, 1863 
(corresp.); Petersburg Express, Sept. 18, 1862; Richmond Examiner, May 16, 
1863 (edit.). 

« Petersburg Express, Sept. 18, 1862; Jones, Diarif, U, 89, 103, 180, 401 ; Q/f/ 
Rec*ds Rebellion, Ist S., XXXIX, pt. 2, pp. 565-6 (May 1. 1864); XLVI, pt. 2, 
pp. 1295-6. XL VII, pt. 2, p. 1191 (Feb.-Mch., 1865); XXXm, pp. 1076-80 
(Jan., 1864). 


and allowed to go to ruin by exposure. Quantities of com, 
wheat, bacon, potatoes, and salt were thus destroyed. Else- 
where supplies which had been collected were lost or stolen 
through the carelessness of the railroads or the other trans- 
portation companies. There was a general feeling that the 
army was starving in the midst of plenty, and that there was 
an abundance of meat and grain in the country, if it could 
only be reached.* 

The arbitrary power the military authorities claimed, to 
seize property and pay for it below the market rate inevi- 
tably led to much oppression being inflicted under cover of 
the impressment taws. Soldiers seized property, though 
without authority to sign vouchers for it, and other inc- 
spoQsible agents of the government preyed upon the people.* 
In Geot^a these ill^al impressments were particularly fre- 
quent. In the fall of 1863 Governor Brown urged the pas- 
sage of a law to make impressment by unauthorized persons a 
felony punishable with ten years' imprisonment and thirty- 
nine lashes on the bare back. The legislature acted upon his 
suggestion, but without efFect, for a year later the Governor 
issued a proclamation warning citizens against bands of Con- 
federate cavalry which infested parts of the State, robbing 
and plundering under pretence of impressiug goods for the 
army.* The North Carolina legislature inveighed against 
these illegal impressments in a resolution passed in Decem- 
ber, 1868; and in his mess^e during the following spring 
Governor Vance repeated the charges* against bands of strag- 
gling soldiers. He had remonstrated with the Confederate 
authorities, but to no effect; on the contrary, the evil had 
grown. In the Alabama and Virginia legislatures resoln- 

1 Jonei. Diaiy, n, 171. 173 (Mch., 1864). 

« OJ'l Rec'dt RtMlion, lit 8„ XXXI, pt. 3, pp. 677, 710-11 (Soy., 1863); 
UI, pt. 2. p. 696 (Jnly U, 1864); JV. C. Standard, Nor. 34, 1863; Richmond 
£zamtnrr. Decs, 1863; N. C. Bet. Dee. 1 2, 1 863 ; YrenMatie, SoaAem Slates, 163. 

■ Mesfiage, Not, S, 1863, in Mtmphii Appeal (jmhliihaS at the time !□ Atlanta), 
Not. 9, 1863; Go. act Dec. 14, 1863; ProclamWion Not. 21, \6^, Augtula Chron- 
idt f- Sentinel, De<^. 3, 1864 ; Off"! Rec'ds Rebellion, 4th S., 11, 943. 

* Pad., 4th S., n, 1066 ; RaUigh Progreu, Hk; 19, 1B64. 


tions were introduced to restrain such forms of lawlessness,^ 
and about the same time a bill was introduced in the Con- 
federate Senate ^ with the same end in view. In the discus- 
sion which followed. Senator Brown of Mississippi held that 
in his State impressment had become mere robbery; and ; 
others were loud in their denunciation of the lawlessness of 
the military authorities. 

Under the similar conditions during the French Revolu- 
tion, exactly the same results followed the prevalent system 
of impressments.^ There was immense wastefulness in pro- 
curing government supplies, enormous quantities of sub- 
sistence or other commodities were accumulated in public 
magazines, and exposed to all sorts of peculation. Unauthor- 
ized persons made use of the impressment laws to prey upon 
the farmers, and revolts and insurrections were excited by 
such lawlessness. Much the same happened during the 
American Revolutionary War.^ The wholesale issue of paper 
currency drove the Continental Congress to the system of 
"specific supplies " and requisitions. The collection of food 
by impressment was attended with much waste and loss. 
While there was great abundance of provisions at one point, 
at another there was great lack, the latter largely due to the 
unwillingness of farmers to bring their produce to town. 

The Confederate impressment laws aggravated the burdens 
of the war. They not only lessened the available supply of 
food by discouraging its being brought to market, but what 
agricultural products did reach the towns and cities were 
constantly in danger of impressment, and were often seized 
for government use at a price far below the market rate. 
This practice accentuated the scarcity of food products, 
created destitution in some sections, raised prices still fur- 
ther, and stimulated the bitterest feelings against the mili- 

1 Aitgutta Chronicle j* Sentinel, Dec 14, 1864 ; Richmond Examiner, Dec 21, 1864. 

« Ibid., Nov. 18, 25, 1864. 

« Thiers, French Revolution (Shoberl transl.), Ill, 126; Revolution de Paris, no. 
XII, Sept. 27, 1789, p. 16; MoDtgaillard, State of France in 1794, pp. 35-6. 

* Sumner, Financier Am. Revolution, 1, 141-2, 154, 239-45; White, Money 4r 
Banking (1895), 143. 


tary authorities,* especially for interfering with goods on 
their way to market. 

Such exercise of arbitrary power by the military and cen- 
tral government necessarily led to a conflict with the State 
governments that opened the eyes of even the States rights 
doctrinaires to the possibilities of a centralized military des- 
potism. Minor conflicts of this kind arose. A South Caro- 
lina court had ordered certain goods sold, the Confederate 
authorities intervened and impressed them.* In Virginia a 
judge granted an injunction preventing the impressment of 
flour; and some time later, a Grand Jury took up the matter 
and memorialized the Secretary of War.* In Georgia the 
opposition to impressment took on a more threatening atti- 
tude. The Governor opposed the policy in his letters to the 
War Department, and was supported by the State Supreme 
Court, which held that the Confederate authorities were 
obliged to pay for impressed sugar at a fair valuation and 
not at a price fixed arbitrarily, and that the impressment law 
was unconstitutional. A collision between the two govern- 
ments was threatened,* but averted, possibly by the amend- 
ments to the law on February 16-17, 1864, which aimed to 
sjrstematize the methods of impressment. But the State 
authorities of Georgia continued to oppose the centralizing 
tendencies which were yielding up their autonomy to the 
growing military despotism in Richmond. They were much 
encouraged in this by the attitude taken by such men as 
Vice-President Stephens and Senator Toombs, and found a 
ready mouthpiece in their Governor, who persistently upheld 
the rights of the State which he thought were being violated 

» JoatA, Diary, 1,301 (Apl. 29, iS6.1)i II, 56 {Sept 29, 1863); II, 103 (Not, 
S3, 1863); Got. Bonhain'B meusge, CharUitm Courier, Sept. 34, Oct. S, 1863; 
Riekmimd Examiner, Jan. ^6, 1863 (Confed. H'se of Rep'">'^'">'l^' 1^^): ^t'^- 3. 
1SG3; Rkknumd Whig, Jnlj SI, 1S64; N. C. Slandard, Oct. 36, 1863; Gen'l 
Ordert Adj.-Gen'ft OJ-, Uch. 19, 1863. 

* N. C. Standard, Jwa. la, 1861 (edit.). 

* JoDM, Diary, I, 279 (Mcb. 3i, 1863) ; II, 101 (Not, SI, 1863). 

* lad., II, 99, 111 (NoT.-Dec, 1863); Rickmimd Examiner, Dec 5, 1S63 
(correspO; Dec. 16, 1863. 


by the growing power of the President.^ In a letter dated ^ 
April 18, 1864, the Vice-President, though disclaiming any 
feeling of personal opposition to President Davis, strongly 
expresses the conviction that the latter is aiming at dicta- 
torial powers, and that he has signally departed from his 
former States rights views.' 

In North Carolina these States rights sentiments were still 
stronger. Frequent public meetings, after the spring of 1863, 
passed resolutions protesting against the encroachments of 
the Confederate upon the State government. Instead of a 
Confederacy of free and sovereign States, the remonstrants 
found themselves living under a powerfully consolidated 
military rule.* We hear of protests* against Confederate 
interference with Congressional elections. 

Some thought that there was very little to choose between 
the despotic rule of President Davis and that of President ^ 
Lincoln, and that the Southern despotism was quite as bad 
as the Northern.^ One shrewd observer,® as early as April, 
1861, saw clearly the contradiction implied in the Southern 
Confederacy's attempting to wage war without an overbear- ; 
ing central authority. He wrote: "If the Southern States \ 
are to adhere to the old distinct sovereignty doctrine, God 
help them one and all to achieve their independence of the 
United States." Even at that time, before the dimensions 
of the war had become apparent, there were many who 
thought all State lines could be advantageously obliterated ; 
otherwise, incessant conflicts between the States, and be- 

1 Jones, Diarii, 11, 193-4 (Apl. 27, 1864); II, 395 (Jan. 6, 1865); Memphis 
Appeal (Atlanta), Oct. 27, 1864; Goy. Brown's messages, Raleigh Progress, Mch. 
16, Dec. 3, 1864, Mch. 4, 1865; N. Y. Times, Mch. 8, 1865. 

« Ojgri Rec'ds Rebellion, 4th S., HI, 279-80 (A. H. Stephens to H. V. Johnson). 

• iV. C. Standard, May, 1863-Aug., 1864 (passim), esp. June 10, 1864; Raleigh 
Progress, Jan. 4, 1864 (edit), May 9, 1864; Moore, North Carolina, II, 189; 
Eggleston, Recollections, 193-4; Augusta Chronicle (f Sentinel, Dec 7, 1864 

• N. C. Standard, Dec. 8, 15, 1863. 
^ Jones, Diary, U, 304 (Oct. 12, 1864); Richmond Examiner, ApL 19, 1864 


• Jones, Diary, I, 24 (ApL 18, 1861). 



IwiKtii till) Ktate and the Confederacy, would arise. There 
wiu« nil iKiud, it was said, to keep up the cumbrous machineiy 
iif Htiito [rovoruiDents, the Confederate government would be 
u HiillluivitUy heavy burden to cany. 

\i. A. Pollard, the editor of the Richmond Examiner, was 
tliti bittoi-est opponent of President Davis's assumption of 
piiwcr, and persistently attacked him as dictatorial, while 
iMililtling the work of tiie Congress. The latter, he claimed, 
iiiui-oly recorded the wishes of the President.' In the 
Coiigi-esB, Representative H. S. Foote of Tennessee was the 
lomliiig opponent of President Davis and his Cabinet, and 
ditiliiigaished himself toward the end of the war by attempt- 
ing to enter the Federal lines and negotiate a peace upon his 
own responsibility.* He was not alone in his attitude, for it 
was about this time that the Congress sent a delegation to 
tliu President to demand the resignation of all the members 
of liis Cabinet excepting Secretary Trenholm. This remon- 
atraiieo resulted in Secretary of War Seddon's yielding his 
place to General Breckenridge. The other members of the 
Cabinet Mr. Davis would not allow to be disturbed.' A year 
Hai'lior the similar antagonism to Secretaries Memminger and 
Ituiijamin had led to the introduction of a bill,* vacating the 
olHce of a Cabinet officer every two years, upon which the 
Senate Judiciary Committee reported favorably. 

Alexander H. Stephens, who, as we have seen, played no 
small part in opposing, the centralizing influences of the war, 
declared before the Recons&uction Committee in 1866 that 
the enthusiasm of the Southerners for the war declined 
"from the operation of the war among themselves, and the 
results of the conflict from their own authorities on their 
individual rights of person and property, the general break- 

> Alfriend, Dana. 328 ; Pollacd, Galaxy, VI, T«, 794 (Dec., 1868) ; Pollard, 
Davit. IGO, 1S2-3, 41(1; JoDCs, IHary, II, 449, 454 (Hch., 18S9>. 

> Pollard, Davit, S04-5, 418, 43S>-440 ; Jodm, Diary, II, 113 (Dec. 9, 1S63) ; 
n, a59, 391, 397, 404^ 410 (Jan.-Feb., 1869). 

• Jonei, Diarn, U, 41S,4!1,433 (Feb., 1865) ; Rdeigh PrC^rUi.Feb. 4, 20,lBe& 
(Speaker Boocock to the pnblic, Feb. 11, 1865). 

* Jones, DiuTg, II, 116, 133 (Dec., ia64-Jttn., 1865). 


down of constitutional barriers which usually attend all pro- 
tracted wars." ^ A newspaper writer during the war, though 
opposed to the Vice-President's policy, confirms the latter's 
statement with these words: ^^The success of the cause is 
embarrassed by the trammels of a constitution designed and 
constructed for the development of a people in time of peace, 
but which fetters the present conflict of life and death." * 

It is a striking fact that, with the opportunity offered 
them , tciw^eely amend the Federal Constitution, and with 
the prospect of a war before them, the framers of the Confed- ( 
erate Constitution did not enlarge their President's powers 
in the direction of increasing his authority as military com- 
mander-in-chief. The right to suspend the writ of habeas 
corpus was left as vague as in the instrument they copied,' 
and this, as we have seen, led to difficulties during the war. 
Similarly, the other war powers of the administration — the 
right to conscribe, to call out the State militia, and to im- 
press goods for the army — were left uncertain.* The Mont- 
gomery Convention of 1861 did, however, greatly enlarge 
the powers of the President in other directions. The lead- 
ing changes made in the United States Constitution by that 
body had reference to remedying some appai*ent defects in 
the working of the Federal government in times of peace. 
So, for instance, as a preventive of " log-rolling " the Presi- 
dent was empowered * to veto any appropriation and approve 
any other in the same bill, a provision introduced into the 
recent Constitutions of a considerable number of States.® 

Presumably the President found few occasions to exert 
this power, but under the war conditions for which the Con- 
federate Constitutions did not distinctly make provision his 

1 39fA Congren, \tt 5., ITk Rep% 30, pt. 3, p. 159 (Apl. 11, 1866). 

* Petersburg Express, Jan. 27, 1864. 
» U. S. C<nut% I, 9, 2 ; Con/ed. ProMl ConsVn, I. 7, 2 ; Confed. Perm. 

Const\ I, 9, 2. 

* U. S. Cons^n, II, 2, 1 ; Amendments, III-V; Con/ed. Provis'l Const'n, U, 2, 
1 ; I, 7, 1 1-13 ; Confed. Perm. Consfn, 11. 2, 1 ; I, 9, 14-16. 

* Con/ed. ProvisH ConsVn, I, 5, 1 ; Confed. Perm. Const'n, I. 7, 2. 
^ Beside those mentioned in Stimson, Am. StatfUe Law, I, 79, § 310, the DeL 

Const'n, 1897, III, 18; the 8. C. Conafn, 1895, IV, 23. 


powers were similarly enlarged by Congressional action, 80 
as to authorize him to transfer parts of appropriations from 
one to another object within a department, whose head asked 
for such a transfer. This anthority was yielded only during 
the coatinuance of the war.' A later law * gave the Presi- 
dent and the Secretary of War power to distribute 57 mil- 
liooB of dollars among the large items of army expenditure. 
A similar law during the recent Spanish-American war will 
' occur to the reader.* 

Another direction in which the Confederate Constitution 
of 1862 enlai^d the President's power was in lengthening 
his term of office and that of the Vice-President to six years 
and forludding their re-election, a change proposed by R. B. 
Rhett of South Carolina, the chiumian of the committee to 
revise the United States Constitution, from whom most of 
, the important changes emanated.* Moreover, the President 
[ was given distinct authority " to remove at his pleasure the 
principal officer in each executive department, and all per- 
sons connected with the diplomatic service; in the case of 
dismissing oljier officials, he was to report the facts to the 
In this connection it is well to point out that the Confed- 
, erate Constitutions lessened the power of the Congress as 
' they increased that of the President. The permanent Con- 
stitution provided that — 

" Congress shall appropriate no money from the treasury ex- 
cept by the vote of two-thirds of both Houses, taken by yeas and 
nays, unless it be asked and estimated for by some one of the 
heads of departments and submitted to Congress by the Presi- 
dent ; or for the purpose of paying its own expenses and contin- 
gencies ; or for the payment of claims against the Confederate 
States, the justice of which shall hare been judicially declared 
by a tribunal for the investigation of claims against the Gor- 

1 Coiifad.utH»7l4, 1861. 

1 Co&fed. Mt Aug. 31, 1861. 

* D. S. act Hch. 9, )89S. 

* ConjW. Ptrm. CoKtt'n, IT, 1, 1 j Stephetui, War between the Slata, 338. ^ 

* Conftd. Pern. ConiCn, II, 3, 3. 


ernment, which it is hereby made the duty of Congress to 
establish." ^ 

This immense curtailment of the money-spending power of 
the Congress, of course, did not make itself felt during the 
war, when the President and the Congress were in harmony 
in that particular. In times of peace, however, the inevitable 
conflicts would necessarily have led to far-reaching results. 
Other and minor i-estrictions upon the powers of the Con- 
gress forbade extra compensation being voted to government 
contractors or officials ; ^ and required every law to relate 
to but one subject, and that subject to be expressed in the 
title.^ This last provision to smother " omnibus bills *' was 
utterly ineffective, inasmuch as all important laws of the 
Confederate Congress, like those of other legislatures, neces- 
sarily covered a variety of subjects, few of which could be 
specified in the title. Nevertheless, such a provision is a . 
favorite device to block ill-advised legislation, and was re- ( 
cently introduced into the constitution of the Australian / 

In enlarging the powers of the President, and curtailing \\^ 
those of the Congress, the framers of the Confederate Con- 
stitutions had in mind not only remedying certain defects in 
the United States government in times of peace, but also 
aimed to borrow some distinctive features of the British cab- 
inet system. The permanent Constitution provided that — 

" Congress may, by law, grant to the principal officer in each 
of the Executive Departments a seat upon the floor of either 
House, with the privilege of discussing any measures appertain- / 
ing to his Department." • 

This radical amendment to the Federal Constitution was ;• 
proposed in the convention by A. H. Stephens.* He urged a 

1 Confed. Perm. Const'n, I, 9, 9 ; c£. Confed, ProMl Cons^n, I, 7, 6. 

« Confed, Perm, ConsVn, I, 9, 10. 

« Ibid, I, 9, 20. 

* Polit, Sc. Quarterly, XIV, 671, 678 (Dec., 1899). 

» Confed. Perm, Const'n, I, 7, 2. 

^ Stephens, War between the Statee, 338-9. 


further extension of the British syBtem bjr leqniiing the 
President to appoint the membets of his Cabinet from among 
the membeis of the Congress. In this he did not succeed, 
nor LB it clear that the above provision of the Constitatioa 
vas taken advantage of. To be sore, Mr. Menuninger's 
private secretary tells os that at times " he was eogt^ed in 
l^e Senate, where, upon all questions affecting the financial 
interests of the government, he had a voice."' But, as he is 
speaking of the year 1861, when the Provisional Constitu- 
tion was still in force, no authority existed at the time 
for a cabinet officer's taking part in the discussions of the 
Congress ; moreover, no Confederate Senate existed before 
I February, 1862, when the two'House's U'ffie Permanent 
\ Congress Werjr^tituted. Another writer says that seating 
the heads of departments in the Congress worked well in the 
legislative history of the Confederacy.* However, this is in- 
sufficient evidence over against the fact that bills to cany 
into effect the Constitutional provision were repeatedly con- 
sidered, but never passed." Evidently the Congress was not 
overanxious to invite members of the Cabinet or other lead- 
ing officials to their deliberations ; nor could the former have 
tried to gain admittance in view of the personal attacks which 
awaited them there, and which, as it was, spent themselves in 
abusive oratory and newspaper criticism. 

One cause of complaint against President Davis and his 
despotic powers had reference to his calling out the State 
mihtia and thereby, as it was claimed, ignoring the rights of 
the individual States. Governor Brown of Georgia figures 
as one of the leaders in this movement, and in his vitupera- 
tive correspondence with the War Department he, on the one 
hand, blamed the administration for not preventing General 
Sherman's advance in the fall of 1864, and, on the other hand, 
he refused " to gratify the President's ambition . . . and to 

1 Capon, SfemmingeT, 331. 

• J. L. M. Cnrry in Galaxy, XVU. 40! (Mch.. 1874). 

■ Charliiton Courier, Mch. S4, ISSl; Mch. 13, 1863; Ri<Aiiumd Examintr, 
Not. 10, )8S4; Bula of Senalt, 1864. 


surrender the last vestige of the sovereignty of the State by 
placing the remainder of her militia under his control." In 
reply to his attacks, the Department tried to pacify Governor 
Brown without compromising the interests of the Confederate 
government. The incident offers a striking illustration of 
the inherent weakness of the Confederate authorities, when 
facing the particularistic interests and convictions of the 

A similar conflict arose between the Confederate author- 
ities and the Governor of Texas. In this case General \ 
Magruder persuaded Governor Murrah to disregard the 
State organization of troops.^ In Mississippi the confusion 
in the military organization ^ weakened the effective strength 
of the army, created dissensions, relaxed discipline, and en- 
couraged desertions. 

In keeping with North Carolina's attitude toward the cen- 
tral authority at Richmond, that State also asserted her in- 
dependence in military matters. In February, 1862, the 
State Convention called upon the President to return the 
North Carolina troops for home defence ; and in the follow- 
ing winter Governor Vance announced his policy of organiz- 
ing independent troops for the defence of the State.* Much 
concern was felt at this attempt to interfere with the Con- 
federate army organization. Said one paper: '-'It will be 
time enough to distract the councils of the South about 
imaginary violations of constitutional law by the supreme 
government when our independence is achieved, established, 
and acknowledged. It will not be till then that the sov- 
ereignty of the States will be a reality." * The North Car- 
olina House passed a bill for the separate enlistment of 

1 Jones, Diary, n, 292,318,341 (Sept.-NoT., 1864); Ojff^lRee'ds Rd)elli(m, 1st S,, 
Ln, pt. 2, pp. 727, 736. 754. 760, 764, 778, 796, 803 (Aug., 1864-Jan., 1865). 

a Ibid,, XXXrV, pt. 2, pp. 1090-5, 1103; pt 8, pp. 727, 747-8, 789 (Mch.- 
Apl., 1864). 

» Ibid., XLV, pt. 1, p. 1247 (Nov. 25, 1864). 

« Ibid,, LI, pt. 2, p. 471 (Feb. IS, 1862); Jones, Diary, I, 198-9 (Nov. 29-^0, 

* Petersburg Express, Dec. 19, 1862. 


10,000 men for home defence, bat the State Senate rejected 
it to tlie sati»&ction of the Confederate aathorities and the 
chagrin of the States righta partisans who opeulj claimed 
ttiat they loved the Confederate States and the cause of the 
South, but loved their Slate more.* 

In Sejitember, 1863, Governor Vance threatened to recall 
the North Carolina troops from service in other States ; * and 
during the rest of the war there were other outbursts of this 
particularistic feeling.* North Carolina troops, it was claimed, 
should primarily serve for the defence of the State, not for 
tiie purixMC of assuming the responsibilities of the Confeder- 
ate government. At the very close of the war Governor 
Vance became involved with President Davis and General 
Johnston in a discussion about his right to treat with General 

In Virginia the relations between the State and Confeder- 
ate authorities were less strained. However, some feeling 
was aroused by the President's forming the provisional State 
troops into a Confederate army, breaking up the organization 
of the regiments, and supplying new ofScera.* 

The appointment of non-residents of a particular State in 
the civil or military service of the Confederacy aroused the 
bitterest States rights feelings. In Georgia it wounded 
people's feelings to have their goods impressed by others 
than natives of the State,* but, as usual, we hear most of such 
complnints from North Carolina, whose Govemor in the fall 
of 1802 was emphatic in resentment that his State's troops 
woro ofTiccrod by strangers.' Moreover, he claimed that resi- 
I dents of other States were being appointed to administer the 
' odious Confederate conscription and tax laws in North Caro- 

1 Kal'igh Progrtu, D«c ST, ISfla ; Jan. 3, M, ST, 30 ; Feb. S-3, 1864, 

• Ojri lifc'dM RfbtUiim, lilt B,, LI, pt, S, p. 764-5 (Sept. 11, 1863), 

• N. C. Standard, Doc. 13, 1863; Jonn, Diary, II, 136 {Jan. 10, 1864). 
t OJ"! UtrTdi RtbdUon. lit 8., XLVTI, pt. 3, p. T93, 811 (Apl., 1865). 

• Vm. o^liDancea, Apl. 37, 1861 ; HdhsU, Diary, 306 (Jane 16, 1863); Baltigh 
PngrtMi, Mch. 10, 1863. 

• Jonu, Di'nry, II, 93 (Not. IB, 1863). 

1 Got. Vuco'i meMttg«, Kor. IT, 1863, Ealtigh Pngnu, Nor. 19, 1863. 


Una, and was constantly wrangling '^'ith the Richmond 
authorities.^ The frequent public meetings held in the 
western counties of the State after the middle of 1863 ^ also 
protested against this '* foreign" domination, and urged people 
" if you have the right to rule in this State, to say so." 

The friction between the State and Confederate govern- 
ments was also increased by the latter's interfering with inter- 
State commerce. So, for instance, the Governor and Council 
of South Carolina forbade the exportation of cotton except 
by permission of either governments. To this Secretary 
Memminger objected, and as a result the prohibition was 
suspended.^ Similarly the Attorney-General declared un- 
constitutional an act of Virginia, and one of South Carolina* 
forbidding distilleries, which prohibition interfered with the 
Confederate government's establishing distilleries in those 
States to supply the army and navy with whisky. About the 
same time the North Carolina legislature called upon Gov- 
ernor Vance to suppress the distillery in Salisbury operated 
by the Confederate government.* A similar conflict arose in 

North Carolina had previously evinced the same particular- 
istic spirit in a State ordinance of February 21, 1862, which 
taxed liquors sold in the State but manufactured elsewhere, 
$1.00 a gallon, while those of domestic manufacture were taxed 
only 30 cents. Toward the end of the war the State became 
involved in a controversy with Virginia owing to the seizure 
of a locomotive and ti-ain hired by North Carolina to trans- 
port salt from Saltville in Virginia. In retaliation Governor 
Vance forbade the exportation of goods from North Carolina 

1 Baldgh Progress, Aug. 12, 1863 (edit.) ; Jones, Diary, IT, 39 (Sept 10, 1863) ; 
176 (Mch. 24, 1864) ; OJTl Rec'ds Rebellion, Ut S.. LI, pt. 2, p. 818, 824, 830, 844 
(Feb.-Mch., 1864) ; 4th S., II {passim), 

« N. C. Standard, July, 1863-Aug., 1864 {pauim). 

* Charleston Mercury, ApL 23, 1862. 

* Attomey-GeneraTs Opinions, Dec. 18, 1862; Mch. 7, 1864; 0/7 TU^ds Rebel' 
lion, 4th S., HI, 879 (Atfy-Genl to Secr^y Nary, Mch. 7, 1864). 

* Raleigh Progress, Nov. 28, 1864. 

« Offl Reeds Rebellion, 4th 8., II, 218 (Secr'y War to Gov. Ga., Nov. 29, 1862). 


t') Virginia, but yielded gracefally wbra the GoTemor of 

Virginia called his attentioa to tbe ooconstitatioiialitf of the 

Another caiue of irritation between the States and the 
Richmond anthorities were the latter's restrictioiis upon the 
State goTeminent« engaging in gpecolation by chartering vea- 
wilt to export cotton and import supplies on account of the 
State, Four State legislatures memorialized the Congress 
npon this matter in April, 1864, claiming that the central 
government had no ri^t to restrict trade in this way.' In 
Georgia a bill was introdoced in the legialatoie forUdding 
the Confederate government's interfering wit^ steameis sail- 
ing on State account,' and in December, 1864, Governor Bon- 
ham recommended * the purchase of vessels abroad in order to 
avoid such interference. A similar conflict arose between the 
Texas and Confederate authorities.'' Bat, as usual, in the 
case of North Carolina the conflict wag most pronounced. ' 
Early in 1861 Governor Vance arranged with the central 
authorities to clothe the North Carolina troops. For this 
purpose he imported foreign goods and machinery. To this 
pracUce the Secretary of the Treasury obje6ted in 1864, when 
the Government was perfecting its embargo policy, and 
aroused the bitterest feeling in North Carolina.' The State's 
attempts to proflt by blockade-mnning continued to interfere 
with the Confederate government's speculations in the same 
line, and was a fruitful source of animated correspondence 
between the two governments.^ In the last session of the 
Congress* there was some talk of yielding to the States* 
importunities and exempting the cargoes owned by States 
from the restrictions on exports and imports. 

> Off-l lUtfdt RthtUim, in 8., LI, pt. S, pp. I0S6, 105S, 1061 (Jan.-Feb., 1S«5]. 

* Hoora, RAtUim Record, TIH, 59fl. 

* Richmond Examiner, Jnofl H, 1864. 

* OoT.'i mBH>g«, Awjatta Chrmidt ^ Sentinel, Dec. 2, ISM. 

* Off'l Rte'dt Rtbellim, \St 8., XXXIV, pt. 3, pp. T30-a, T34. 

* N. C. reml'n, Maj 99, 1B64 ; Jonra, Dtarg, II, lae, 990 (1834). 

* O/fl Itee'di Kebeliitm, Ist S., XXXIII, p. 1 2S3 ; LI, pt. S, pp. B!B, B37, 841 
(Hch., 1BS4) ; QoT. Vance'R mcMagfl, Raleigh Prcgreu {lIUj 19, 1B64). 

■ RkhMmd Examiner, Dec. 3, S, 1864. 


Still another phase of the friction between the State and 
central government is presented by the Confederate taxation 
of State bonds.^ A decision of the Confederate court in 
South Carolina stood in the way of the Congress taxing 
money invested in State bonds. At least the war tax of 
August 19, 1861, was for that reason not collected from in- 
vestments in South Carolina bonds. The Secretary of the 
Treasury evidently was chagrined at the outcome,^ but could 
oflfer no remedy, as the decision could only be reversed by 
the Confederate Supreme Court, which had not yet been 

An early act of the Confederacy, that of March 16, 1861, ^^^^^ 
provided for the establishment of the Confederate courts. 
A Supreme Court was to hold annual sessions at the seat of 
government ; and its appellate and original jurisdiction were 
defined in similar terms to those applying to the Federal 
Supreme Court. District Courts were established in each 
State by this act, and were at once constituted.^ . Of these 
the one in South Carolina, over which Judge A. G. Magrath ^ 
— formerly of the TThited States Circuit Court — presided, 
became by far the most important. 

There was evidently some hesitation at organizing a Su- 
preme Court at once; and on July 31, 1861, the previous 
act of March was amended to prevent the Supreme Court's 
meeting till authorized to do so by the Congress. So matters 
rested for a year and a half. But early in 1863 a bill was 
introduced by Senator Hill of Georgia to formally organize 
the court. It was fully discussed, and passed the Senate in 
amended form on March 18, repealing the appellate jurisdic- 
tion of the court. The House, however, buried the measure. 
The opposition to constituting a Supreme Court centred 
about the centralizing tendencies it embodied, which, it was 
said, would inevitably bring on a conflict between the Con- 

^ Richmond Examiner, Dec. 16, 1864 (Va. Senate, Dec 15). 
' Capers, Memminger, 44S-9 (Report, Jan. 10, 1863; Charleston Courier, Jan. 
23, Apl. 21, 1862. 

> Ibid., Mch. 18, 20, Apl. 15, 30, 1861 ; Acts May 21, 1861, Jan. 29, 1862. 


teAtraXu and the State gorenunenta. The notioD of con- 
ittitating a Supreme Court with appellate jorisdictioD over 
the bigheift coorti of the States was distasteful to the adro- 
catex of States ri^ts, tbongh Senator Yancey held that the 
Constitation did not grant the Supreme Court such power* 
except in cases where the States levied import dnties.* 

In the next session of the Congress a farther attempt was 
made to yam a similar Inll, bat again the opposition to a 
centralized government prevailed. The argument that the 
I States would not submit to sacb a court because sabTeraiTe 
^*'y I of State sovereignty was sacceasfully used.' At the same 
time the advocates of States rights in North Carolina were 
defending their position by claiming that, in the absence of 
a Confederate Supreme Court, the State govemmentB could 
decide for themselves the extent of the central government's 

Evidently the Congress deliberately avoided establishing 
a Supreme Court, as they were directed to do by the Con- 
stitution, in view of the particularistic feeling which such an 
^ enlargement of tiie central authority would have necessarily 

The citizens of North Carolina, as has been shown, were 
foremoHt in opposing such centralization of power in Rich- 
mond. Among them were many whose attachment to the 
Southern cause was hardly more than nominal, and who, after 
the second year of the war, grew restive under its burdens 
and demanded a cessation of hostilities. The frequent public 
meetings held in the western counties of the State after the 
middle of 1868 passed many resolutions demanding an honor- 

> JoDM, Diarji, I, 343 (Ju. SI, IBS3) ; CharlttKm Courier, Jan. 3B. Feb. S, 6, 
IT, Mch. IS, 1863; RtJtigh /Vt^ren. Hcti. 18, IBM; A'cAMond fxnniner, Feb. 6, 
leea; CkarUttoa Hereury, Heb. 15, 1863; Pub'i So. BM. Au'n.TV, 63 (Mch., 

* Richmond Examiner, Dec. IT, 1863, 

* J. 0. RamMy to roter* Oct. 16, 1863 (JV. C. Standard, Oct 88, 1863) ; the 
elaim wM repeated In s reeolncion tntrodnced a ^eaf later Id the State Senate 
{RaUifih Fngrru, Dee. 14, 1B64). 

* Cf. S«. Uiil. Ai^n Pttb'i, iV, 83-93 (Mch., 1900). 


able peace and favoring *'the constitution as it is and the ' 
Union as it was." ^ In the spring of 1864 the same feeling 
was evidenced in Mississippi,^ and in Jannaiy, 1865, Georgia, 
on the authority of Governor Brown,® was ready to accept i 
any terms of peace she could obtain. The destructive oper-; 
ations of General Sherman made the burdens of the war 
doubly intolerable. 

This desire for peace expressed itself in the concrete pro- 
posal to elect or appoint peace commissioners to treat with 
the Northern authorities. Such proposals were made as early 
as December, 1862, and were particularly favored by the 
States rights parties in Georgia and North Carolina.* They 
were finally acted upon by the Confederate authorities in u 
February, 1865, when three peace commissioners were de- 
spatched to meet President Lincoln and Secretary Seward at 
Fortress Monroe. The conference, it will be remembered, I ^ 
led to nothing.* ' 

One of these peace commissioners, Vice-President Stephens, 
had at the outset opposed secession, and duiing the war, as 
we have seen, voiced the opposition to the military absolu- / \^^ 
tism. In the fall of 1864 he leaned to making an effort at 
negotiating peace, and was willing to restore the old rSgime 
on the basis of States rights and a gpiarantee of the right of 
property (in slaves). The position he took made a sensa- 
tion, and brought on him and Governor Brown of Georgia, 
who of course sided with him, the attacks of the administra- 
tion newspapers.* 

^ N. C, Standard, July, 1863-Aug.. 1864 {pasiim). 

2 Of*l Bee da Rebellion, Irt S., XXXn, pt 3, pp. 625-7 (Judge R S. Hudson 
to Pres. Darifl, Mch. 14, 1864). 

* Raleigh Progress, Jan. 5, 1865. 

* Jones, Diary, I, 200 (Dec 1, 1862); Moore, Rebellion Record, VH, 500; 
Greeley, Am. Conflict, II, 664; Charleston Courier, Mch. 23, 1864 (Ga. peace 
resolutions, Mch. 19); N. C. Standard, Not. 26, 1863, Feb. 4, 1864; Raleigh 
Progress, Oct. 21, 1864 (corresp.). 

* Greeley, Am. Conflict, 11, 675; Richmond Examiner, Dec. 17, 19, 1864; 
Raleigh Progress, Jan. 31, Feb. 2, 1865. 

« Cleveland, Stephens, 694, 696, 832 ; Raleigh Progress, Oct. 4, 5, 10, 22, 1864 ; 
Augusta Chron, ^ Sentinel, Dec. 2, 1864 (edit). 


The proposal of a peace commission was exploited liy the 
States rights advocates, who demanded that action should be 
taken by the States in their sovereign capacity and inde- 
pendently of the Confederate government. In Geoigia this 
demand for a convention of States was frequently made in 
the newspapers, and finally led to Governor Brown's advo- 
cating it, like the Governor of Mississippi, in his message of 
February, 1865.' In North Carolina the frequent public 
meetings after July, 1863, demanded a State convention for 
the purpose of bringing about peace. The right to negotiate 
peace was claimed for the State in its sovereign capacity. 
The relation of tlie States to the Confederate government, it 
was said, was very different from its old relation to the Fed- 
eral Union. ' One correspondent, ^ even, went so far as to sug- 
gest that the State should send ambassadors to Washington. 

An Alabama and a South Carolina newspaper similarly 
advocated a convention of the States in the fall of 1864; and 
a few months later the Richrrumd Examiner followed suit.* 
This newspaper had strongly opposed Representative Foote's 
resolution in the Confederate Congress, which he offered in 
January, 1863, and again in November, 1864, in favor of 
referring to the sovereign States any peace proposition sub- 
mitted by the Federal government. This was defeated in 
the Congress by a large majority, as was a similar resolution 
offered by J. T. Leach of North Carolina.' A similar reso- 
lution was defeated " in the North Carolina legislature. 

In framing the Confederate Constitutions the familiar 

1 AtiaiOa Eeffiittr, qaoted in N. C. Standard, Nov. 30, 1653 ; Augiula Chnm. 
i- Sentinel, Oci. 16, Not. 9, 1864; Raltigh /■rt^rtu, Jan. 11, 1S69, qnoting jlu^uMi 
Conttilationcdia and Aagtala Chnm. ^ Sentinel ; Gov. Brown's message in Bullish 
Pn^rus, Hch. 4, 1865; Jaae; Diary, 11,436 (Feb. 38, IBSS). 

■ N. C. Standard. 3a\y, IS63-Ang., 1864 (pouim), eip. Jan. 19,1864; Raltigh 
Progrett, Bee 13, ISM, Jan. 21, 1865. 

• N. C. Standard, July 31, 1863. 

' RaUigk Progrett, Oct. 1, 1864 (edit.) ; Angutta Chron. 4r Sentinel, Jan. 37, 
166S; Jones, Diary, II, 381 (Jan. 9, 1865) ; RicAmand Examiner, Mch. 2, 1865. 

■ Jones, Diari/, I, 338 (Jan. 14, 1863), 11, 346 (Dec. 3, 1B64) ; Richmond Ex- 
aminer, Dec 3, 1864 ; Raleigh Prograi, Nov. IT, 33, 39, 1864. 

■ Ibid., Nov. 29, Dec. 15, 1864, Jan. 4, ieG5. 




Southern States rights notions had prevailed. The pre- 

\ amble to both instruments emphasized that the several States 

! were acting in their "sovereign and independent" character 

i in forming the Confederacy; and the permanent Constitution 

even gave the State legislatures the power to impeach any 

Confederate oflScer resident or acting within that State. ^ 

The necessities of the war accentuated the powers of the 
central government in a way that brought little comfort to 
those who hoped to escape the yoke of Federal authority in 
seceding from the Union. The States rights men soon found 
themselves "fighting to free themselves from the tyranny of 
Lincoln to become subjects of a monarch of their own un- 
intentional creation."^ 

The logical corollary of the right of secession from the 
Union in 1861 was the right of individual States to similarly 
withdraw from the Confederacy during the war. The threat 
to secede was frequently made, for instance, in North Caro- 
lina. Even Governor Vance, in December, 1863, threatened 
to call out the State militia for defence against the detached 
bodies of Confederate troops which infested the State, ^ and 
earlier in the year* it had been feared that the legislature 
contemplated taking the State out of the Confederacy. Pub- 
lic meetings held in the State passed resolutions declaring 
North Carolina to be as independent as when she entered the 
Confederate States,* and, in general, those who opposed the 
military despotism and favored peace made good use of 
the secession arguments of 1860-1 to serve their purpose. 
Representative Leach wrote to his constituents:* "What was 
loyalty in one man three years ago, in advocating the dis- 
solution of the old Union, is treason in another now; and if 
there be any reconstructionists they certainly have the prece- 
dent of the secessionists by which to prove their loyalty." 

1 Confed, Perm. ConsCn^ T, 2, 5. 

2 Raleigh Progress, Feb. IS, 1863 (edit.). 

* Jones, Diary, II, 119 (Dec 25, 1863). 

* Raleigh Progress, June 15, 1863 (edit.) ; Jones, Diary, I, 340 (June 4, 1863). 
A N. C. Standard, Sept. 4, 1863 (meeting in Grenyille Coontj, Aog. 29, 1863). 
< Ibid., Sept. 8, 1863; cf. Oct. 20, 1863 (corresp.). 



Hie Hala/jh Progrtn, of wliich W. W. Holden was editor, 
HxiimmfsA tbe name viemc "If North Cuolina bad the ri^t 
to Xmntk off from tbe Federal GoTemment, by an act of her 
anivvtitUm, the tiaa the relative right to bseak off from Mr. 
Davi»*» gf^verament." * 

We tiave Meen bow North Carolina, especially the weetetn 
M;<;tion, waa lukewarm in her attachment to tbe Sonthem 
<MU»e, and rewented bearing the bordens of the vrar pot apon 
her. A very large party in tbe State, the so-called '*Cou- 
Mcrvativex," objected to the heavy sacrifices they were called 
U|Mn t» iriake presamably for the benefit of the slave-holders, 
(or whom it was felt tbe war was being waged, and most of 
wbom were rexidents of other States. The cotton States 
wem blamed fur breaking up the old Union without good 
cttUMc, and for showing themselves incompetent to manage 
tbe afTiiini of tlie new government.* W. W. Holden, the 
leader of tlie North Carolina peace party, bad ^itated before 
IHW tor Uio taxation of Hlaves by an a<i valorem tax,* and in 
tbe Hiinimur of 1HQ6 organized a party in the State which 
cmiMid ttio Uichmond authorities some uneasiness, though 
(Jnvcnior Vance minimized its importance at first.* The 
JinUv/h J^or/reM^ maintained that the State waa loyal. By 
Heptcmlxir, 180S, however, the public meetings in tbe west- 
oni countioB to protest against the military despotism and 
the burdeilH of taxation, and to favor peace, bad become so 
numoroiiM andffevidenccd the strength of tbe popular move- 
' meiit of rosiHtance to the Confederate authority that Gover- 
nor Vanoo iHSuod a proclamation, on September 7, calling 
ujion Uio people not to " seek to cure the evils of one revolu- 
tion by plunging tho country into another."' Public feel- 

> tiiiM^ Pngnu, Jan. ]», IBBB (ftdlt.) ; d. ibid., Jnlj 12, 1864 (edit.)- 

* N- C. Standard, Oct 16, 1863 (F. T. Htnij to TOten, Sept 96, 1863). 

* MwtM, //irt'y JV. t'.. 187. 

* I)aW*, Itavil, II, «BS-4; N. C. Staadard, Julj !4, 1863; Off'l JUedi lit- 
Mliim, M H., 1,1, pt. 1, pp. T39-40 (DbvU-Vmim comipondence) ; Petenburg 
Kx}mu, Anff. 97, IB83. 

* Hai*igii I'ngnu. Sept. 7-9, 36, 1863. 

* Ibid.. Hopt. 8, IH63 ; PtUr^uTg Exprtu, Sept. 10, 1863 ; Off'i Rtc'di AM- 
liim, 4Ui S., II, 7M. 


ing ran high on both sides, and was further intensified by 
Holden's newspaper office being sacked by some Confederate 
soldiers.^ Governor Vance demanded the punishment of the 
military officers present at the assault. He was evidently 
much influenced by the occurrence or by the popular feeling 
it aroused, and came out strongly in favor of negotiating a 
peace with the North as the only means of removing the 
discontent in North Carolina. His letter of December 30, 
1863, to President Davis advising action on these lines was 
answered with a flat refusal, in view of the futility of expect- 
ing peace without complete subjugation of the South and 
emancipation of the slaves, and also with an urgent request 
to put down any movement against the Confederate author- 
ity in his State.2 

Before this correspondence was published — in June, 1864 
— Governor Vance changed his attitude toward peace nego- 
tiations. His re-election was approaching, and presumably 
he preferred standing as a supporter of the Confederate 
administration to standing as a representative of the peace 
party. The latter perfected its organization in the numerous 
meetings held after the middle of 1863 to protest against 
the burdens and excesses of the war; and was strengthened 
by the position taken by Vice-President Stephens and by 
Governor Brown of Georgia. The party stood for the imme- 
diate attainment of peace on terms of independence, and, if 
these were impossible, for peace on the best terms to be had; 
it was opposed to the " last man and last dollar " principle. 
One of its leading organs said: "If the people of North 
Carolina are for perpetual conscriptions, impressments, and 
seizures to keep up a perpetual, devastating, and exhausting 
war, let them vote for Governor Vance, for he is * for fight- 
ing it out now; ' but if they believe, from the bitter experi- 
ence of the last three years, that the sword can never end it, 

1 N, C Standard, Oct. 2, 1863; Jones, Diary ^ 11, 45 (Gov. Vance to Fres. 
Davis. Sept. 16, 1863). 

> Off I Rec'ds Rebellion, Igt S., LT, pt. 2, pp. 807-8 ; Richmond Examiner, Jnne 
1, 1864 ; N, C. Standard, June 10, 1864 ; Dayis, Davis, U, 454-5. 



and are in favor of steps being taken, hj the States to u^e 
negotiations by the general goTemment for an hcmozBble and 
speedy peace, they most vote for Mr. Holden." * 

The position of neither psr^ was perfectly clear. Holden, 
tboogb favoring peace, distinctly stated that he did not favor 
the State's seceding from the Confederacy, adding, however, 
that if he did, he woold be no more treasonable than the 
majority were in 1860-1.* Governor Vance, on the other 
band, while anxioos and willing to champion the caose of 
the State against the encroachments of the military power, 
strr>ngly opposed calling a State convention for the purpose 
of furthering peace negotiations, and urged Govenior Brown 
to prevent such a convention in Georgia.' Finally, in Feb- 
ruary, 1865, he issued a proclamation * rehearsing the story 
of the peace party in the State, and advising resistance to the 

In the mean time Governor Vance had been re-elected in 
August, 1864, receiving 58,070 votes to Holden's 14,491.' 
Tbis result was accepted as a triumph of the war part}-, and 
was intensified three months later by the defeat of General 
McClellan in the Presidential election in the North. The 
Democratic convention at Chicago had aroused general inter- 
est tliroughout the South; and the party's platform, which 
coquetted with those who favored an early termination of 
the war, was accepted as a hopeful sign. President Davis 
was even advised to respond to the overtures of the Demo- 
crats, if they won in the November elections.* The re- 
election of President Lincoln disaipated the last remnants of 
hoiK) of attaining a peace by mutual concession. The rapid 
decline in the value of Confederate notes and bonds indi- 

1 lialiiffh Progreu, June 7, lBe4 (edit.), 

• JV. C. Standard, Jane 4, 1BS4 (edit.). 

• Ralash Prograt, Apl. ao, May 19, July 9, Dec. S, 1864 ; Jones, Diary, U, 
190 (ftept. 38, 1864); 0^' I Be^di EdttUion, lit S.,XLYI,yt.a,-pp. 1093-6 (Jan. 
IB, IMS). 

• Off'l Bte'd* lUUUion, \H 8.. XL VII. pt. 3, pp. 1187-93 (Feb. 14, 1869). 

• tialrigh Pra^eu, Oct. 8, 18M ; Moore, ffisl';/ N. C, II, 364. 

• JnnPB, iJiarg, II, 375 (Sept. 1, 1864) ; BaJtiyh Progrtu, Oct. T, 1864 (W. W. 
Boyce to Datle, Sept. 39, 18M) ; Dmoeratk Platform, Aug. 39, 1864. 


cated the popular estimate of the chance of savins: any yesti&:e 
of the govSment from the impending wreck. 

As J. F. Rhodes has pointed out,^ the Union sentiment 
sxirviving in the South during the war was insignificant. 
The outbreak of hostilities united the South in support of 
secession. Here and there we find traces of attachment to 
the Federal cause, but almost always in sections that were 
overrun by Northern troops.* Enough has been said about 
the growing opposition to the Confederate military despot- 
ism to indicate that, aside from the insignificant number of 
outright supporters of the Union cause, there was a consider- 
able minority out of sympathy with the methods and objects 
of the central government, a minority which would have 
welcomed the end of the Confederacy before 1866. It is to 
be noted that Holden, the leader of the North Carolina peace 
party, was appointed Governor of the State by President 
Johnson.' It was not unreasonable for Francis P. Blair, one 
of the Northern peace commissioners, to count on the polit- 
ical disintegration of the South if the war continued beyond 
the spring of 1865.^ In fact, a student of Confederate his- 
tory wonders at the persistency of the political no less than 
of the military organization of the Confederacy which sus- 
tained itself for four years against overwhelming force from 
without as well as the disintegrating force from within. 

If McClellan had been elected President, or if one of the 
foreign powers had intervened in the conflict, the Confed- 
eracy might have escaped the immediate fate that befell it. 
But it is very questionable whether it could have avoided 
the inevitable results of the disintegrating forces which the 
organization of its government involved and which the course 

1 Rhodes. Hisey U, S., Ill, 405, 407; cf. Pollard, Dams, 117-18; also Carl 
Schnrz's evidence, Dec., 1865 (39th Cong., let S., Sen, Exec, Doc, no. 2) ; Pejton, 
Am. CrisUf I, 21-4, 69. 

« Of I Rec'da Rebellion, Ist 8, LI, pt. 2, p. 343 ; LII, p. 283 ; VH, p. 699; 
Dobose, Yancey, 562 ; Greeley, Am, Conflict, II, 53 ; Jones, Diary, U, 86. 

> Moore, Hi^y N. C, II, 304 ; Andrews, Soulk tince the War, chaps. XV* 

* 0/f 7 Rec'ds Rebellion, Ist 8., XLVI, pt. 2, pp. 1037-9 ; LI, p. 1094 ; Southern 
Hitei Soc, Papers, III, 168 (ApL, 1877) ; Campbell, Reminiicmces, 21, 30. 


of the war accentuated. Texas' organic connection vith 
the Confederacy was merely nominal. Other States, as we 
have shown, resented the interference of a stroi^ central 
government With the unifying influence of the war no 
longer active, the cohesiTeness of the Confederacy would 
necessarily have been lessened. Whether this would have 
led to a separation into its coostitaent parts, the cotton sec- 
tion and the border tier of States, or into the commetcial, 
maaufactnring, and agricultural sections, is a guess hardly 
worth more than suggesting. Of one thing we may be sure : 
i the Confederacy could not have survived in the form in 
j which it was instituted. This contained elements of weak- 
' nesa, which the Southemets were forced 1^ the exigencies 
of ihe war to correct, thereby contradicting their cherished 
principles of govemment. 



Spbculation Of Gold, and tbs MoYBMXirT to suffrsss it — GoTSSimiiT 
Spbculation in Gold and Cotton — Thb Fbdbbal Blookadb — 
blogkadb-runndfo — imports and exports — import and export 
Duties — Tariffs and Prohibition of Imports — Embaroobs — 


Traffio through thb Military Linbs. 

At the beginning of the war there was a strong disposi- 
tion to economize. Consumption, especially of luxuries, was 
hemmed; and on every hand the exigencies of the war led to 
retrenchment of personal expenditure.^ The rising inflation 
of the currency began to stimulate business in the second 
year of the war, and from then on produced a fictitious com- 
mercial activity quite unusual in the South. It was a repeti- 
tion of the familiar experience with an inflated and fluctuating 
price level. With the value of the currency constantly 
falling, and the price of commodities rising, the holder of 
notes felt the strongest incentive to turn them into commod- 
ities. The longer he held the notes, the less they would 
buy. The rising market invariably led to the wildest specu- 
lation, into which every one was necessarily and unconsciously 
drawn. At the time some clearly saw that the redundancy 
of the notes was fostering this speculation, that ^Hhe cur- 
rency made the speculators, " and not that " tlie speculators 
ruined the currency."^ Others, however, blamed the specu- 
lators for being the worst enemies of the Southern cause. It 

1 Cf. Richmond Examiner, Feb. 19, 1863 (edit.). 

3 Pollard, War in America, 245 ; Davis, Rise f- Fall, I, 491 ; Eggleston, Recol- 
lections, 82 ; DeLeon, Rebel Capitals, 235-6; Richmond Examiner, Apl. 15, 1863. 



WHH nluiinod that thej veie depi«ciating the conency and 
liillittiiiK prices from their insane desire for gain.' 

ICxiidtly the same views weie taken in the French Assem- 
My ill 1792 and 1793; the inflation of prices and general 
HtoiiiMge of business was ascribed to the aTaricious specn- 
luttiro and monopolists.' It has been a common practice to 
Itlamo the speculator for the evils resulting from a deranged 
currency, when, in point of tact, the latter pats a premium 
ujxm aleatory, mere gambling ventures, and supersedes legiti- 
mate business with unbridled speculation. The experience 
of Austria and Italy during their periods of suspension is 
instructive in pointing out the inevitableness of an irredeem- 
able and redundant note issue's leading to this result.' 

Speculative business in the South encouraged by the re- 
dundant currency was only in part based on local differences 
in price. Such differences existed of coarse, for instance in 
the gold premium, and offered alluring opportunities for suc- 
cessful speculation. But these local differences within the 
Confederacy — the differences between the Northern and 
Southern price level will be considered below — were insig- 
nificant compared with the violent price fluctuations during 
successive weeks and months, which supplied the chief incen- 
tive to the wild speculation that characterized the South 
during the war. With prices constantly riaing, it seemed 
impossible to lose by any venture, and all seemed to grow 
rich by investing their notes in commodities, and selling 
&ese at an advance. The mania affected young and old 
alike, and extended to every kind of commodity. As one 
observer put it : " Every man in the community is swindling 
everybody else."* 

r,tSAj9, 1863 (sdit.) ; June T, 1863 («dit.) ; Dee.4, IS63; 
Not. 7, 1864 (edit.) ; Charlaton Courier, Aq;. 98. 1863 (qaoting Richmond Srnti- 
nti) ; Angtata Dailg ConititiOitmaliit, Jane 16, 1863 ; Richmmd during tAt War, 

* Le Mmitatr, XI, 198, aSB ; Xm, 341 ; XV, 430-1 ; XVn, 378. 

■ A. Wagner in Datitditt Slaatn>»rttrbaeh (186S), VII, 671 ; Finanz-Ardiiv, 
XI, 89-90 (1894); Jahrb./. NaL Oek. ^ Seal., XXXVIII, S71 (188aJ. 

• Riehmond Examiner.lSch. 31,1863 (edit.) ; ApL, SI, 1863; JoDM, 
Diars. I, ass (Apl. B, 1863) ; Fremantle, Southern Statei, 179. 


As had happened during the French Revolution, many 
invested in real estate and other objects of supposed perma- 
nent value, buying from those who were anxious to obtain 
notes with which to speculate in other directions.^ In keep- 
ing with the experience of the Frenchmen, the Southerners 
found it more difficult to keep than to acquire notes. Many 
bought cotton, which became a favorite means of insurance 
against a further depreciation of the notes, and was adopted 
especially by those who counted confidently on the downfall 
of the Confederacy. Some of these persons appeared in the 
United States Court of Claims after the war, demanding 
indemnity for their cotton destroyed by the Federal troops 
under General Sherman, and claiming to have been loyal to 
the Union or in some cases to have invested their indebted- 
ness to Northerners in cotton. ^ We shall hear more about 
speculation in cotton in connection with attempts to run the 
blockade and the trade between the belligerents. 

The prevalence of speculation in gold aroused much feel- 
ing in the South, as it did in the North. Dealers in specie 
were denounced as traitors who were injuring the credit of 
the government by depreciating its notes.' One newspaper 
editor thus appeals to the speculators: ^^In the name of 
patriotism, justice, and reason, we appeal to the people to 
look on and value a dollar in Confederate money as a dollar^ 
and fix their prices accordingly." Many proposals were made 
to forbid the speculation in gold ; * and, curiously, the French 
experience of 1793 was referred to* as proving that legisla- 
tion could prevent such traffic, when, in point of fact, both 
the French experience and the similar experience in the 

1 White, Fiat Money in France, 63 ; Richmond Diipatch, Apl. 5, 1862 ; Rich' 
mond Examiner, Nov. 5, 1863; Savannah Republican^ Mch. 25, 1863. 

a 3 Nott & Huntington, 52-5 ; 4 : I, 319, 417 ; 5 : 311, 346, 549 ; 6 : 294, 323 ; 
7: 130. 

« New Orleans Picayune, Mch. 9, 1862, quoted in Barker, Rebellion, 111; 
Charleston Courier, Mch. 27, 1862; Raleigh Progress, Oct. 9, 1863 (edit). 

* Charleston Courier, Dec. 3, 1863, quoting Montgomery Advertiser; Richmond 
Examiner, Dec. 17, 25, 1863 ; Jan. 2, 1864 (Gov. Smith's inaugural address). 

» Richmond Examiner, June 30, 1863; cf. U. S. acts June 17, July 2, 1864; 
White, Fiat Money in France, 57-8, 60, 64. 


North in 1864 irrefutably proved the uselessness of such legis- 
lation. Indeed, the Federal prohibitioD was repealed wiliiin 
fifteen days from its enactment. 

A few Yoices were raised in the South against the policy 
of forbidding trade in specie on the ground that such traffic 
neither could nor should be stopped.^ Those who favored 
the prohibition were more outspoken, and pushed numerous 
bills to that effect in the Congress and especially in the 
Virginia legislature, but the hills were never passed. The 
penalties proposed were extreme.' 

No effort was made to prevent speculation in specie except 
by the occasional order of a provost-marahal in sections under 
martial law.' Such speculation continued till the end of the 
war, when the government itself was drawn into speculation 
in gold, accumulating a supply of specie, which was thrown 
upon the market in exchange for treasury notes, thereby 
spasmodically lowering the gold premium.* Governor Smith 
had proposed a similar policy to the Virginia legislature a 
few months before." It was inevitable that the government 
should be drawn into the craze, and still more inevitable that 
officials who held government funds should yield to like 
temptations. With prices constantly rising it was natural 
that such officials invested government funds in merchandise 
on their private account, as the postmasters and lotteiy 
agents were led to do in Italy a few years later, and as was 
the practice of similar ofGcials in China four hundred years 
ago.^ Such dealings must have been general in the South 
as early as 1862, when the regulations of the subsistence 
department and General Lee's general orders were aimed at 

> B^VOT, RebeUioH, 113-13; CiarUtlon CounVr, Sept. 15, 1663 (W. W. Bo^m 
to J. 1). B. DeBow). 

' RUkm/md Examinrr, Dec. 15, !5, 18S3 ; Houte Journal, Jan. 23, 1865 (Cm- 
/td. Archioa) ; Jones, Diary, II, 361, 373, 37B; Richmond Exaaintr, Sep%. 1,5, 
la, U, Oct. 13, 1663; Dec. SO, 1S64. 

■ CharitUm Courier, Apl. 7, 1863 (qaoting A'ew Orltam Priix Current). 

* Jones, Diary, II, 373, 378, 398 (Jan., 1866) ; Richmond Examiner, Jan. 25, 
1B65; Ridmond Enquirer, Toil. U.ISK; So. ffiK. Soc. Papen, IX, 545 (1881). 

' Richmond Examiner, Dec. 9, 1864. 

" Finanz-Arehiv, XI, sy ^SM) ; Journal Atiatique, a» 8.,!%' , i6* (Not., 1837). 


army ofiBcers who bought supplies for the purpose of selling 
them again at a profit.^ In the following year the practice 
became so general that the Congress passed a law to punish 
officers who speculated in food, clothing, or in war materials.^ 
The law could not have been effective, for such trading by 
government officials continued, and aroused much hostility.' 
It was claimed that members of Congress were engaged in 
dealing in government supplies ; and even the Secretaries of 
the Treasury, Memminger and Trenholm, it was said, were 
personally interested in blockade running.* The latter accu- 
sation was no doubt based on a misunderstanding of the 
attempts of those officials to trade on government and not on 
their private account. 

During the first months of the war it was frequently sug- 
gested that the government should obtain control of the 
entire supply of cotton in the Confederacy not only with a 
view to coercing foreign powers into recognizing the Southern 
government, but for the purpose of deriving a large revenue 
from the anticipated rise in the price of that staple.^ Though 
some of the leading newspapers urged such a stupendous com- 
mercial enterprise upon the government, it was not favored 
by the administration. When a few years later cotton had 
reached enormous prices in England, Secretary Memminger 
was loudly blamed for not having seized and exported all 
obtainable cotton at the outbreak of hostilities. It was said 
that he could have bought cotton with notes or bonds at 
seven cents a pound, and could have shipped it abroad before 
the blockade became effective, and established a credit with 

1 Regufns Subsist. Dep% 1862, §§ 896, 901 ; GenH Orders Dtft No, Va., Nov. 
14, 1862. 

3 Jones, Diarif, I, 288 ( Apl. 8, 1863) ; Confed. act May 1, 1863. 

^ Jones, Diary, II, 3, 132 ; Richmond Examiner, Sept. 15. 1863 (bill in Va. H'se 
of Del's) ; OJ^I Rec*ds Rebellion, Ist S., XLIX, pt. 1, p. 967 (letter to Pros. Dayis, 
Feb. 9, 1865). 

* Pollard, />arts, 808; Richmond Examiner, Feb. 9, 1864 (quoting Columbian 
Carolinian); Jones, Diary, 1, 299; Charleston Courier, Dec 29, 1864. 

^ Russell, Pictures of Southern Life, 13; Richmond Enquirer, Oct. 4, 11, 12, 15, 
1861 ; Richmond Examiner, Oct. 23, 1861 ; New Orleans Delta, Oct 9, 1861 ; 
Charleston Mercury, Oct. 10, 1861. 


the foreign bankeis for an indefinitely large amoont, reacb- 
inj; orer one thousand millions of dollars in the estimatifHi of 
some.' I These critics did not show where the Secretary could 
t have found ships to carry the cotton to Europe before the 
I Federal fleet closed the Southern ports, or vhere he could 
) hare obtained at such short notice the means with which to 
' buy the cotton from planters. 

The Confederate government never could have entered into 

such a gigantic scheme. But it was evidently drawn into 

>■ speculations of lesser dimensions, which apparently were first 

frowned upon by the authorities, bat were later tolerated. 

These were carried on especially in Texas, where we find 

I it not an uncommon practice of government agents to invest 

I treasury notes in cotton, transport it into Mexico, sell it for 

gold, and reinvest in notes.' 

The State governments, and, as we shall see, especially 
North Carolina, were interested in cotton speculation. Gov- 
ernor Vance had bought 15,000 to 20,000 bales by the end 
of the year 1862, which he hoped to hypothecate in Europe. 
During die followii^ years he carried on extensive opera- 
tions for his State government, of which we shall hear more 

To return to private speculation prevalent during the war: 
the popular feeling gainst it was often expressed in an 
assault upon the Jews, who were said to be the most offen- 
sive participants and to be treacheronsly undermining the 
credit of the government.' The conviction was general that 
the speculators were driving up prices and thereby lowering 
the value of the government notes. "Brokerage is a legiti- 
mate business, " wrete one editor, ** bat in a time of war it is 
not legitimat« for brokers or any one else to depreciate the 

> JODM, ZKary, I, 389 (Jnlj, 1S63); Johnttoa, MSitari/ Optraliom, ti2; Se 
Leon, Ibbtl CapiiaU, SM-& ; Pollard, 3d Ytm of the War, 333 i Pollud, Sd Tear 
oflht War, 178; Poll»rd, Wot in Amenta, 338. 

* Jonet, Diary, II, 53 (Sept. 35, 1863) ; Off't Ree'dt Bthtllion, Irt S., XXVI, 
pt. 3, pp. 535-8 (Dec. 36, 1863); XXXIII, 1341 (Mch. 36, IBM); XLV, pt. S, 
p. 639 (Doc. 1, 18M) ; XLVI, pL 3, pp, 1343-3 (Feb. 38, 1865). 

* JoiKit, Dt'ary, I, 78, ISO, D, 361; EttAmmd during tkt War, an. 


currency of the government " ^ A vocabulary of opprobrious 
epithets was perfected to apply to these gamblers, and the 
lynching of a few of them was suggested as a remedy, as 
had been done under similar circumstances by Marat in the 
French Assembly.* 

Legislation was often invoked, and in some cases effected, 
against them. General Imboden's orders of November 28, 
1863,^ were aimed at a class who were defined as comprising 
"any one who buys to sell again." In the Confederate Con- 
gress bills were introduced with a view to restricting or pre- 
venting speculation, but no legislation resulted, and one of 
the bills was adversely reported upon by the Judiciary Com- 
mittee of the Senate.^ In the State legislatures more deter- 
mined efforts were made to pass such laws. In the Virginia 
legislature the matter was fully discussed in September and 
October, 1863. Though the pressure to pass a law forbid- 
ding speculation must have been great, and though the 
number of those who publicly opposed the policy was small, 
nothing was done.^ In his inaugural address in January, 
1864, Governor Smith favored legislation to punish fore- 
stalling, regrating, and engrossing, and to suppress auctions.^ 
But no legislation resulted. Similarly the agitation to sup- 
plement the act of February 6, 1863, which penalized extor- 
tion, with a law to prevent monopolizing and speculating 
resulted only in a bill being offered to the State legislature.^ 
In North Carolina a similar agitation, instigated by Governor 
Vance and some newspapers, led to nothing.® The North 
Carolina ordinance of December 11, 1861, aimed at suppress- 
ing speculation and in force during the war, was apparently 
ineffective, as might have been expected. 

1 Atlanta IrUeUigencer, quoted in Richmond Diipatch, Mch. 24, 1863. 

a Vtcksburg Eve, Citizen, Not. 13, 1861 ; White, Fiat Money in France, 52. 

* Richmond Examiner, De^ 7, 1863. 
« Ibid., Jan. U, 1862; Jan. 6, 1864. 

* Ibid., Sept. 18, 24, Oct. 8. 8, 9, 1863. 
« Ibid., Jan. 2, Dec 17, 1864. 

7 Charleston Courier, Apl. 6, 1868. 

* Raleigh Progrese, Not. 17, 19, 24, 1862. 


In other States similar laws were enacted, for inetance one 
l>y Alabama during the first year of the war, to forbid any 
one's buying a commodity with the intent of producing a 
sctiroity. Georgia, Florida, Mississippi, and Texas followed 

Cotton and tobacco were the leading commodities that fell 
in value in the South during the war as expressed in gold, 
and as compared with the 1860 price level; and these were 
the commodities that rose highest in price in the Xortb and 
abroad. This divergence of price was due to the Federal 
blockade of the Southern ports, which created a great scar- 
city of cotton and tobacco, especially of the former, in 
Northern and foreign markets, and led to a corresponding 
accumulation of those staples in the South. 

President Lincoln declared the Southern coast blockaded 
south of North Carolina on April 19, 1861, and eight days 
later extended the blockade to the North Carolina and Vir- 
ginia coasts. In a short time Charleston and the other 
Southern ports were blockaded by Federal men-of-war. 
These interfered most effectively with the trade of the 
South, captured large numbers of merchant vessels contain- 
ing valuable cargoes, and constituted the most powerful tool 
at the command of the Federal government in its effort to 
subdue the South. The relentless and almost uniformly 
successful operations of the navy have been minimized in 
importance by the at times more brilliant achievements of 

, the army; but we lean to ascribing to the n_avy the larger 
share in undermining the power of resistance on the part 

, 6r the South. It was the blockade rather than the ravf^es 

[ of the amy that sapped the industrial strength of the 

1 Confederacy. 

Notwithstanding the watchfulness of the blockading fleet, 
the possibility of large profits from exporting cotton and 
importing European goods stimulated ingenuity and daring 
in blockade-running, and it was carried on with great energy, 

■ Ala. act Not. U, 1861 ; Ga. act Dec U, 1861 : Fla. acta Dec. IT, 1861, Dec 
10, 1S6S; Mioa. act Dec. 30, 1861 ; Richnaod Examina; ApL T, 1863. 


especially from 1863 till the capture of Wilmington and the 
evacuation of Charleston in February, 1865.^ Fast vessels 
of light draught were secured abroad, the services of the 
most skilful pilots and crews were obtained at enormous 
cost, and the deep-draught Federal blockaders were fre- 
quently evaded, especially off the harbors of Wilmingfton and 
Charleston. From these ports the blockade -runners returned 
with cargoes of cotton to their starting-points at Nassau, 
Bermuda, Havana, or other neighboring ports. All con- 
venient ports were anxious to figure in tiiis trade. Nassau 
was the favorite, and transshipments were made there from 
and to the large British vessels that carried the cotton to 
England in exchange for manufactured goods.^ As a result 
of this unusual activity, Nassau particularly enjoyed great 
prosperity during the war, and its inhabitants cannot be 
blamed for having made no secret of their sympathy with the 
Southern cause. 

However, the amount of imports into the Confederate 
States was insignificant compared with the demand for those 
articles the supply of which had necessarily to come from 
abroad. As we have seen, the price of commodities rose to 
the greatest heights ; and, conversely, the goods which rose 
highest in price were the ones to be most extensively smug- 
gled through the blockading fleet. " Blockade goods " came 
to mean luxuries in general, English manufactures, espe- 
cially cottons, linens, silks, woollens, hosiery, shoes, cutlery, 
and needles. 

The effect of the blockade was severely felt before the fall 
of 1861 ; and a strong incentive was offered to discover sub- 
stitutes for the leading articles of consumption. Buttons 
were made of persimmon seeds; tea of berry leaves; coffee 
of a variety of parched seeds; envelopes and writing paper 

1 Rep'ts U S. Seer*y Nav^, 1864, pp. 724, 733; 1865, pp. 457; Wait, Block- 
ode Service, 227 ; Blaine, Twenty Yean in Congress, 552-5 ; von Halle, Die 

* Case U. S,, Geneva Conference, 42d C, 2d S., Sen. Exec. Doc. 31 (1872), 
p. 92 ; Bollock, Secret Service (passim) ; Wait, Blockade Service, 218-24 ; Tajlor, 
Blockade {passim). 


of scraps of wall paper; shoes of wood and caovaa; and so 
on in great variety.^ 

Few reliable figures are available to indicate the &lling off 
of Southern imports and exports during the war. During 
the season 1860-1 New Orleans exported one and a half 
million bales of cotton; during the following season the 
amount fell to 11,000. The total exports of Southern cotton 
during the same time fell from two millions of bales to 13, 000. 
The 17,000 hogsheads of tobacco exported and the 500,000 
sacks of salt imported at New Orleans in 1860-1 shrank to 
nothing in 1861-2, while the large importations of coSee 
almost disappeared.' The exports from Confederate ports 
during the year ending September 30, 1863, were officially 
estimated at a value of over 17 millions of dollars, — 
perhaps 8 millions in specie, — of which 89 % consisted of 
cotton, and 9 % of tobacco, intended chiefly for shipment 
to the British West Indies and to Cuba.' During the 
calendar year 1863, the Liverpool cotton brokers claimed 
that 131,776 bales of cotton had arrived in England from 
Charleston, Wilmington, Mobile, Savannah, and Texas, and 
during the first seven months of 1864 the amount was put 
at almost the same %ure.* During the last six months of 
1864, 11,796 bales of cotton were shipped from Southern 
ports, of which only 11 % were lost.' 

The amount of exports from individual ports, like Charles- 
ton, is more easily and safely determined. So, for instance, 
during the quarter beginning September 1, 1861, less than a 
thousand bales of cotton slipped out of Charleston liarbor, as 
compared with an export of nearly 110,000 bales during the 
same months in 1860; 4400 bushels of rice, as compared 

1 Cf. Smahem Hia. Ait'n PuV,, n, asS (July, 1898) ; Atlantic Mo., LVTII, 
SS9 (ADg., ISSe) ; Hagae. BUxkadid Family ; Malet, Errand in the SouO, 3S. 
' Nev Orleant Price Current, qnot«d in Merciantt' Mag., XL VI, MS (Jnue, 


' Con/ed. Arehior* : Rep'l Regittr, Apl. 30, 18M. 

' Rep't Liverpool Brokers' Abs'd, qaot«d io C*ari«tonM<Tcury. Sept. 1, 1864; 
Can V. S., Centra Conference, tid C, Sd S., Sen. Exec Doc. 81 {IBT2}. p. IM, 
• Richmond Ditpatck, Jao. 3, 186S ; Jones, Diary, II, 371-5 (Jan. 3, 1865). 


with over 23,000; 1500 barrels of naval stores, as compared 
with over 33,000; while the exportation of lumber, rice, 
and flour had ceased entirely. The next quarter beginning 
December 1, 1861, gave similar figures.^ During the six 
months beginning October 1, 1862, tiie Collector of Customs 
at Charleston reported an export of 19,594 bales of cotton, 
and total exports since July 1, 1861, of 32,050 bales.* During 
that time 62 vessels had entered and 130 had cleared the port. 

The total imports during the year ending September 30, 
1863, were officiaUy valued at $5,332,469, two-thirds of which 
represented cargoes imported in foreign vessels.' After 
April, 1861, the imports at New Orleans fell off enormously.* 
Those that succeeded in reaching Southern ports were chiefly 
supplies for the armies, arms, ammunition, and food; they 
also included large amounts of foreign luxuries, the intro- 
duction of which was highly profitable, but was resented by 
many, as we shall see. During the last two months of 1864 
we have it on the authority of the Secretary of the Treasury * I 
that the imports at Charleston and Wilmington — which ( 
comprised almost all — included over 8} millions of pounds ( 
of meat, 1 J millions of pounds of lead, nearly two millions ^ 
of saltpetre, half a million pairs of shoes, 316,000 pairs of \ 
blankets, over half a million pounds of coffee, 69,000 rifles, 
43 cannon, 97 packages of revolvers, and 2639 packages of ^ 
medicine. Similar importations were made across the Mexi- 
can border. 

At the outset it was vaguely assumed that imports and 
exports would furnish the basis for a generous government 
revenue. An export duty on cotton won especial favor. 
It was claimed that such a tax would fall almost entirely 
upon the foreigner, one enthusiast estimating the amount to 
be thus gained at 20 millions of dollars.^ 

1 Charleston Courier, Not. 29, 1861 ; Mch. 7, 1862. 
« Off*l Rec'ds Rebellion, 4th 8., II, 662. 

* Con fed. Archives : Rep^t Register, ApL 30, 1864. 

* DeBow's Rev,, XXXI, 456 (1861). 

» RepH Secr'y Treaty, quoted in Jones, Diary, 11, 374-5 (Jan. 8, 1865) ; Rick- 
mond Dispatch, Jan. 3, 1865 ; Raleigh Progress, Jan. 18, 1865. 

* Charleston Courier, Mch. 25, 1861. 


An export duty upon cotton was contemplated in the Con- 
federate Constitutions. The provisional instrument of 1861 
omitted Hie prohihition against expoi-t duties appearing in 
the United States Constitution, while the Permanent Con- 
stitution allowed such a duty if enacted by a two-thirds vote 
of both Houses of the Congress.' As we have seen, the first 
loan act passed l^ the Confederate Congress on Febniaiy 28, 
1861, provided for the levy of a tax of ^ of 1 cent per pound 
on exported cotton, but the fiscal results were meagre in the 
extreme, owing to the severity of the blockade. During 
the period July 20 to November 16, 1861, only 81811.65 
were collected; during the first nine months of 1863, — 
when blockade-running was most active, — the figure rose 
to 88101.78; and during the six months ending September 
80, 1864, the amount was $4320.12, in all equivalent to 
perhaps $6000 in specie as the amount raised during the war 
from the export duty on about 45,000 bales of cotton. 

The revenue from import duties was similarly overesti- 
mated. Early in the first session of the Provisional Congress 
the Committee on Finance was authorized to report upon a 
tariff for raising revenue. A few days later, on February 
14, 1861, an act directed the appointment of the old United 
States customs officials as officeiB of the Confederacy. On 
February 16 they were directed to enforce the existing reve- 
nue laws; and on February 18 a free list was established to 
include all food articles, provisions, and army supplies; it 
also included all foreign goods bought before February 28 
and shipped before March 15.* 

The first distinctive Confederate tariff was enacted on 
March 15, 1861, and Tevie3~a' 15 % a3 valorem duty upon 
the importation of coal, iron, paper, and lumber. This was 
soon elaborated into the tariff of May 21, 1861, which, 
slightly amended on August 8, and put into force on August 

» U. S. Coiut'a, I, 9, 6 ; Confed. Prov't Cotut'n, I, T, S ; Confid. Perm. ConU'n, 

* An kct of March IS. 1661, farthei remitted tli« payment of dnties if the 
importer could i>how that it vat impouible for him to get the goodi on board 
before that date. 


81, expressed the tariflf policy of the Confederate States dur- 3 
ing the war. As was to be expected, the Confederate Con- ' 
gress perfected a revenue measure from which almost every 
trace of protective motives was removed. In fact, the pro- 
tective principle was discountenanced by both Confederate 
Constitutions,^ for under the old rigime the South always 
felt that the burden of the tariff had fallen chiefly on its 
own shoulders. The Provisional Constitution amended the 
"general welfare clause " of the United States Constitution, 
as we have seen; the Permanent Constitution emphasized 
this position by providing that "no bounties shall be granted 
from the treasury; nor shall any duties or taxes on importa- 
tions from foreign nations be laid to promote or foster any 
branch of industry." This clause had been proposed in the 
Montgomery Convention by Robert Toombs of the Georgia 
delegation,^ and led the legislators to base their tariff upon 
the principles carried out by the United States tariffs of 
1846 and 1857, from which the Morrill Tariff of 1861, passed 
as a distinctively Northern measure, had so signally de- 
parted. In fixing the rates of duties upon various articles, 
the latter were classed under seven schedules, bearing the 
rates of 25 %, 20 %, 15 %, 10 %, 5 %, and specific duties, the 
seventh schedule containing the free list. As in the case 
of the old tariffs of 1846 and 1857, each rate was avowedly 
aimed at deriving the largest possible customs revenue from 
the particular articles to which it applied. In carrying out ^ 
this principle, the Confederate tariff lowered the former rates 
of 1857, especially the leading 24 % rate to 15 %, or even in 
some cases to 10 %. Thus, the duties on leading, textiles 
and metal manufactures were reduced from 24 % to 15 % ; 
coal and coke, raw hemp and tobacco, leather, iron ore, and 
pig iron, from 24% to 10%. The duty upon sugar and 
molasses, however, was but slightly reduced, from 24 % to 
20 %, perhaps from lingering protectionist motives, which we 
shall see were not wholly absent. In general, however, this 

1 Confed, Prov*l Coiut'n, I, 6, 1 ; Confed. Perm, ContVn, I, 8, 1. 
> StepheiiB, War between the States, 338. 



Confederate tariff indicated the opposite policy to the one 
reverted to in the short-lived Morrill Tariff, passed in Wash- 
ington immediately before the outhieak of the war, which 
had aimed to return to earlier protective tAriffs by raising 
the duties especially along the line of the above lednctioos 
in the Confederate tariff. The latter emphasized its revenue 
motive by taxing the importation of ice atS1.50 per ton — 
while it was free under the tariffs of 1846 and 1857 — and 
that of salt at 2 cents per bushel, though it put coffee upon 
the free list, where it had been placed in the two previous 
United States tariffs. The Confederate free list itlso in- 
cluded provisions, f^icultural products, gunpowder, and 
ammunition, dutiable in the North; it also exempted ships 
from all import dudes and also supplies for the army for an 
obvious purpose. 

Secretary Memminger, in his report on May 10, 1861, 
planned to raise over 25 millions of dollars during the fiscal 
year from an average import dut^ of 12^ % . In point of fact 
1^ millions were raised during the year ending February 17, 
1862. From the beginning of the war to September 30, 
1864, the total receipts from import duties amounted accord- 
ing to the ofScial reports to 2| millions in currency, equal to 
perhaps one million in specie at the time of collection. 

The vigilance of the Federal blockading fleet robbed the 
Confederate government of its prospective customs revenue, 
but, at the same time, it enriched the class of blockade-run- 
ners by making their hazardous ventures enormously profit- 
able. The evidence is clear that those who had control of 
sufQcient capital to secure suitable ships fared well and grew 

Such inducements to the profitable investment of capital 
led to the incorporation and organization of numerous imports 
ing and exporting companies. These began to appear early 
during the war, but first in large numbers in 1863, when 
millions of capital were sunk in such corporations, especially 

> Fremantle, Southtm Stales, 15-16, S7 ; Tarlor, Blockade, 136-9, 144 ; 4 Nott 
& nmlhgion, 380, S73 (U. a O. of CI.) ; Moore, North CanJimi, U, !5l. 


in South Carolina,! where the Palmetto Exporting and Im- 
porting Company, the Chicora and the Charleston Company 
figured prominently in blockade-running. Judging from the 
quoted prices of the stocks in these concerns, and from the 
percentage of dividends paid, their business must have been 
very profitable. 

The uncertainties and anomalies of the industrial move- 
ment during the war necessarily stimulated aleatory instincts 
and dulled normal business foresight. All business became 
speculation, and speculation leaned to mere gambling. This 
is seen in the rapid development of the insurance business in 
the South during the war. Large numbers of life, marine, 
and fire insurance companies were incorporated, did a grow- 
ing business, and declared handsome dividends. Under nor- 
mal peace conditions this might be interpreted as indicating 
a growth of legitimate business, but under prevailing con- 
ditions, with business almost at a standstill, the insurance 
companies became more or less establishments for the encour- 
agement of betting, akin to the modem "bucket shop." 

The usual outcry against the speculators was also directed 
at the blockade-runners, whose trafiSc, it was said, depressed 
the currency, drained the country of specie, encouraged 
extravagance and speculation, and spread disaffection. 
This feeling was reflected in the heavy tax rates put upon 
foreign credits, representing the profits of the blockade-run- 
ners. At times the newspapers were bitter in their attacks 
upon dealers in imported goods, and could not be appeased 
by the latters' representatives claiming with a show of reason 
that heavy importations and frequent auction sales of block- 
ade goods did not inflate but depressed prices.^ 

Hostility to the importation of foreign articles of luxury 
not necessary for the support of the army grew in strength, 

1 S. C. acts Dec., 1862-Feb., 1863 ; Va. acts, Feb.-Mch., 1863; Jones, Diary, 
I, 326 (May 17, 1863) ; Richmond Examiner, July 11, 1863. 

a Jones, Diary, I. 343 (Jane 8, 1863) ; II, 13 (Ang. 13. 1863) ; Richmond 
Examiner, Dec. 21, 1863 (Memorial Fla. leg. to Ck)nfecL Senate); Charleston 
Conner, Apl. 12, 1864 (Letter of W. C. Bell). 


SEd led eventually to the passage of the aot of February 6, 
1864, forbidding under heavy penalty the importation of a 
large number of such articles, the sale of which in the South 
had been especially profitable, as they weie exclusively of 
foreign production, and therefore scarce in that market. 
The prohibition went into effect on March 1, 1864, and 
applied especially to wines, spirits, and beer, the finer grades 
of textiles, and omameuta. The act aimed to confine impoi^ 
tations to articles of necessity and common uue, but could 
not have succeeded in doing so, as is indicated by a later 
amendment.' The incentive to import foreign articles of 
luxuiy, the prices of which rose to the greatest heights in 
the South, was too great to be overcome by the pronuncia- 
mentos of law-makeia. 

At the beginning of the war different motives had actuated 
legislation. Instead of putting restrictions upon trade, the 
Congress wisely freed it to a considerable extent from inter- 
ference. An early act practically repealed the old naviga- 
,■ tion laws, and threw open the foreign trade and the trade 
i between Confederate ports to all vessels without discrimina- 
' tion.* Shortly afterwards • it was provided that all vessels, 
wherever built, if one-quarter owned by citizens of the 
Confederacy, could claim a Confederate registry, provided a 
majority of the stockholders desired it. The early law 
authorizing the establishment of ports of entiy was amended 
s year later to allow the landing of cargoes at any part of 
the coast.^ Similarly tiie provision forbidding the importa- 
tion of sugar except in vessels of a certain tonnage and in 
pack^es of a certain size, and the similar provisions regard- 
ing liquors and beers, were repealed on March 5, 1861. A 
small tannage tax was collected after May 1, 1861, for the 
support of the lighthouse system.' An act of March 15, 
1861, exempted ixom all duties goods in transit through the 
Confederate States to other countries. A deduction of one- 

1 Act Jane 14, ISM. * Act Feb. 36, 1861. 

• Act Mch. 6, 1861. • Acta Feb. SS, 1861; Apl. 31, 1863. 

* Act Mch. 16,1861. 


third was also allowed by an act of May 6, 1861, on duties 
payable on goods and prizes of war brought into a Southern 
port by vessels having a commission or letters of marque 
and reprisal. These early laws of the Confederacy aimed at 
encouraging the importation of foreign supplies of which the 
South stood in great need. During the third and fourth 
years of the war the same policy was pursued in freeing from 
all import duties railway material and machinery, especially 
that intended for textile factories.^ 

Free trade was advocated in the South, especially during 
the first year of the war. It was felt that any restrictions 
upon commercial intercourse with foreign nations was a self- 
inflicted injury to the Confederacy. In the fall of 1861 a 
convention of planters and merchants at Macon unanimously 
and enthusiastically recommended to the Congress the sus- 
pension of all duties and the adoption of free trade with all 
nations at peace with the South.^ A similar petition was 
circulated in Charleston a month later.' The agitation was 
reflected in the Congress, where two bills to repeal all tariff 
laws were introduced before the end of 1861.* In fact, the 
Committee on Finance had in August been instructed* to 
inquire into the advisability of such action. The matter 
was discussed by the Congress in secret session, and the bill 
admitting free of duty all goods except such as were imported 
from the United States was defeated ^ by the adverse votes of 
Florida, Georgia, Tennessee, and Texas, — each State being 
entitled to one vote under the Provisional Constitution, as 
had been the case under the Articles of Confederation of 
1777. The Richmond Examiner favored the repeal of all 
tariff laws for the further encouragement of foreigners in 
breaking the blockade; to the mind of the editor a Con- 

1 Acts Apl. 29, 1863 ; Maj 23, 1864. 
* Charleston Courier ^ Oct. 17, 1861. 
« Ibid,, Nov. 14-15, 1861. 

^ Tr'ls Cong,, aecret tession, Not. 28, Dec 9, 1861. 
» Ibid., Aug. 21, 1861. 

^ Ibid., Feb. 19, 1862; Charleston Courier, Feb. 20, 1862 (qnotmg Richmond 
Examiner) ; Confed, Archives: H. J. Fiaher to Secr'y Memminger, Jan. 7, 1862. 


(tolerate tariGf at the time of a Federal blockade vas an 

The first Permanent CongresB was more disposed to adopt 
free trade with foreign nations other than the United States. 
Early in the first session, in March, 1862, bills to that effect 
were introduced in the Senate and House of RepreBentatives, 
and met with considerable favor. In the House the bill re- 
{torted by the Ways and Means Committee was passed by 
a large majority on April 8; hut the session closed a few 
weeks later without the Senate's having acted upon the bill, 
though Senator Semmes of Louisiana made an effort to have 
it passed.* 
^ Nothing more is heard of a free trade movement in the 
>*■* South. This was only partly due to the severity of the 

th^ blockade, which made insigoifieant any legislative restric- 

tions upon trade; though any measure, however insignifi- 

) cant, to counteract the efficiency of the Federal fleet, should, 
as it seems, have been received with favor. On the con- 
trary, as the war progressed, the popular feeling in favor of 

\ trade limitations grew, and we find Congressional and State 
legislation directed at supplementing, not counteracting, the 
efforts of the Federal fleet by putting further difficulties in 

' the way of imports and exports. A twofold motive was 
involved in this policy: that of protecting Southern indus- 

. tries, and also the motive of coercing foreign powers into 
recognizing the Confederate government. 

The Constitution, as we have seen, voiced the traditional 
Southern feeling against protective tariff legislation, and 
tried to bar the way to the adoption of a policy that, as it 
was claimed, had benefited one section of the country at the 
expense of another. Incidentally it may be mentioned that 
the Constitution aimed to prevent similar legislation in two 
other directions. In delegating to the Congress the power 
" to regulate commerce with foreign nations, and among the 
several States," the Permanent Constitution provided that — 

» Bichmond Examiner, Dec 6. 14, 30, 1861 (odLt.). 

* CharlMon Caaritr, Hch. 10, Apl. 4, 5, 1662; Ridimond Examiner, Apt. 5, 
23, 1862; Riehmtmd Diipatdi, Apt 3, 1S6S. 


''neither this, nor any other clause in the Constitution, shall 
ever be construed to delegate the power to Congress to appropriate 
money for any internal improvement intended to facilitate com- 
merce; except for the purpose of furnishing lights, beacons, and 
buoys, and other aid to navigation upon the coasts and the im- 
provement of harbors and the removing of obstructions in river 
navigation, in all which cases, such duties shall be laid on the 
navigation facilitated thereby, as may be necessary to pay the 
costs and expenses thereof."^ 

Similarly the expenditure of public money for the benefit 
of a part of the people was forbidden by requiring that the 
Post-Office Department should be self-supporting. One of 
the clauses in the Constitution provided that ^^ the expenses 
of the Post-OflBce Department, after the first day of March 
in the year of our Lord 1863, shall be paid out of its 

The Post-Office Department was managed by its head, y^ 
J. H. Reagan, in accordance with this provision. It began ' 
operations on June 1, 1861, and by the end of the year some ■ 
8300 post-offices had been established.^ An early act of ■ 
February 23, 1861, established postal rates at 5 cents for 
single letters (limit, J ounce) within the Confederacy and 
within 500 miles; and at 10 cents for longer distances. 
These and the corresponding rates for other matter led to 
successive deficits in the postal revenue until the last quarter 
of 1862, when a surplus was attained by doubling the domes- 
tic letter rates to 10 cents.* The same act abolished the 
franking privilege. During the last session of the Congress 
a bill was passed providing free carriage of newspapers to the 
soldiers in the field. It was vetoed by the President on the 
ground of its being unconstitutional and providing for un- 
equal taxation. He had previously vetoed a similar bill.* 

1 Confed. Perm, Const'n, I, 8, 3. 
« Ibid., I, 8, 7. 

» RepU Postmaster-Gen^lj Charleston Mercury, Jan. 18, 1862 ; Viclahwrg Eve, 
Citizen, June 1, 1861. 

* Act Apl. 19, 1862 (in effect July 1, 1862). 
' Richmond Examiner, Jan. SO, 1865. 


His position was that of an ultra Btrict-constrnctionist In 
other and vastly more important linea of legialation he did 
not stand In the way of enacting measures whose unconsti- 
tutionality was much more doubtful. The motive force in 
securing the passage through the Congress of these insignifi- 
cant bills was the surplus revenue in the Post-Office Depart- 
ment, which continued to be secured on the basis of high 
postal rates. In this small particular the provisions of the 
Constitutioa were faithfully carried out.^ 

To return to the constitutional prohibition of a protective 
tarifF : this statement of good intentions did not prevent the 
development of a strong protectionist sentiment, the con- 
comitant of every war. Within three months after the 
establishment of the blockade we begin to hear of its being 
a blessing in disguise, in tJiat it is educating the South to 
fostering and developing its own boundless and undeveloped 
' resources.* And from then on we have frequent reference 
to the alleged advantage accruing to the South from the 
diversification of its industries due to the blockade. Indus- 
tries, heretofore unknown and neglected, were being called 
into life, and the South was being assured an industrial inde- 
pendence and supremacy such as New England owed to the 
War of 1812." Lists of factories, such as iron furnaces, 
powder and cotton mills, were published to prove what the 
South was gaining by the war. There is also evidence that 
protection became an issue in the Congressional elections; 
one candidate, at least, in 1863 announced that he was "for 
protecting and building up the manufacturing interests of 
North Carolina."* 

The growth of this protectionist feeling expressed itself in 

I AcH Oct. 9, 13, 1863 (cbap'B 38, 90) ; June 13, IBM; RcJagh Progra; Feb. 
S8, 1B63 ; Charlatan Courier, Dec. S*, 1863 ; Rtp't PotimaiUr-Gm'l, 1863, N. C. 
Standard, ian. IS, 1864; C. S. Mnaaae, ISM. 

■ Tickibarij Eee. Citizen, Aug. SO, 1861 (edit.). 

• ioae»,Diarji,l, 102 (Dec 35, 1861); /leBDic'f AeD.,Mch.ftApl., ISGS.p 327 
(qDOted in Charlftbm Mercuri/, Apl. 29, 1 862) ; Charleston Courier, Ang. 23, 1861 
(Hesaage Gor. N. C); Not. S, 1862; itfeAmoni £n^iW, Not. S6, 1861. 

< if. C. Standard, Oct. 27, 1663. 


the resentment of the former industrial dependence upon the 
North. The notion became prevalent that the war was 
actually a benefit to the South in correcting the former ten- 
dency to rely on Northern manufacturers whom the South 
had enriched under the tariffs framed in accordance with 
the North's wishes.^ President Davis declared that "the 
injuries resulting from the interruption of foreigfn commerce 
have received compensation by the development of our inter- 
nal resources."^ We find in embryo many of the familiar 
protectionist arguments, chief among them the notion that, 
by fostering home production, the South is saved the loss 
incurred in exporting goods, and especially money, to the 
greedy Northerner or foreigner. Throughout 1861 we find 
patent medicines advertised in the newspapers as a product 
of Southern industry, to which is often added the reminder 
that hereafter the South may save the millions that formerly 
went to the North for such articles. One Richmond newspaper 
argued that it was better to pay high prices at home than to — 

"send our money to the Yankees for our supplies. What we 
pay the manufacturer is still at home • . • and we are encour- 
aging and fostering those arts which will make us sufficiently 
independent." • 

This desire for industrial as well as political independence 
is similarly expressed by another newspaper: — 

*• We are not running in debt abroad, and shipping every valuable 
we possess to pay off the score. The process of exhaustion which 
has been going on since the nineteenth century began, has ceased ; 
and if we are not growing rich, we are, at least, not running ruin- 
ously in debt." * 

The Governor of North Carolina voiced the same senti- 
ments soon after the blockade became effective, which, he 
held, would surely accomplish the national and commereial 

1 Malet, Errand South, 38, 71-2 ; Vick$burg Eve. Citizen, Aug. 20, 1861 (edit.), 
s OjffTl Rec*d8 Rebellion, 4th 8., II, 350 (Mess. Pies. Davis, Jan. 12, 1863). 

* Richmond Dispatch, Dec. 7, 1861. 

* Richmond Examiner, Jan. 17, 1862. 


independence of the Soutii.' This feeling expressed itaelf 
in the movement to prevent or forbid ezporte, an embargo 
policy, which strikingly represents the contradictory attempt 
to beneflt the Southern cause by assisting the enemy in his 
plans of effectively blockading the coast. 

In the Montgomery Convention of 1861 the sentiment 
already prevailed that a stoppage of the supply of cotton 
would soon bring the commercial nations, especially the 
North and Great Britain, to terms, and an embargo upon 
that staple was looked upon with favor.' President Davis 
is said to have welcomed the Federal blockade as a means 
of winning the recognition of the Confederacy by foreign 
I powers.' This feeling was early embodied in Confederate 
legislation, which' has the appearance of playing into the 
hands of the invaders by assisting them in preventing ex- 
ports, just as we have seen a similar policy was pursued in 
hindering importation. An act of May 21, 1861, forbade 
the export of cotton except through the seaports of the Con- 
federacy. On the following August 2 this act was extended 
to all leading articles of export, and on April 19, 1862, a 
further act was passed aimed specially at the transportation 
of goods to sections of the South in possession of the enemy. 

In the Stat«a similar action was taken to hem the outward 
movement of cotton. In the summer of 1861 the cotton 
factors in New Orleans, Mobile, Savannah, and Charleston 
concertedly ui^d the cotton planters to withhold their cot- 
ton from the market till the blockade was broken ; * and in 
October * the Governor of Louisiana by proclamation forbade 
further cotton shipments to New Orleans. In the following 
spring the Governor and Council of South Carolina passed 
a resolution forbidding the export of cotton, but suspended 
its operation shortly after, owing to Secretary Memminger's 
objections, namely, that the State should defer action till 

' Chariatm Courier, Aug. S3, 1861. 

» DnboM, rnnwy, 568 ; Pollard, Davii, IIS. 

• Ibid., 169. 

• CharttUon Courier. July 30, Ang. SO, Sept. 31, 1861. 

• n^d., Oct. 18, 1S61. 


the Congress had expressed a decisive policy in the matter. ^ 
Similarly, Governor Vance of North Carolina proclaimed an 
embargo on the export of provisions and cloth for thirty days 
from November 26, 1862,^ following the example of the State 
authorities during the Revolutionary War in forbidding ex- 
ports partly to embarrass the enemy and partly to insure an 
abundance of provisions for the army. A few months before 
the Governor of Florida had recommended to the State legis- 
lature that they prohibit commercial intercourse with foreign 
countries as a means of preventing speculation and extor- 
tion, and of sustaining the public credit.® 

This general embargo policy found its adherents as well as 
opponents. In the opinion of some the policy of forbidding 
exports was a powerful tool to be used for war purposes, 
which the South would be foolish to neglect. John Bull, it 
was said, was beginning to feel the power of the Confederacy 
to withhold cotton, and must inevitably intervene.* To 
the mind of others it was not the Englishman, but the 
Northerner, and especially the New Englander, who gained 
by obtaining raw cotton for his mills, and who could be 
coerced by having that supply cut off; and some seriously 
proposed that the ports which the Federal navy could not 
blockade should be closed by the Confederate government.^ 

The Charleston Courier^ however, took strong grounds 
against the embargo policy which was advocated by corre- 
spondents in its columns.^ The latter harped on the notion 
that by holding back cotton the planter and shipper could 
force upon Europe a recognition of the Confederacy, and 
upon the North a cessation of hostilities. Their advice was : 
"Do not sell our right arm of defence for coin," and "Help 

1 Charleston Cornier, Apl. 23, 1862. 

3 Raleigh Progress, Nov. 27, 1862 ; Off^l Rec'ds Rebellion, 4th S., II, 214. 

» Ibid., 4th S., 11, 489 (Mess. Gov. Fla., ApL 15, 1863). 

* CAar/Mron3/«rairy, Feb. 5-6, 1862 (edit.); Ojff^l Rec^ds Rebellion, let S.^'LII^ 
pt. 2, p. 114 (June 21, 1861). 

^ Richmond Dispatch, Apl. 19, 1862 (Charleston corresp.) ; Petersburg Express, 
Ang. 27, Nov. 5, 1862; Richmond Examiner, Aug. 7, 1863 (edit); Ojff^l Rec'ds 
Rebellion, Ist S., LII, pt. 2, p. 569 (Dec. 3, 1863). 

• Charleston Courier, Sept. 28, 25-7, Oct. 14, 16, 1861. 


enforce Lincoln's blockade." The paper met these viewB 
by claiming that a prohibition of exports waa merely playing 
the enemy's game, and was a policy of biting off one's own 
nose; that coercion of England was quite out of the ques- 
tion; and that the wisest policy for the South to pursue was 
to enlarge her exports, if possible, aa a means of obtaining 
the needed foreign supplies in the cheapest way.' The 
Secretary of War was advised that the army could be pro- 
visioned only by allowing the trade with the enemy. As 
between starvation and violating the sentimental policy of 
withholding cotton, the writer said there was no choice.* 

The later policy of the Confederate government in this 
particular represented a strange mixture and conflict of 
motives. The act of February 6, 1864, forbade the export 
of cotton, tobacco, military and naval stores, rice, sugar, and 
molasses, except under regulations of the Treasury Depart- 
ment These, as framed shortly after,' had in view the 
government's sharing in the export trade, — which the act 
expressly allowed, — by requiring that half the tonnage of 
outgoing and incoming vessels should be at the disposal of 
the Confederate authorities. A secret act of February 18, 
' 1865, combined the prohibition of exports with permission to 
' t^e Secretary of the Treasury to make exceptions in the case 
' of individual exporters. 

Others have fully described the futile efforts made by the 
South to secure the intervention of foreign powers in the 
Civil War, or at least the official recognition of the Confed- 
eracy!* The declaration of neutrality by the British govern- 
ment on May 13, 1861, followed by similar proclamations in 
France and Spain," raised the hopes of the South, and during 
the war there were periods of recurring sanguine hopefulness 
of British or French interference which never materialized. 

< CharUiton Courier, Sept. 4, 24-5, Oct. 35, 1861 ; ct. Balagh Progrtit, Mch. 
13, 1863 (edit.). 

* Off"! Rtc'di Rebdlim, 4th 8., 11. 151 (Seer*? War to D»TiB, Oct. 30, 1868). 
» /iirf., 4th S., nl, 187; Richmond Ezamina, Feb. 11, Mch. 11,1864. 

* Ct. Rhode«, Hitfy U. S., ni-IV (pa„im]. 

* Moore, IUbea!on Rtcird, I, 245; n, 170; Snppl. I, 83. 



While the embargo policy proved ineffective in coercing 
the foreign powers, the temptation to relax its rigid pro- 
visions and allow the government or favored individuals to 
import and export was too strong to be resisted. A simi- 
larly contradictory policy was pursued during the Revolu- 
tionary War. On the one hand, commercial warfare was 
waged with England by attempting to cut off all trade rela- 
tions with her, as well as with other foreign countries; on 
the other hand, exceptions were made in favor of some who 
wished to import foreign products in return for an American 
staple like tobacco. The Continental Congress frequently 
involved the government itself in such speculations, by join- 
ing hands with private operators, and sharing with them the 
risks and profits of their ventures. It was difficult to distin- 
guish between the speculations of an individual when acting 
in his private capacity and when acting as an agent of the 
government, as is well seen in the career of Robert Morris, / '. 
as well the head of the fiscal system as a leading speculator. ) ^ ^ 
George A. Trenholm of South Carolina, who succeeded Mr. */ *^ \ ^ 
Memminger as Secretary of the Treasury in July, 1864, / 
occupied a somewhat similar position in the history of the .. 
Confederate States. As senior member of the firm of John { 
Fraser and Company of Charleston, he became a leader in 
the business of blockade-running, and, when a member of 
the Cabinet, did not escape the imputations of selfish motives 
put upon Robert Morris's actions.^ 

Some color was given to these charges by the fact that Mr. 
Trenholm's firm no doubt profited largely by the blockade- 
running business. Moreover, the branch firm in Liverpool, 
Fraser, Trenholm, and Company, acted as the agents of the 
Confederate government in financing some of its attempts to 
secure supplies from abroad. Such government agents were 
stationed at foreign ports, for instance in Bermuda, Havana, 
and in Nassau; they bought and shipped the much needed 
supplies, and paid for them with the proceeds of the little 

1 Porter, Autobiography, 112-13; Charleston Courier, Dec. 29, 1864 (Confed. i \ fr " 
H'se of B.) ; Simmer, Financier Am. Btv^n ( poBeim), O^L , |» ^ /j S 

"^ f i _ 


cotton the govemmeDt sacceeded in slipping through the 
blockading Seet. Few reliable figures are available to indi- 
cate the extent of these government ventures. J. D. Bul- 
lock, the head of the Confederate secret service abroad, 
reports that 31,000 bales of cotton had been shipped by the 
government, up to tJie end of 1863, from Charleston and Wil- 
mington to the Liverpool agents,' and during the last tiiree 
months of 1864, President Davis claimed' half a million 
pairs of shoes, eight millions of pounds of bacon, two mil- 
lions of saltpetre, fifty cannon, and so forth, had been im- 
ported on government account, and paid for presumably 
with exported cotton. Such government shipments began 
in the fall of 1861, and continued till the end of the war.^ 

Four government steamers were eng^ed in carrying out 
cotton and bringing in supplies.* A special bureau had 
chaise of the ventures, and succeeded in importing 113,504 
small arms during the year ending September 30, 1863, and 
39,798 during the calendar year 1864. 

Frequently such shipments were made on joint account 
between the government and some firm of merchants; the 
outgoing cargo to be cotton, the incoming generally muni- 
tions of war.' Evidently the administration yielded to the 
clamor that the government should share in the profits of 
Uockade-running," one correspondent of President Davis 
recalling that he had urged a similar policy upon Mr. Biddle 

1 Bollock, Saret Strvia, U, 323. 

• Jones, Diary, n, 373 (Jan. 3, 1865). 

■ Bullock, Stertt Strtfiet, I, 100; Catt V. S., Geneva Conference {pasiim) ; 
Jones, i><'ary, I, Sll (Dec.ll, 18S3); II, 3S2-3 (Jan. II, 1869) ; Con/ed. Arthivei : 
W. G. CreDsbaw to Hemminf^, Dec. 18, 1663, C. Hww to J. Goigaa, Dec 37, 
1863; Off'lBted, Eebtllion. ith S, U (powim). 

• /Uif., 4th S., II, 955, lOU ; 111,388,351,930,965. 

• Jones, i)i'ary, Dec. 33, 1863; Mck 38, 1864; Caie U.S., Gmeva Conferenee, 
113; Og'i Rec'de Eebeliion, lat 9., LU, pt. 3, pp. 918-19, 531 (Ang.-Sept., 1863); 
Att'if-Gen'l't Opinum, July 30, 1864; Con/al. Arckivee; Memmioger to Fnuer, 
Ttenholni, A: Co-, Mch. 32, 1664; Contract between Secr'y War & Vernon &. Co., 
Nor. 14. 1863. 

• Jones, Diary, n, 114 (Dae. 13, 1863) ; II, 153 (Feb. 31, 1864) ; Charhatoa 
CouTier, (Sept. 18, 1863) ; Off'^ lUe'di R^idiion, lit S., LU, pt 3, p. SS9 (C. G. 
DsUgieu to Pk*. DatIs, Dec 3, 1863). 


of the United States Bank in 1837. State governments as 
well as individual merchants offered to share with the Con- 
federate government the risk of running the blockade.* One 
of the largest ventures of this kind involved a contract with 
Alexander Collie and Company of London, with whom the 
foreign Confederate agents had large dealings. The firm 
was to supply four new steamships and to buy £200,000 
worth of supplies for the Confederate government, the latter 
to pay for the goods on their arrival in a Southern port with 
cotton at the rate of 6 pence per pound. Two of the vessels 
we know reached their destination. 30,000 bales of cotton 
were necessary to pay for their cargoes, though 5000 would 
have cancelled the debt if sold in London at the prices pre- 
vailing there. This fact led Secretary Trenholm to declare 
that such a wasteful method of procuring supplies from 
abroad must be abandoned.' 

The government was also drawn into speculating in Fed- 
eral "greenbacks," the circulation of which, it will be re- 
membered, was strictly prohibited. But the act of February 
6, 1864, which forbade trade in United States currency, also 
authorized individuals to carry it on when acting for the 
government. As in the case of the embargo policy, which, 
as a war measure, aimed to forbid intercourse with foreigners, 
but allowed such trade relations in exceptional cases, so in 
the matter of the enemy's currency a similar privilege was 
granted ; its circulation in the South was forbidden as a war 
measure, but where the government was evidently the gainer 
by exchanging its cotton or other goods for Federal "green- 
backs " or postage stamps, an exception was made to the 
rule. There is some evidence that Federal currency was 
obtained in considerable amounts by the Confederate Treas- 
ury in this way.' It was a repetition of the experience dur- 

1 OjBTI Rec^ds RebeUian, 4th S., I. 898 (Got. La. to Secr'j War, Jan. 31, 1862) ; 

a Jbid., 4th S., in, 529, 588; II-III (;ximiiii). 

* Ibid., 1st S., yyYTTT, p. 1241 (Mch. 26, 1864); XLV, pt. 2, p. 639 (Dec. 1, 


ing the Revolution when -the Congress allowed two States to 
import a given amount of salt as an exception to the general 
non-importation policy, but took occasion to remind the 
Governors of those States that "nothing less than the press- 
ing necessities of Virginia and Maryland could have induced 
Congress to relax the resolution made against further inter- 
course with the enemy. That an abuse of this indulgence 
will highly injure the American cause." ^ The same conflict 
of motives is presented by the experience of the Confederate 
I States. In fact, the policies of the Confederate and of the 
Continental Congress ran strikingly parallel in their restrict- 
ing foreign trade and in also engaging in it. As has just . 
been noted, exceptions were made in the non-intercourse 
policy during the Revolutionary War in favor of the impor- 
tation of salt as well as of equally important army supplies. 
The Revolutionary government also became involved in a 
large number of trading ventures, tobacco playing the part of 
cotton in the similar ventures of the Confederate government 
eighty^odd years later. The Continental Congress author- 
ized contracts with individual merchants, making advances 
to them, and sharing in the profits of the undertaking. The 
several Colonial legislatures were also urged to export pro- 
visions and other produce to the West Indies to pay for 
imported ammunition and other army stores. 

The individual State governments of the South likewise 
engaged in trade with foreign countries. North Carolina 
was particularly active. In 1862 an agent of the State was 
sent abroad to make arrangements for blockade-running. 
Cotton was bought, — over 15,000 bales in 1862, on the 
authority of Governor Vance, — exported and exchanged 
abroad for machinery, clothing, ammunition, medicine, and 
other equally desirable articles.* It is noticeable that Gov- 
ernor Vance was fiercely attacked on this account by his 

• SecrttTr'l Cong„ An^. U, 1781. 

* Jonei, Diarg, I, 207 (Dec B, 1S63) ; II, 120 (Dec. 27, 1853) ; Moore, Httfy 
N. C, n, 176 ; N. C. Srandard, Sot. 27, Dec 4, 1863 (Got. Vance'i mesaage); 
N. C. act Dec. 12, 1863; Got. Vance in So. Sal'l Soe. Paptrt, XIV, 512 (1886). 


political opponents in 1864. They claimed that he was the 
only gainer by these blockade-running ventures, which en- 
abled him to export his own and his friends' cotton. The 
State, they claimed, was running heavily in debt as a result 
of these transactions. Governor Vance's friends, on the 
other hand, asserted that the State had profited to the extent 
of $6,000,000.1 

Some of the other Southern States seem to have followed 
South Carolina's example. In Greorgia we can detect the 
jealousy of the individual blockade-runners, whose presum- 
ably large profits some were disposed to secure for the State 
treasury. By the end of 1863 the legislature authorized the 
Governor to purchase a fast steamship, load her with cotton, 
for exchange in Europe for military supplies. As a com- 
mentary on the speculative nature of the transaction, it may 
be mentioned that, though $750,000 were appropriated for 
the purpose, the sale of the cotton abroad was expected to 
pay for the ship.^ In South Carolina, the centre of the block- 
ade-running activity, an act of December 17, 1868, author- 
ized the State government to unite with the Importing and 
Exporting Company of South Carolina to become one- 
quarter owner of its ships and share in its ventures. The 
Georgia legislature authorized a similar arrangement with 
that company.* 

The States engaging in exporting and importing inevitably 
came in conflict with the policy of the Confederate govern- 
ment, developed especially in 1864, to restrict and monopo- 
lize all trade relations with foreign countries. The State of 
North Carolina was, of course, particularly involved. The 
steamer "Hansa," owned in part by the State, was detained 
by an officer of the Confederate navy, on the ground that the 
ship's cargo did not contain the quantity of cotton which the 
Confederate government claimed it had the right to send by 
her. The Secretary of War and President Davis supported 

1 Raleigh Progress, Jnne 21, 27, 1864 (edit.). 
> Richmond Examiner, Apl. 27, 1863; Ga. act Dec 14, 1863. 
* Got. BoDham's message, Augusta Chron, 4r Sentinel, Dec. 2, 1864. 





this actioD. A heated coirespondence vas carried on be- 
tween Governor Vance and the Richmond anthorities, in 
which the President joined to point ont that the legrdations 
complained of applied only to individuals shipping goods, 
and that by sharing with the State government in the owner- 
ship and profits of blockade-runners, snch individual specu- 
lators aimed to escape the rules covering the export of cotton 
and tobacco on private account. This did not satisfy Gov- 
ernor Vance, who continued to declaim against the interfer- 
ence of the central government vrith the right of the State to 
export and import, and deplored the indignity put upon the 
sovereign State in being compelled to submit to the treat- 
ment accorded to (he individual speculator. The Governors 
of Georgia, Mississippi, and Alabama joined Governor Vance 
in memorializing the Cor^ress to the same effect' 

As a result, a bill was introduced in the House in June, 
1864, to forbid the Confederate government's interfering 
with steameiB sailing on State account, whether owned in 
part or in whole by a State.' It was presumably this bill 
which was vetoed by President Davis, who objected to 
exempting vessels only chartered, not owned by the States.* 
The Govemore, however, renewed their memorial to the 
Congress in October, 1864.* A bill embodying their demands 
was fully discussed in the Senate, but nothing ' came of it. 
Some thought the practice of the States engaging in export- 
ing and importing had been beneficialj others objected to 
countenancing it for fear that such supposedly lucrative 
trade would thereby pass from the hands of the Confederate 
government to those of the State authorities. 

The contradiction involved in the two sections of the coun- 
try, while politically at war with each other, being economi- 

' Of I RK'dt RtbtUlm. 1st S.. XXXIII, 1323 (Mch., 1864) ; LI, pt 2, pp. 
83S-3T; 841 (Pres. Davis to Oot. Vance, Hch. 26, ISG4) ; Ecdeigh Prograt, iiAf 
19,1864; N. C. resol'n. May 9S, ISM; Mooro, R^llim Becord.YlU, &M. 

> Ricliniond Eiamintr, Jnne 3, 18G4. 

» Cjri Rec'd, litMlim, *th S., lU, 553-5 (June 10, ISM). 

* Ihld., 4th S., in, 736. 

* RicAmmd Examiner, Dec. S, 9, 1864, 



cally dependent upon each other and the best of friends is 
well illustrated by the extensive trade carried on through the " ^ 
opposing military lines and the efforts made to put a stop 
to it or turn it to the use of the government. The policy 
pursued by the Federal government was particularly equivo- 
cal. It is evident that the authorities wished to secure the 
cotton and similar products of the South without legally 
authorizing trade with the enemy, ^ which individual mer- 
chants stood quite ready to undertake. In fact, by an early 
act of the war commercial intercourse with the South was 
closed, but the President was authorized to and did license 
individuals to trade with the enemy.^ 

Early in the war the trade carried on through the lines in 
Virginia attracted attention. Specie, it was said, was read- 
ily slipping through to the North; and, as usual, the Jewish \^Ln)4l 
merchants were held to be the chief culprits.* Bulkier com- 
modities figured in this trade. Tobacco was shipped North 
from various points in Virginia.* We constantly hear of 
propositions made to the government to legalize such traffic ; 
and of complaints that the military authorities have inter- 
fered with it.^ 

We also hear of high military and civil officers engaging in 
such trade.® And even G. B. Lamar of Savannah acknowl- 
edged having written to Fernando Wood proposing an ex- 
change of goods to their mutual profit. "^ A year later he 
also proposed® to go to New York and buy some supplies 
with a thousand bales of cotton. A contract between Beverly 
Tucker, acting for the Confederate government, and a New 
York firm, to deliver cotton for bacon, pound for pound, 

1 U. S. act July 2, 1864 ; U, 5. Treat^y Regul'ns, July 29, Sept 18, 24, 1864 ; 
7 Ct. o/CL 98; 8 Wallace, 185. 

a U. S. act July 13, 1861 ; U. S, Treas'y DepH Circular, July, 1863 ; 3 Nott ^ 
Huntington, 59 (U. S. Ct. of CI.) ; 5 ihid., 614-15. 

» Richmond Examiner, Dec. 31, 1861 ; Rhodes, Hist'y U. S., Ill, 549-50. 

* Jones, Diary, I, 232 (Jan. 5, 1863) ; Baker, Secret Service, ch. XXVI. 

6 Jones, Diary, I. 179, 181, 187-9, 191, 196, 225. 
« Ibid., 1, 289 (Apl. 9, 1863). 

7 N. C. Standard, Nov. 6, 1863 (quoting Richmond Examiner), 
B Jones, Diary, U, 345 (Dec 2, 1864). 


though made by the authority of the Secretary of War, was 
disapproved by Secretary Memmioger,' and presumably was 
never put into effect. Toward the end of the war the trade 
relations between the North and the South in Virginia most 
have been very extensive, and were winked at by boUi the 
Federal and the Confederate government. 

The similar traffic carried on through the lines in Alabama 
was much more openly tolerated. The military authorities 
found — as a report by the Genertd Purchasing Commissary 
said * — that the battle against want and starvation was 
greater than that against the power of the enemy. An 
"interior blockade trade '" was proposed, one pound of cotton 
to be offered for three of bacon within the Federal lines in 
Tennessee. Such a trade was extensively carried od, and 
was favored by General Beauregard aud other military author- 
ities as the best means of providing army supplies, especially 
medical stores, and of securing a market for the cotton 
planters.' It is evident that the government was jealous of 
the profits made by individuals in this trade, and some efforts 
were made to have them shared or even monopolized by the 

The trade carried on through the opposing lines was par- 
ticularly brisk in the Mississippi valley after the capture of 
i New Orleans in the spring of 1862. Cotton was shipped in 
considerable quantities to that port, and was there exchanged 
for salt or other commodities which tiie Southerners were 
moat in need of.* These were shipped to Mobile or to some 
interior port. The military authorities would not or could 
not prevent the traffic. 

Memphis and Vicksburg became centres of trade to which 
Southern cotton found its way. The Federal authorities 

■ Janes, Diary, 11, 319 (Oct. 31, IS64). 

« OjT' Rte'd$ RtMion, in S., XXIII, pt. 2. pp. 771, 777 (Apl., 1863). 

» IbiJ., Igt 8., XXXn, pt. S, pp. 833-4 (Gen. Polk, to Prra. Davis, ApL 87, 
1864) ; XXXIV, pt. 2. pp. 9T1-S, 983-3 ; XXXIX. pt. 2, pp. 86a-4 ; LU, pt. 2, pp. 
795 & ea. ; XLV, pt. 2, pp. 637, 639. 

* Ibid., iBt 8., LII, pt. 2, pp. 387, 412, *53, 460, 465; XXTI, pt S, pp. 494-6, 
G98 ; 4th S., tl, 242 ; Jodm, Diarg, I, 327, 376 ; II, 51-2. 


encouraged, or at least gave permits for such trade. The 
Confederate authorities, too, put no serious obstacles in its 
way. The Mississippi River offered an easy means of com* 
munication between the two hostile sections, and any efforts 
to prevent their exchanging products would have been futile.^ 
The profits of the traiSc are attested by the eagerness with 
which individual speculators sought to gain the government's 
permission to cross the lines. The Governor of Mississippi 
urged President Davis to accept the proposition of a French 
firm to import salt in exchange for cotton. Although the 
firm agreed not to carry the cotton to the North, it was sus- 
pected that the Frenchmen were acting in the interest of the 
Federal authorities at New Orleans. Notwithstanding, the 
President was persuaded to allow the traffic, especially in 
view of the scarcity of salt.^ Similar propositions from 
French firms in New Orleans were accepted with some mis- 
givings by the President. We hear of other propositions of 
the same kind. One merchant proposed to supply the Con- 
federate troops with clothing and shoes by importing them 
from the North in exchange for cotton; another offered to 
buy the government's cotton in the most exposed sections 
along the Mississippi River at the rate of ten pence per 
pound, to assume all risks except those from destruction by 
Confederate troops, and to ship the bales to New Orleans 
and thence to Antwerp.* Presumably the government did 
not grant the necessary permission in these cases. Another 
French firm in New Orleans offered to exchange salt for 
cotton, engaging themselves to ship the cotton direct to 
Europe. President Davis, however, still persisted in the 
policy of withholding cotton, and refused his assent.* A 

1 26 Fed, Cases, 278; 27 ibid., 284; Moore, Rebeliion Record, XI, 480; Off'l 
Rec'ds RebeUion, Ist S., XXXII, pt. 3, pp. 625-7; XXXIX, pt. 2, pp. 583-4; 
725-6; XLVII,pt l,p. 1316; LII. pt. 2, pp. 370-2, 600; 4th S., HI, 508-10, 
514, 649-51, 682, 688, 1075; Jones, Dtary, U, 87, 293, 315; N. Y. Times, Jan. 
31, 1865 (8-1). 

« Off'l Rec'ds Rebellion, 1st 8., LII, pt. 2, pp. 383-4 (Got. Pettns to Pres. Dayis, 
Oct. 28, 1862); Jones, Diary, I, 185, 187, 189, 191, 198. 

» Ibid., I. 202 ; II, 63, 198-9, 236. 

* Ojri Rec'ds RebeUion, 4th S., II, 173-4 (Nov. 7, 1862). 


little later the War Department, though professing its disap- 
proval of sach a trade, authorized one in cotton in order to 
secnre some necessities from Mew Orleans.* In 1864 the 
Secretary of War, writing to General Taylor,' says that the 
"law does not allow trade in cotton with [the] enemy," but 
that the "military are not required to enforce this law," and 
about the same time General Lee gave ordeiB that the gov- 
ernment's policy of winking at the illicit trade be not given 
undue publici^ for fear that the Federal authorities might 
interfere with the traffic.' 

Nominally the government was opposed to any trade rela- 
tions being established with the enemy. The acts of May 
21, 1861, and April 19, 1862, distincUy forbade the trans- 
portation to and sale in any place within the Confederacy 
in possession of the enemy of cotton, tobacco, sugar, rice, 
molasses, syrup, or naval stores ; and regulations were adopted 
to cany out this prohibition. They could not have proved 
effective, as bills were introduced in the Congress in 1863 
to further penalize such border traffic* Much feeling was 
aroused gainst the individual traders who allowed selfish 
interests to outweigh patriotic considerations, and who, as 
usual, were blamed for depressing the currency.^ North 
Carolina aimed to remedy tlie difficulty by taxing the profits 
from trading with the North.^ 

As had been tlie case during the Revolutionary War, the 
instinct of trade was at war with the instinct of patriotism. 
The trade with the enemy was demoralizing in its effect 
upon the communities near the border line between the 
North and South. The soldiers, too, could not reconcile 
their military duties with the practices they saw about them, 
wtiich were connived at, if not directly authorized and insti- 

■ Ofl Rec'di RtbtUioB, 4tb 8., Tl, S06 {Jan. 8, IWS). 

■ Ibid., 4th 8 , III, T35 (Oct. 14, IBM). 

• Ibid., lit 8.. LI, pt. 2, 8*2 ; 4th 8., Ill, 606 (Aug.. 1864). 

• RicAnumd Ezaniiner, Mcb. il, Apl. 97-8, Dec. 13, 1S63. 

' Ibid; Apl. 38, I863j CharUilon Courier, Aag. S8, 1863 (qnotiog Ritihimnd 

< N. C. Kt Dec. 12, 1863. 


gated by their superiors. Nor were there wanting those who 
claimed that the military officers were personally the gainers 

There was a difference of opinion as to the effect and the 
desirability of the trade with the enemy. Many not only 
pointed out the demoralization it caused, but went so far as 
to claim that the trade enriched the North and impoverished 
the South. "It would be better," said the Richmond Exam- 
iner^ "for our government to blockade its own ports than 
that this traffic with the enemy should be continued,"^ a 
sentiment similar to the one regarding the embargo policy 
already alluded to. Others, however, thought that the peo- 
ple on the border should be encouraged to trade with the 
enemy in order to obtain food, clothing and arms on the 
most advantageous terms; that, under the peculiar condi- 
tions, such a trade was beneficial to the Confederacy and 
should be regulated, not hampered.^ Still others urged that 
the profits accruing from the trade should be monopolized by 
the government.* 

These divergent opinions were reflected in the policy pur- 
sued by the civil and military authorities. General Pem- 
berton frequently reported to the War Department that the 
illicit trade could not be stopped in Mississippi, and urged 
a policy of tacit non-interference. This policy was pre- 
sumably adopted, for we hear of a lively trade springing 
up in that section, which was distinctly recognized, if not 
authorized by the Richmond authorities.^ General Polk also 

1 Off I Rec'ds ReheUion, let S., LII, pt 2, pp. 663, 700^ ; XXXIX, pt 8, pp. 
860-2; XLIX, pt. 1, pp. 944-5, 1011; Jonea, Diary, I, 95, 328; Richmond Ex- 
aminer, July 15, 1863; Feb. 15, 1864; Charleston Courier, Feb. 1, 1865. 

* Richmond Examiner, June 8, 1863 ; cf. Jones, Diary, II, 285 (Sept. 18, 1864) ; 
Offl Rec'ds Rebellion, Ist S., LII, pt. 2, pp. 870-2 ; 4th 8., 1, 905 ; II, 585 ; HI, 508- 
10, 514. 

» Ibid., iBt S.. XXXI, pt. 3, pp. 833-5 ; LII, pt. 2, pp. 465, 600 ; 4th 8., 11, 460 ; 
m. 10, 285-6, 596. 

« Rid., l8t 8., LI, pt. 2, p. 936; Richmond Examiner, ApL 28, 1863 (resol'ii in 
Confed. 8eDate). 

* Ojgri Ree*dt Rebellion, let 8., LII, pt. 2, pp. 453, 460, 465 (Apl.-Mfty, 1863) ; 
4th 8., n, 242 (Dec 16, 1862) ; Jones, Diary, I, 320; 327 ; 11, 133. 


3&1URU '.axnsn; t^ il&eit toaie:, and ganc pHK* to ma- 
j ita^riia 31 .-ar-T eocEoa to ViekabcTg and liciiig lack w|i|ifiM. 
;^ A ^uQ^ensaL kcca Le ad-naed G«iaal W. AduoB to 
■^■^M ~"'"^ YifiVjwwi get cooon anv uui tben. boE not faster 
~ua »ai3 cor poipcae.' ^ A he&vj lao'venienx ti eocDai into 
i2e Fq yr^t liaea CoQcnred vLieh arooaed maeli opfUKtiaa to 
orttrriyn*'"'^'^? the aaffic' In ttex, ve ga^KT tlias dw poe- 
2,^ oc pecuiiuii^ is wa« btiC goKBllj dimmed ftw bax of 
,j^.nTr >Ei"j popular feeling agaiDct it. 

O«oetal Lee, tboog^ icecigiining tfae deoMxalizing effect of 
fn:h, w*"^*^, allciwed it to pa^ throo^ bis lioes tovaid tbe 
«jid cf tbe wv. He advised the Secretary of War to ''make 
tbie vaBc . . . m pmdaeart as poKUe," patsnmaUj b; 
kkving tbe gorenuDent mcaopolize it, but » fortci^t later 
be advised giTii^ up all attempts at interfeFence:,* vliich 
Ucer advice vas iffUowtA. 

Earlier in tbe war this policy of ncn-interfeTence had not 
been to genenllj adopted. Doting 16^ and 1^2 President 
Davis had not seen his waj to aathoiizing trade with the 
enemy, thoogfa he evidently recognized its existence, and 
had anthorized the Governor of Uiasiasippi to obtain a Bop- 
ply of aalt in that iray.* In the spring of 1863 the Secretary 
of War tef used to make a serioos attempt to break up tlw 
traffic, and advised fieneral PembeTt<Hi to leave it to tbe 
civil aothorities to deal with. A month later he even went 
so far as to bold that his Department could not stop the 
traffic, and that it shonld be licensed, because it secured 
the m<mt needed snpplies in the most economical way by the 
exchange f(*r cotton.* The Attorney-General, however, took 
a different view,* and refused to dismiss a snit against a firm 
for trading with the enemy, even thoogh General Pember- 

1 Cif'l Rti^di lUbxUwm, IM S., XXXIX, pt. 3, p. SS4 ; Jodm, ZKory, II, 138. 
■ /W., IKR, XXXIX, pt.3,pp.T35-S; S37. 

• lUd., in K, X1.VI, pt. 9, p. 1075 (Jan. IS, 1865); 1«W (F«b. S, ISeS); 
Jodm, IJinry, II, 180 (ApL 3. IMS). 

* OJTl «"■*•'< /IfUUion. 1* »., L[I, pt. a, p. 412 {Jm., 1863). 

* /M., IM 8,. Lll, pt, 3, pp. tGO (Apl. 6, 1863), 465 (Haj 2, 1863). 

• Jodm, Diarg, I, 37S (Jul; 10, 1863). 


ton had agreed to allow them to ship cotton to New Orleans 
in exchange for army supplies. In 1864 Greneral Taylor 
annulled similar contracts on the ground that the illegal 
traffic with the enemy was demoralizing Mississippi and 
eastern Louisiana,^ and in the last months of the war General 
Brent made strenuous but hopeless efforts to stem the tide 
of goods passing through his lines.* The part played by 
commerce in the history of the Confederate States recalls , ^ 
vividly the story of the Revolutionary War,* In both cases .ryii'-^^^*^ 
commercial non-intercourse was greeted as the strongest ' 
weapon of coercion, but proved to be a useless one ; in both ' 
cases it was used as an adjunct to military operations, and j 
in so far as it was effective — in the case of the South, 
whether as a result of the Federal blockade or of Confederate 
legislation — it weakened the country for waging war effec- 
tively by shutting off foreign supplies; in both cases, the 
prohibition of trade between the belligerents was evaded to 
a marked extent, the military motive of mutual destruction 
could not fully repress the economic motive of mutual gain j 
by trade. Professor Sumner's words, applied to the com- 1 
mercial policy of the Revolution, apply equally well to that ( 
of the Confederate States : — ' . 

" It [commerce] was used as an engine of war, also for profit ; \ 
as a resource for the treasury, and for direct exchange as a j 
means of getting things otherwise unobtainable."^ I 

This mixture of motives is well illustrated in the treat- 
ment of the commerce across the Rio Grande. Cotton was 
exported from Texas and exchanged in Mexico for arms and 
ammunition, which were smuggled into the Confederacy. 
In some cases the French authorities interfered.* Until the 

1 Ojgri Rec'dt Rebellion, Ist S., XXXIX, pt. 8, pp. 860-2 (Oct. 28, 1864). 
« Ibid., iBt S., XLVm, pt. 1, pp. 1423, 1426-7, 1436, pt. 2, pp. 1265-6 (Mch.- 
ApU 1865). 2 -* 'tO • ^^u 

» Cf. Sumner, Financier Am, Revolution, I, ch. V. I P V Ol . i *i .■ •' *^ ^ 

* Ibid,^ 103. -.-■• « * 

* Confed. Arch ives: S . Johnson to Prea. Dayis, Not. 4, 1861 ; Ojff*l Rec'da 
Rebellion, Ist S., XXVI, pt. 2, pp. 90, 153, 267, 273, 286, 315, 384, 517, 521, 
524, 568 ; Fremantle, SotUhem States, 8, 33. 


capture of Brownsville at the mouth of the Rio Grande in 
November, 1863, this trade flourished. After the Federal 
forces gained a foothold in that region, it became more 
hazardous; and, in keeping with the policy of the Confed- 
erate government under similar circumstances, instead of 
encouragement being given to it, restrictions were put upon 
the trade, largely with a view to having the government 
share in its profits. Plantera were allowed to export 40 
bales of cotton for eveiy 100 slaves owned; and shippers 
were required to import from Mexico at least one-quarter of 
their goods in military supplies. Security was required to 
insure compliance with the law.^ Other similar restrictions 
were appUed, which suggest the government's jealousy of 
the profits earned by individuals in the trade. 

In 1864 the government put further difficulties in the way 
of private speculators,^ and itself set up a Cotton Bureau in 
Texas. Of its operations we know but little; it is clear, 
however, that it organized and largely monopolized the busi- 
ness of exporting cotton into Mexico in exchange for the 
needed foreign goods.' The Cotton Bureau contracted with 
parties who undertook to transport the cotton across the 
border and return with the government supplies. There 
seems to have been great activity in this trade during the 
last months of the war.^ 

1 Ojff*lRe^dsRAeU{4m,\^S.,XXXIV,pL2,pp.SiO-4;XXVl^pL%,^\9A\ 
XXXIV, pt 8, pp. 830^, 858-^; XLVm. pi. 1, pp. 1458-^ ; 4th S., m, 806 ; 
Fremmiitle, SotOhem States, 36 ; Donej, RxolUetiimSf 839. 

* OjgriRe^ds Rebellion, Ist S., XXXIV, pt. 4, pp. 643-4 ; LII, pt 8, pp. 801 & 
M. ; XXVX pt. 2, p. 184 ; Gen'/ Orden Adj.-GtnTa Off., ApL 16, 1864, m. 

• Off'l Bec'da BebeOum^ltX 8.» XXXIV, pt. 8, p. 831 ; pt. 4, pp. 646-6, 649 ; 
4th S., n, 857. 

« Ibid., l8t 8., LII, pt. 8, p. 801 (Secr^y War to Gen. Taylor, Dec 88, 1864) ; 
RaUigh Progreu, Jan. 18, 1865 (quoting Bep't Secr^j Treas'y). 




Salt Works — Thb Manufacture of Arms Aim Ammukitiom — Iron 
Works — Textile and other Manufactures — The Profits of the 
Manufacturers — The Railroads — The Crops — The Limitation 
OF THE Cotton Crop — The Distilling Industry — The Moral 
Decadence of the South. 

The development of mining and manufacturing industries 
in the South during the war was comparatively meagre. How- 
ever, the incentive to find a domestic source of supply of the 
commodities which had formerly come from the North or from 
abroad and were temporarily cut off by the blockade led to 
the establishment of a variety of industries that are worth 
noting. ^. .^^ 

Strenuous efforts were made to supply the need of salt, aV«-'5^*-. 
first by the evaporation of sea water,^ but as the Federal con- 
trol of the coast Une put difficulties in the way, the interior 
was searched for possible salt mines that could be worked. 
The State governments offered rewards for the discovery of 
salt springs, and a bonus for the production of salt ; or under- 
took to subscribe to the capital of any private salt-manufactur- 
ing concern, as they had been urged to do by the Continental 
Congress during the Revolution.* Minor salt works were 
established in Texas, Alabama, and Louisiana.^ In North 
Carolina the State Convention took the matter in hand, and 

^ Charleston Courier, Jan. 1, 20, 24, 28, Feb. 29, 1862 ; Moore, Rebellion Record, 
ni, 445; Atlantic Mo., LVIII, 229 (Aug., 1886). 

3 Ala. acts Nov. 11, 19, 1861 ; Ga. act Dec. 16, 1861 ; S. C. act Dec 21, 1861 ; 
Petersburg Express, Apl. 11, 1862. 

s Vicksburg Eve, Citizen, Dec. 11, 1861 ; Charleston Courier, Jane 25, Aug. 12, 
1862 ; Of*l Rec'ds Rebellion, let S., LII, pt. 2, pp. 382-^. 


appointed a salt commissioner, who estabUshed works at 
Morehead City. These were destroyed by the Federal txoops. 
Then works were built near Wilmington, which were in opera- 
tion two years, and had to contend not only against tiie rav 
ages of yellow fever among the operatives, but also against 
the interference of t^e Richmond authorities on the score of 
the alleged disloyalty of the employees.' South Carolina 
sought to remedy the scarcity of salt and its extortionate 
price by contracting with private manufacturers for a supply 
of the article, which was then sold to consumers by the State, 
and presumably below cost.' Alabama made some similar 
■ The leading source of supply waa in the soutiiweat comer 
of Virginia, especially at Saltville, where the daily output of 
< salt rose to above 7000 bushels before the end of 1862. By a 
series of laws the State of Virginia obtained the lai^est part 
of the salt produced there, and controlled its manufacture, 
distributing it at a low price through the State and to con- 
sumers.* Other States, like Alabama, Georgia, and North 
Carolina, also put up works at Saltville, and made advances 
to contractors. There was much friction between the States, 
Virginia being blamed for taking the lion's share of the lim- 
ited supply, and interfering with the export to the other 
States. These works remained in operation till 1865, and 
were not disturbed by the Federal troops till the last days of 
L.^^ The South obtained its supply of arms in ipaxt from the 

> CharJttton Courier, Ang. 16, lS6a ; Batei^ Prognu, Nov. Ifl, 1863 (Got. 
Vance, meu.) ; Nor. 31, 1662 ; Og'L Eec'di BtbtlUon, lat S., LI, pt. 2, pp. 1030, 
1033, IMS, 1047. 

» CkarUtUn Couritr, Sept. 13, 1862. 

■ Off'l lUedi BebtUim, ith S., I, 7DS (Got. A]a. meM.). 

• Vidabury Evt. CiWaw, Dec. 20, 1861 ; Oj?"'/ flec'rf* fleW/ion, IgtS., XSVII, 
pt3, p. B89; XLVI,pt. a, pp. 1221-2; Va. acta May 9, Oct. 1, 1863; Mch. 30, 
Oct. 39,30, 1863; Mch. 8, 1864; Remrn Mcb. 30, 1862; Richtnond Examiner, 
Hch. 30, 1863, k 1S63--3, pauim (Notioea of SuU distribation of salt) ; Rtp'l Va. 
Auditor. Oct 3, 1864 iStatt Do^t). 

• Charlatan Mercury, Jnly 31, 1862; Off'l Rti^di RebdUtm, lit R, LI, pt. 2, 
pp. 1056, lose, 1061 ; LII, 384; JoaM, Diary, n, 367 (Dec. 37, 1864]. 


United States arsenals which were taken possession of by the 
Confederates at the outbreak of the war ; in part, as we have 
seen,^ from abroad ; and in small part from Southern factories 
that were established during the war. Of these there were 
none in the spring of 1861 ; by the following fall and winter 
a number had been equipped under the auspices and control 
of the government. The valuable machinery secured at Har- 
per's Ferry was put to use, and by September, 1862, the Chief 
of Ordnance reported that over 14,000 small arms had been 
manufactured, and that the public armories could turn out 
over 2000, and the private armories over 1500, per month. 
It is fair to assume that they were not manufactured at that 
rate, and that most of the establishments were given up, or 
were destroyed by the advancing Federal troops. We hear of 
only one — at Columbus, Georgia — manufacturing small 
arms as late as the spring of 1863.' 

Heavy ordnance was more extensively manufactured in the 
South. Foundries and similar iron-works at least attempted 
to turn out cannon, and those in Augusta and Columbus were 
still in operation in 1863.^ Almost all the ordnance of domes- 
tic manufacture was made by the Tredegar Works of Rich- 
mond, which had been established a few years before the war, 
and were put at the disposal of the government and enlarged 
in 1861. Plates for armorclads and shells were also produced 
there.* Very few iron-works other than those engaged in fur- 
nishing the government with arms were operated. We hear 
of plans to establish smelting works, and of some rolling 
mills ; but fuel and ore were too scarce to come into genersd 

^ See pages 28-9. 

s Off*l Rec'ds RebeUion, 4th S., I, 425, 467, 556, 622 (^ pastim); IT, 299; 
Charleston Courier, Jnne 18, 1861 ; Jan. 18, 1862 ; Charleston Mercury, Mch. 3, 
1862; Petersburg Express, ApL 14, 1862; Richmond Examiner, May 13, 1863; 
Acts Apl. 17, 19, 1862. 

> Charleston Courier, May 25, 1861; Les Etats Conf€d&A, 56; Fremantle, 
Southern States^ 176; SterenBon, Rebel Army, 82-3; Richmond Examiner, May 
13, 1863. 

* Ojrn Rec*ds Rebellion, 1st S., XLVI, pt 2, pp. 1287-8 ; 4th S., 11, 956 ; Bol- 
lock, Secret Service, I, 21 ; Two Months in the C. S., 95, 273 ; Jones, Diary, I, 
324; New England Mag,, XL, 368 (Not., 1891) ; DeLeon, Rebel Capitals, 92. 


use, though iron mineB in Sonth Carolina and coal mines in 
Alabama and North Carolina are mentioned. Nails were 
about the only article of iron, other than distinctly war mate- 
rial, we find produced during the war.' Natniallj the indus- 
tries which supplied the armies with war material received 
meet attention. Factories for the maniifactare of percussion 
caps and cartridges were established at various places, — for 
instance, one in Augusta, which was presumably the largest.* 
I The authorities were chiefly concerned with providing a 

itwH"' sufficient supply of gunpowder. At the outset the Secretaiy 

" v* of War reported that no powder works were known to exist 

in the Confederacy. By the summer of 1861 some factories 
were in operation in South Carolina, Alabama, Mississippi, 
and Tennessee ; and in the fall numerous powder-manufac- 
turing concerufi were incorporated in those and other States.' 
Abandoned or neglected saltpetre mines were worked again; 
! one of them by the same man that operated it in the War 
I of 1812. In the spring of 1862 the government made stren- 
uous efforts to increase the supply of saltpetre by offering 
a high price for it, and proposing to advance half the 
capitil necessary to erect nitre works or enlarge the present 

Reliance upon private manufacturers was insufficient, and 
in April, 1862, a special government bureau was created to 
furnish the armies with powder. This "Nitre and Mining 
Bureau " at once set about to explore for nitre mines, and 
by August 1 had nearly 400 men at work in 16 caves. By 
October 200,000 pounds of saltpetre had been produced, to 

> Off'l Rec'dt RtMUm, Irt S.. XXXT, pt. 2, p. 191 ; XXXn, pt. 2, p. 662 ; 4Hi 
8., II, 391 ; III, 34, 832 ; Jones, Diary, U, 337 ; CharUnan Courier, May 31, Aug. 
27, 1863 ; Rlchmmd Dhpalch, May U, 1868 ; Richmond Eiaminer, Ang. 31, Dec 
25, 1863; Sfaitphlt Apprnl.On. 20, 1863; N. C. acU Dec. IS, 14, 1863; Malet, 
Errand South, 75 ; Doreey, Rec'illfcliont, 240. 

' Charlatan Courier, July 15, 1861 ; Stevenson, Rehd Anng, 91 ; La jSlau 
Con//d&a, 58; Fremantle, Southern Stales, 175-6; Raines, Six Decada in 
Texat, 369. 

* OlT'i Rec'di Sebellion, 4tli S., 1, 292-4, 555-6 ; Chartetton Courier, May-Sept., 
1861 (paitim). 

* Eiehmond Diipalch, Mch. 6, 1S62; Act Apl. 17, 1862. 


which were added the foreign imports from Mexico and those 
direct from Europe; these exceeded the home production. 
The leading government powder factories were at Augusta 
and at San Antonio ; the former was the chief reliance of the 
government ; during the year ending July, 1863, it supplied 
one million pounds, and presumably remained in operation till 
the capture of Augusta.^ 

The South was at the outbreak of the war less deficient in ( A\v^\9^>nJt.^ 
tanneries. They existed in considerable numbers, and were 
added to. Factories for turning out shoes and saddlery were 
established here and there. In 1862 the government took 
hold, and started a factory of its own in Richmond, detailing 
soldiers to make shoes, — no machinery was supplied ; simi- 
lar works were started at Montgomery later in the war. To- 
gether their capacity was at most perhaps a thousand pairs of 
shoes a day.* 

Textile manufactures hardly existed in the South in 1861. A-. '\^ 

Cotton mills were soon established, especially in Georgia, 

South Carolina, and Alabama. These produced no inconsid- 
erable amount of cotton cards and cloth, and were encouraged 
by subsidies from the State governments as well as by the 
governments* importing suitable machinery from abroad.' „ 

The establishment of paper factories was less extensive, f^^^" ) (^ 
though we hear of a few turning out a coarse quality.* The ' 
chief supply of that necessary article waa obtained from the 
stock carried over from before the war. Of other lines of in- 
dustry started, we hear of the manufacture of hats, blankets, 
hosiery, candles, printer's ink, lamp black, glass, matches, pot- 

1 Acts Apl. 11, 19, 1862 ; Apl. 22, 1863 ; June 4, 1864 ; Off*l Rec*ds Rebellion, 
4th S., II, 26-30, 222-3, 661, 957 ; Charleston Courier, Oct. 6, 1862. 

* Charleston Courier, Richmond Examiner, Raleigh Progress (passim) ; Va. acts 
Mch. 1861 ; Confed. act Oct. 9, 1862; Vicksburg Eve. Citizen, Sept. 13, 1861. 

' Merchants* Mag., XLII, 376 (1860) ; Charleston Courier, Richmond papers 
(passim) ; Jones, Diary, I, 203 ; Off*l Rec'ds Rebellion, Ist S., XXXII, pt. 2, 
p. 562; Ya. acts 1861-4; Ala. acts Dec. 4, 1861, Nov. 8, 1862; Ga. acts Dec 6, 
1862 ; Miss, act Dec. 9, 1863 ; N. C. ord. Feb. 25, 1862 ; Newbem Progress, Mch. 
7, 1862 ; Confed. act Oct. 8, 1862. 

^ Vicksburg Eve. Citizen, Jnlj 13, 1861 ; Charleston Courier, Mch. 3, July 12, 
1862; Richmond Dispatch, Apl. 16, 1862; Jones, Diary, 1, 102. 


teiy, and even of cutlery, copperas, nroollens, tmware, silver 
V plate, stoves, oilcloth, pianos, and sewing-machines.* It is 
doubtful whether any of these industries got beyond the ex- 
- . perimental stage. Necessary machinery and skilled labor 
vSt'^ were wanting, and could not be supplied. 
rJVV A Confederate Patent Office was provided for by the Pro- 

^ visional Congress in 1861 ; and during its first year 304 ap- 

plications for patents were received, 57 were granted, and 110 
caveats were filed. The business of the office, judging from 
its receipts, increased till 1864, and then fell off greatly.* 

Those who succeeded in securing a sufficient amount of 
capital and labor to establish mannfactOTies must have made 
large profits. Pollard states that the contractors who sup- 
plied the government with war material had become rich and 
prosperous by 1864,' The only direct evidence we have on 
the subject is furnished by the Viiginia tax assessment for 
the year 1863* According to this, 120 establishments were 
taxed on a basis of profits exceeding three millions of dollars. 
There were 66 tanneries, 16 textile and 14 flour mills, 5 iron 
works, 9 coal mines, 9 salt works, and one paper miU. One 
cotton factory alone was assessed for profits of $355,000. 
A woollen mill is reported to have declared dividends of 
$530,000 on a capital of $200,000; a paper mill 575% divi- 
dends in the years 1861 and 1862 ; and another manufactory, 
645 %.5 

One important industry, the railroads, deserves more than 

,' ' passing notice. The railroad development of the South had 

la^ed behind that of the North. The railroads of the North 

> Oar/eiton Couner, Jnlj t3, Oct. 17, Not. a, 1B61; Hch. 3, Jul/ 13, 1BG3; 
Viektbarg Eve. Citiien, Not. 36, 1861 ; CharkUm Meratry, ApL IS, 1863; JUdt- 
vumd Ditpatch.Hec. 7. 1B61; Jnn. 30, Mch. 6, Apl. 5, 8, 1B6S ; Richmmd Exam- 
ion; Dec. 23, 1B63 ; Jane 18, 1864 ; DeBov'* Rtv., XXXII, 337 (1863) ; Mslet, 
Errand South, 75 \ RAines, Six Decade* in Texat, 369-70, 478. 

■ Rewl'o Hch. 4, 1S6I ; Acta Uaj 91, Aag 30, 1861 ; Jvi. S3, Feb. 3, Sept. 
S6, 1863 ; Richmond Examimr, Mch. 13, 1S62 {Bqit Comni'r PatenU) ; Biehmtmd 
Record (painm), 

* Pollard, £ian>, 351. 

* Rep'l Va. Auditor, D«c. 9, IB63 (IfuMnirg RepubUean. Jim. 35, 1864). 

* Charletton Courier, Mcb. 14, 1863, qaoting Richmond E 


were better built and equipped, and were better run. Those 
of the South represented few systems; there were no trunk \?[.^t 
lines ; those that did^exist had largely the character of local < * 
roads supplymg the local traffic from and to the important 
coast cities like Wilmington, Charleston, Savannah, Mobile, 
New Orleans, and, of course, Richmond and Petersburg. Of 
the total railroad mileage in the United States in 1861, namely, 
31,266, the States of the Confederacy contained 9283, or less ^' i ' ^ 
than 30%. This figure waa soon reduced by Federal inroads 
to something over 6000, or roughly one-fifth of the country's 
total railroad mileage.^ 

The railroads were put to their utmost to keep the centres 
from which they radiated as well as the armies gathered there 
provisioned. From Richmond and Petersburg two systems 
tapped the food-producing regions: the Southside Railway, 
which ran westward to the comer of Virginia — from where 
most of the salt came, as we have seen — and into Tennessee ; 
and the Richmond and Danville Railway which ran in a south- 
westerly direction, and was extended during the war to join 
the North Carolina railroads at Greensboro. In that State 
the railroads radiated from Wilmington, and were of great 
importance in distributing the blockade goods. One line led 
northward through Goldsboro and Dalton to Richmond ; the 
other led westward through South Carolina, where it joined 
the network that centred at Charleston. One of these ran 
from Charleston westward through Augusta to Atlanta, and 
thence northward to Chattanooga. A parallel line ran from 
Savannah to Macon, and joined the former road at Atlanta. 
The remaining roads were either unijnportant branches and 
disconnected links, often incomplete; or they were at least 
partly in the hands of the Federal troops. The latter was 
especially true of the long line running eastward from 

Aside from the immense destruction of railroad material 
along the line of the Federal advances, the roads deteriorated 

1 Poor, Manual for 1868-9, p. 21 ; OffH Rec'di Rebellion, Ath S., II, 512; Ton 
Halle, Bautnwollproduktion, 114 & as. 



• ', 


rapidly, and could not be kept in repair. Their capacity for 
handling freight was much reduced ; in 1863 we find only a 
few railroads with more than two trains a day. Bridges and 
rolling stock wore out, and could not be replaced. By the 
end of the war the nulroads were reduced to a condition from 
which it took them many years to recover. The North Caro- 
lina Railroad, for instance, had only five serviceable passenger 
cars left for its 22S miles ; and others were no better off. 

The railroads certainly did not make due allowance for this 
deterioration, but figured out large profits on their business 
during the war. The carrying of troops and army supplies 
superseded the carrying of cotton, which of course greatly 
declined, — in the case of the South CaroUna Railroad, a 
leading cotton road, from over 800,000 bales in 1860 to 
120,000 in 1861, and to an annual average of 28,000 during 
1862-4. The gross receipts of this road increased fourfold 
between 1860 and 1864, and the net receipts more than 
doubled, — at least as expressed in currency, — leading to 
an increase of the dividends from 7% to 8%, 12%, and 16%. 
The accounts of the Georgia Railroad give similar figures, as 
do especially the railroads like those leading out of Richmond, 
which did a large business on government account.^ 

There is good evidence that the railroads sought to in- 
crease their profits by speculating in cotton, which they, of 
course, had excellent opportunities to buy and store (dong 
their lines.' 

There must have been some feeling against tiie profits of 
the railroads, as a bill was introduced in the Confederate 
Senate to compel the latter to reduce their eharges if their 
annual profits exceeded 15% of their paid-in capital. An 
amendment to substitute 30% was ofEered, but was tabled 

I InfoTniatioD kbont Soothem railroada ii best gathered from Appletoa's 
Gaidt, Poor's J/anuaii, N. C. Convtntim 1865, Extc. Duc'i ; Newspaper flies, 
Mpecially of the CkarUttm Courier, Richmond Examiner, Ridimimd DitpalcK ; 
MerciantM- Mag., XLII-XLIII {I860) ; Off'l Rec'di Bebeilim, ■1th S.. U, 483-6 
(Bep't to Socr'y War, Apl. U, 1863) ; Ketwl, Souihem Wtnlth, 87-8 & appendix. 

' Charlaion Courier, Dec 1, 1863; Hep't WUmbgtoa & Weldon K. B. in Bep't 
Treas'r [X. C. Concenlion 1865, Exec. Doc'i). 



with the original bill.^ Legislation was not directed at dis- 
couraging profits in railroads, but was, on the other hand, 
concerned to no small degree in encouraging raiboad build- 
ing. The completion of through lines was deemed a military 
necessity, and led to appropriations of over $6,000,000 in 
Confederate bonds by tiie Congress in aid of various rail- 
roads. The first grant of one million dollars went, in Feb- 
ruary, 1862, to the Richmond and Danville Railroad for the 
completion of its line southward. The remaining amount 
was voted to raiboads in Georgia and Louisiana. It is interr 
esting to note in regard to the latter that objection was raised 
in the House of Representatives on the ground that a military 
necessity did not exist, and that the appropriation was in real- 
ity merely offering assistance to private speculation. The 
objector, moreover, denied the right of the Congress under . k^ " 
the Constitution to thus interfere with States rights.* 1 ^^ 

In fact, the practice of subsidizing raiboads *unmis ta kedly_ y^ 
suggests the railroad aid legislation before the warj into ^^'^^T^fA 
which most of the Southern States had been drawn during *^ 

the fifties. That the continuance of this practice during the ^ 

war was not so much due to military exigencies as it was fos- 
tered by the loan and currency policy, — which, as we have 
seen, encouraged unbridled speculation, — is a fair inference ^ 
from the numerous railroad aid acts passed by the State legis- 
latures during the war. These authorized the States and also 
the counties and cities to lend their credit to various rail- 
roads.^ It should be added, however, that in a few cases 
railroad aid acts passed before 1861 were suspended during 
the war.* 

Of the state of the agricultural industries in the South 

1 Richmond Examiner, Feb. 24, 1863. 

« Acta Feb. 10, Apl. 19, Oct. 2, 1862 ; Charleston Mercury, Apl. 23, 1862 ; Off*l 
Rec'ds Rebellion, 4tli S., 11, 145-6. 

> Ala. acts Feb. 7, 8, 1861 ; Fla. acts Dec. 6, 1861 ; Nor. 27, 1863; La. acts 
Jan. 20, 23, 1862; Miss, acts Jan. 29, 1862; Dec. 7, 1863; Apl. 5, 1864; N. C. 
ord. Feb. 8, 1862; N, C, Convention 1865, Rep't TreasW; S. C. acts Jan. 28, 
Dec 21, 1861 ; Feb. 6, Dec 17, 1863 ; Va. acts Feb. 25, Mch. 30, 1861. 

« Ala. acts Dec 5, 1861 ; Miss, acts Aag. 2, Nor. 21, 1861. 

1 . -..f 


during the war yre have little authentic informatioQ. The 
oewspapers of the time reported abundant crops in 1861 and 
of excellent quality. There was a good grain and sugar har- 
vest, but a falling off in the tobacco crop.^ 
' In 1862 the conditions were not so favorable, though in 
parts of Georgia the corn crop was abundant Little rice was 
raised owing to the Federal troops overrunning the sections 
along the coast. However, there could not have been anj 
scarcity of food products, as cotton as a crop gave way largely 
. to the raising of grain, com, and fodder. In South Carolina 
: the planters were said to have doubled their com acreage. 

In 1863 this movement to raise food products in preference 
to cotton continued. We hear of large com crops, and of 
especially large wheat crops except in Virginia, where there 
are complaints of scarcity, which os closer analysis are seen 
to be due, not to small crops, but to the familiar unwilling- 
ness of the farmers to send their produce to Richmond for 
fear of having it impressed at unremunerative prices. This 
phenomenon has been discussed above.^ In August, 1863, 
the receipts of wheat in Richmond fell off from 700,000 
bushels in former years to 75,000.* 

In 1864 the com crop is reported to have been unusually 
abundant in most of the States, while the production of 
wheat is said to have fallen off except in Virginia ; and in 
1865 the condition of the crops in March is reported as 
having been exceptionally favoraWe in the States south of 

We are forced to the conclusion that whatever scarcity of 
food was felt in the armies and in the cities was due not to 
deficient harvests but to the difficulty of attracting produce 
to the markets under the currency and impressment rigime. 

' Day, Doicn South, S6T ; nempapen. MpecUllj Oiarlatim Coarier (qnoting 
other Suntbem newspapers ). 

* See pagM SOS t ra. 

» Richnumd Ezanlatr, Anff. 30, 1863. 

* Informatioa regarding the crops is best obtuned from the fliea of tbo Kich- 
nond and ChArlecion nawspaperB ; also from Off 'I Rt^dt RtbeUion, lit S., XXXIX, 
pt 3, p. TBS; XLVI, pt. !, p. 1297. 


The destructioii of food products by the advancing Federal 
armies — which was no doubt very considerable, especially 
after the spring of 1864, and is indicated in the changes and 
reductions in the soldiers' rations,^ in comparison with the 
Federal regulations — was much more than counterbalanced 
by the increased attention given by the Southern planters to 
raising grain and com to the exclusion of cotton. 

Popular appeal and legislation discouraged the raising of 
cotton. Some urged the planters to stop planting it altogether 
on the plea that such action — like an embargo — would 
bring the Englishmen to terms.^ The same reasoning led to 
the advice to bum the cotton crop when harvested with a 
view to throwing the English cotton operatives out of em- 
ployment and coercing their government into recognizing 
the Confederacy.* The newspapers joined in friendly ad- 
monition to planters to raise no cotton, but as much grain, 
fodder, and meat as possible.* Such friendly advice was 
given more formal expression by the authorities making 
similar recommendations. So, for instance, a grand jury in 
Georgia in its presentments advised planters not to grow 
cotton. The Mississippi legislature followed suit. Even 
the Congress, after protracted discussion, passed a joint reso- 
lution in the spring of 1863, authorizing President Davis to 
issue a proclamation embodying a similar recommendation, 
which he did. Incidentally, it may be mentioned that 
much opposition was expressed in the Senate to the pas- 
sage of the resolution, one Senator opposing restriction on ^ 
the ground that it would build up the East India cotton in- 1 
terest. Governor Vance supplemented the President's proc- 
lamation with a similar appeal to North Carolina planters.* 

1 Regulations Subsigtence DepX 1862, p. 7 ; OffH Rec*ds Rebeliion, Ist S., XXIV, 
pt 3, p. 1055 (Aug., 1863); XXVII, pt. 3, p. 536 (Dec., 1863); XXXU, pt. 2, 
p. 608 (Jan., 1864) ; 4th S., Ill, 592 (Aag., 1864). 

2 Confed, Archives: M. Valentine to Pres. Davis, July 16, 1861 ; Charleston 
Courier, Jan. 15, 18, 1862 (quoting Mobile Advertiser ^ Register), 

> Barker, Rebellion, 124-5. 

« Merchants' Mag., XLV, 378-9 (Oct., 1861) ; Petershirg Express, Apl. 4, Oct 
4, Nov. 6, 1862; Richmond Examiner, Apl. 28, 1863. 

» Charleston Courier, Dec. 13, 1861 ; Mch. 6, 13, 1862; Miss, resol'n Dec. 3, 


As is customary in the Sonth in mora raoent times, the 
plunters met in convention during the war, and pledged 
themselves to limit their production of cotton to a certain 
amount. Those of a Louisiana parish resolved in a public 
meeting held in January, 1862, that none of their number 
should plant or raise mora than 2500 pounds of cotton dur- 
ing the coming season, unless the blockade wera removed by 
March 1. At a convention in Memphis in February there 
: was some talk of petitioning tiie Congress to impose a tax of 
920 a bale, with a view to discoursing cotton raising. In 
the following months numerous meetings wera held to create 
a sentiment against planting cotton and in favor of raising 
food for the army ; those planters who exceeded the quota 
allotted them were dubbed unpatriotic' 

As has generally been the case with more recent attempts 
to restrict the cotton crop by mutual agreement, the tempta- 
tion to exceed the quota of bales allowed each planter was 
too great to be resisted. The agreements were evidently 
broken. The desire to raise cotton for purposes of speculation 
often outweighed ihe more patriotic desire to raise food for 
the army. And, in fact, it would seem that the iaterests of 
the army were best served by raising cotton and shipping it 
abroad in exchange for war materials. In any case, it is 
evident that the Southern farmer forsook his cotton crop with i 
evident unwillingness, for he might expect large profits by i 
holding it till the end of hostiUties. His food products he 
was in danger of losing to the government at arbitrary and 
unramunerative prices. The friendly admonition of the news- 
papers and the mutual agreements of planters' conventions 
did not suffice to bring about a change of production, at least 
not to the degree desired by the buyers of farm produce ; and 
we find a striking though ineffectual movement on the part 
of the State legislatures to legally restrict the planting of 

1861 ; Confed. j't imoI'ii Apl. 4, 1865 ; Jonet, Diarg, I, 390 ; Off'l Rec'di Rt- 
Mliim, 4tb S., II, 376 ; MoON, RO^im Record, VI, 924 ; RickmoTtd Examiner, 
Mch. 13, 1863. 

1 Charleiton Courier, Jan. 18, Feb. S6, Hch. 6, 35, ApL 8, 1863; Richmond 
Exatnlner, Apl. 31, 1863. 


cotton. A limit was set to the number of acres per hand 
employed, varying from 1 to 3 ; or the number of plants or 
of bales was fixed by statute. Heavy penalties were imposed 
for exceeding these limits, though we never hear of their being 
inflicted. Similar provisions were made to apply to the 
tobacco crop.^ 

Whether as a result of this agitation and legislation or not, 
the amount of cotton raised in the South during the war fell 
off greatly. The 1860 crop had amounted to more than 4i 
millions of bales ; the figure for 1861 fell below 4 millions. 
In 1862 over one million bales were raised; and in 1863 some- 
what less.-- The crops of 1864 and 1865 probably did not\'f*^rr<^ 
exceed half a million bales.'. Cotton was accumulated in' 
large amounts on the plantations and by the government 
with a view to finding a profitable market at the close of the 
war. Most of it was ruined by exposure or destroyed on the 
approach of the Federal armies. There was a deep-rooted 
notion that the South was increasing its wealth by the rise in 
the scarcity value of cotton abroad. One writer gave ex- 
pression to this feeling by figuring out an increase in the 
value of the products of the South — cotton, tobacco, and 
naval stores — of $200,000,000 ; he claimed that the ex- 
penses of the war were being met by the increased value of 
agricultural products, in consequence of its continuance.' 

The same motives which actuated the restriction of cotton 
planting and the encouragement to raising food products 
were shown in the movement to forbid the distilling of grain 
and corn, as had been the case during the Revolution. The 
Confederate Congress was petitioned, in December, 1 861, to 

1 Ga. act Dec. 11, 1862 ; Off*l Rec*ds RebeUim, 4th S., 11, 376 (Pres. Davis to 
Got. Ga., Jan. 27, 1863); Charletton Courier, Jan. 1, Mch. 2, Dec 5, 1863; 
Raleigh Progress, Mch. 27, Apl. 6, 1863 ; S. C. acts Feh. 6, Apl. 10, Dec. 17, 1863 ; 
Va. act Mch. 12, 1863 ; N. C, Standard, Nov. 27, Dec. 1, 1863 ; Fla. act Dec 3, 
1863; Ark. act Mch. 21, 1862. 

2 Merchants* Mag., XLIII, 506-8 (1860) ; XLV, 497 (1861) ; Charleston Courier, 
Jnlj 15, Nov. 7, 1861 ; Aug. 13, Dec. 18, 1862 ; Aug. 5, 1863, & passim ; Richmond 
Examiner, Jalj 16, 1863 ; N. Y, Times, Mch. 11, 1866 (1-3) (Charleston corresp.) ; 
Richmond Whig, Dec. 25, 1863; Richmond Record, Sept 10, 1863. 

* C. S. Almanac for 1864, p. 49. 


1, c- 


take such action ; and the War Department seized a quantity 
of com in the hands of distillers a few months later to prevent 
its scarcity.^ Governor Brown of Georgia took similar action 
six weeks later. Beginning with the spring of 1862, the 
State legislatures passed drastic measures to forbid distilling, 
though their frequent re-enactment indicates that people 
evaded the law, finding it more profitable to turn their prod- 
uce into spirits. Moreover, the Governors were generally 
given authority to suspend the prohibition in certain cases 
and to license individuals to distil spirits for medicinal or 
manufacturing purposes.' 

The Confederate government engaged extensively in the 
distilling industry, which, as we have seen,^ led to difficulties 
with the States, with whose policy of prohibition the practice 
of the central government did not accord. So, for instance, 
the Governor of Georgia proposed to prosecute any one distil- 
ling in the State, whether an agent of or a contractor for 
the Confederate government or not, but the quantity of 
whisky distilled by the government or by its contractors was 

The picture of the disturbed and anomalous condition of 
the South would be incomplete without a reference to the 
moral decadence which accompanied i^. The effect of the 
redundant currency in stimulating reckless speculation has 
already been noted.^ Its effect in encouraging extravagance 
^ was equally marked. The nouveau riche in the cities who 

1 Charleston Courier ^ Dec 9, 1861 ; Petersburg Express, Feb. 10, 1862. 

s Ibid,, Mch. 27, 1862 ; N. C. acts Feb. 21, Dec 17, 1862 ; Raleigh Progrett, 
Nov. 19, Dec 5,6, 1862; Feb. 16, 21, Mch. 27, 1863; Moore, Rebellion Record, 
VI, 524 (Gov. Vance, Apl. 2, 1863) ; S. C. acts Dec 18, 1862 ; ApL 10, 1863 ; Ga. 
acts Nov. 22, Dec 9, 1862 ; Dec. 3, 1863 ; Fla. resorn Nov. 24, 1863; Fla. act 
Dec 4, 1863; Miss, acts Jan. 3, Dec 9, 1863 ; Mch. 19, Apl. 5, 1864 ; Mch. 9, 1865 ; 
La. act Jane 20, 1863 ; Ala. acts Dec. 8, 1862 ; Aug. 27, 29, Dec 7, 1863 ; 39 Ala. 
247 ; Ark. act Mch. 19, 1862 ; Tex. act Dec 16, 1863 ; Va. acts Mch. 12, Oct. 1, 
1862; Richmond Dispatch, Dec. 2, 1862. 

> See page 217 ; cf. Off'l Rec*ds Rebellion, 4th S., m, 118. 

« Ibid., 4th S., m, 106 ; Petersburg Express, Nov. 23, 1863 ; Charleston Courier, 
Jan. 14, 1864 ; Act June 14, 1864. 

* See pages 230 & ss. 


had amassed a fortune, often fictitious, was given to lavish 
expenditure, luxurious living and display, exactly as had 
happened during the paper money era in Austria, during 
the American Revolution, and especially during the French 
Revolution. Theatre and baUs were the favorite means 
of spending one's quickly gotten wealth.^ The act of 
February 6, 1864, though partly directed at this evil of ex- 
travagance by forbidding the importation of foreign luxuries, / 
could not stem the tide. Early in the war there had been 
a marked tendency toward retrenchment in personal expendi- 
ture; the plethora of currency no doubt brought about a 
change, by putting a premium, as we have seen, upon buying 
something with the paper money one held. 

The change in the moral tone which inevitably accompanies 
a paper money inflation is furthermore seen in the growing 
prevalence of gambling. As we have noted above, legitimate 
business made way for speculation of the wildest kind ; shad- 
ing off into gambling, which became very general and open, 
especially in Uie large cities of the South. In Richmond the 
increase of gambling-houses gave the authorities much con- 
cern in the fall of 1863. Laws were passed to suppress 
them, but only temporarily held them in check. As in 
Washington at the same time, the aggregation of prosperous 
government contractors, underpaid government officials, and 
furloughed soldiers increased gambling to an appalling ex- 
tent in Richmond, where it caused more comment than in the 

1 RiiAmond Examiner, Jtm, 3, Feb. 19, Not. 24,1863; Feb. 8,1864; Pollard, 
Third Year of the IVar, 182 ; Day, Down South, 1, 99 ; Rhodes, HitCy U. S,, III, 
648-9 ; Samner, Am. Currency, 79, 317 ; Sumner, Financier Am, RevoTn, II, 136 ; 
White, Money ^ Banking (1896), 147; Montgaillard, State of France, 1796, 
p. 50; De Goncourt, SociA€ franf. pend, la R^voCn, 181; Ton Sybel, French 
Revol% rv, 222-4; Blanc, Hist, de la RivoTn, XU, 118; White, ViVil Money 
in France, 39-41, 72. 

^ Day, Doum South, I, 98 ; Richmond Examiner, Jan. 3, Apl. 21, 1863 ; ApL 
21, 1864; Richmond during the War, 76-7, 255; ajTl Recede Rebellion, Ist 8., 
XXXII, pt. 3, pp. 625-7; Pollard, Davie, 153; Egglerton, Recollections, 102-3; 
Rhodes, Hist^y V. S., HI. 549 ; DeLeon, Rebel Capitals, 238-9; Va. acts Oct 16, 
1863; Mch. 10, 1864; Jones, Diary, II, 79; SteTenson, Rebel Army, 106; Jones, 


The distarbance of the Soath's indastrial life and the 

full development of the militaiy instdncta lowered the 

^T ■* moral staodards of the people, as every great war has done. 

Jjfr . ■' I Drunkenness became very common. The convictiona in the 

Ir. Ih*"- army for this oflEence numbered 5 in 1861 ; 28 in 1862 ; 78 in 

-^^ww 1 1863; and 40 in 1864. The falling oft in 1864 agrees with 

** ***^'l^ ' the number of arreeta for drunkenness in Charleston, which 

fJs tri •*">'", also fell off markedly after 1863, perhaps in boUi cases owing 

^**»^«»wj&n. -to the scarcity of intoxicants,' 

This lack of self-restraint and want of social discipline was 
also shown in the bread riota which broke out in some of the 
larger cities. Mobs broke into stores and demanded goods at 
the government's impresament prices, a curious commentary 
upon the effect of the policy of interfering with a free mar- 
ket The Richmond Examiner claimed with reason that the 
mob "put into practice the principles of the Commissary 
Department." ' 
Vice and rowdyism became rampant. RufBans, thieves, 
^^-*''' and prostitutes abounded, and vice iu every form became 

/common," The South from this point of view does not pro- 
sent an attractive pictur^ -v^taitt- is only matched by the 
description of the social conditions prevailing at the time of 
similar upheavals in other countries, for instance in France 
during the last decade of the eighteenth century.* 

Chin itt Me Camp, STO; Gm't Order Dept No. Va., Not. 14, 1862; Baker. 
Secret Strvitt, ch. XIX. 

1 Jonea, ChriMt in tht Camp, 268 & U. ; Richmond Examintr, Dec SS, 1B64 
(Adj.-GenTi letter in SenaW); Act Apl. 21, 1862; Police reports in Chtrlaton 
Cauner.panim; N. Y. Timti, Jnlj Sa, 1883 (6-7), qnoting PAiia. fiecord. 

» Richmond Examiner, Apl. *, 1863 ; Jona^ Diary, I, 884 ; Richmond during 
the War, 30S. 

• Ptleribarg Exprai,Veh.l7,'[S6i; CTar&ifon Mercury, Oct. 27, 1 B6S ; Pollard, 
Davi*. lag, 153; PolUrd, Third Ytar of the War, 182; StaTonKm, Rdid Army, 
106; Off'l Rec'dt Rebellion, lit S., pt. 8, pp. 625-7; Rnssell, Diary, painm; 
Jonea, Diary, 11, *l ; Richmond daring iht War, 76-7 ; RaUiffh Progreu, Mch. 2, 
1864; Ridimend Examiner, Jan. 3, May 7, 1863; July 32, 1864; Daj, Daum 
South, I, 98. 

' MoDfgailUrd, Slate of France, 179S, p, 50; De Oonconrt, Sociitt fnaif, 
pend.iaRir<il'n,\%\ ftu.; tod ^f\ir,\, French Revol'n.lV, 292-4; Blanc, ^it(. d* 
^AAreTRiXn, 118; White, Pia< J/iwey in /Vonoe, 41-3, SS, 72. 


It must be confessed that the revolting picture is not 
appreciably modified by the fact of religious revivals in 
Richmond and in the army, which occurred during 1862 and 

1 Jones, Chritt in the Camp {pasiim); Richmond Examiner, Aug. 15, 1863; 
Jones, Diary, II, 64, 79. 

//^ /ll^i - 

I: ^cU^^\ Rc^^^^S^r^^*'^ 



Tbe Dikbct War Tax of AcansT, I86I — Itb AprOBTiomiBirT aitd Collio- 
iiOM — TbkTax Act of Apoil, 1S63 — Tauh ih kihd — Tax Actb or 


The revenue ot the Confederate govemment was largely 
derived, as we have seen, from loans. Taxation was neglected, 
especially during the first two yeara of the war. The cotton 
export duty of ^ of 1 cent a pound was levied on February 28, 
1861, in connection with the 15-Dullion loan of that date. 
Some months then elapsed before anything further was done 
by the Congress with a view to raising a tax revenue. In 
his report of May 10, 1861, Secretary Memminger proposed a 
direct tax of $15,000,000, to be levied and collected by means 
of the established State tax machinery, — the latter a fatal 
mistake, as will be seen. He counted on raising over 13 mil- 
lions by October 1 ; and had been urged by Mr. Denfigre, 
the well-known New Orleans banker, to recommend the levy 
of such a tax for the purpose of securing 30 to 40 nuUions a 
year from the owners of real estate, slaves, and capital in 
trade. But others thought such a direct tax too cumbersome, 
and clung to the belief that customs duties would suffice.' 

The Congress was not anxious to adopt a policy of taxa- 
tion, and merely pledged the faith of the Confederate States 
to raise a sufficient revenue to meet the principal and interest 
of the loans authorized on May 16, 1861. The Secretary of 

' Ctm/ed. Arehivii: Denhgn to Memmtnger, May 4, 11,36, 1861; E. J, For- 
stall to D. F. Eenner, Feb. 91, 1S61. 


the Treasury was, however, authorized to collect information 
regarding the revenue system of the individual States looking 
toward raising 810,000,000 within the year 1861. In antici- 
pation of this future tax the States were called upon to pay 
into the Confederate Treasury their respective quota in specie 
less a rebate of 10 %} 

The desired information was collected by the Secretary, 
and presented to the Congress on July 24. He urged the 
raising of $25,000,000, by taxing real estate, slaves, and per- 
sonal property, comprising merchandise, bank and other cor- 
porate stock, and money at interest, at a uniform rate of 54 
cents on each $100, which he believed would be sufficient. 
The total assessed value of the above classes of property he 
put at over 4600 millions of dollars ; nearly half representing 
slaves, and nearly two-fifths real estate. In answer to this 
recommendation, the Congress provided for a direct war tax 
in the loan act of August 19, 1861. It taxed all properly 
^ of 1 % of its value, except Confederate bonds and money on 
hand. Property worth $500 was exempt in the case of the 
head of each family ; and the property of educational, chari- 
table, and religious associations was, as usual, freed from the 
tax. Each State was to constitute a tax division under a 
Chief Collector to supervise the assessment lists to be pre- 
pared by October 1, and completed by December 1, 1861 ; 
the collection of the tax was to be made by May 1, 1862, and 
the customary arrangements were made for tax sales and the 
treatment of taxable corporations as "persons." Moreover, 
by an unfortunate provision, the States were allowed to antici- 
pate the amount of taxes assessed upon their citizens by pay- 
ing the sum minus a 10 5^ rebate into the Confederate Treasury 
at any time before April 1, 1862. 

Arrangements for the levy of the tax proceeded slowly, and 
by November 20, 1861, the Secretary could only report that 
Chief Collectors had been appointed, and that the States had 
been divided into districts. He recommended a postpone- 
ment of the tax in view of the disturbed conditions and of 

X Act May 16, 1861, §§ 4, 6, 7. 


the extent of the country to be canvassed. Ttiis the Congresa 
-willingly granted by passing the act of December 19, 1861, 
which extended the time of assessment from October to 
January 1, and authorized a further postponement at the dis- 
cretion of the Secretary. The time of collecting tlie tax was 
not affected, but by later acts oi April 19, September SO, and 
October 13, 1862, this hmit was extended, or the collection 
was suspended, as in the case of the border States which had 
been overrun by the enemy. 

The assessment of the tex, when complete, fell off some- 
what from Mr. Memminger's estimate, and amounted to 
f4,220,755,8S4.21. Of this sum 1500 mUliona represented 
slaves; 1400 millions, real estate; 500 millions, money at 
interest; and 94 millions, hank stock. The Secreteiy's val- 
uation of slaves had been higher by 660 miUions.^ 

The assessment proceeded slowly, and by the middle of 
1862 only two out of eleven States had made complete re- 
turns i six Stetes had made no returns at all. Great diffi- 
culties were found in assessing taxable property, especially 
slaves.^ No revenue was collected from the tax during the 
first fiscal year of the Confederacy ; but during the five months 
ending August 1, 1862, \0\ millions were gathered, to which 
a further 6 millions were added during the last five months 
of 1862; and more than 4 millions during the first nine 
months of 186S. In all, apparently about 18 millions were 
raised by this direct tax. On July 1, 1863, over 2 millions 
were still uncollected,* most of it in Tennessee, Texas, Ark- 
ansas, and Virginia, where either the presence of the enemy 
or the distance from the capital made its collection difficult 
and often impossible. In the other States the delay in col- 
lecting the tax was due to the central government's depend- 
ence upon the several State govemmente to either levy the 
tax with their own local tax machinery or compound the 

1 Sep't Seer's Treai'y, Jul; 34, I86I ; Rep't Comrn'r Taxa, 1863, in Richmond 
Examiner, D«c. 30, 18S3. 

a Ccmfed. Arckiva: Chief Clerk Wai Tax Bnieaa to Memmioger, July 15, 
Aug. 1, IS6S. 

• Ibid. ! Rep't CddhbV Taxei to Seer's Treaa's, Hot., 1863. 


amount due by paying it, less 10%, into the Confederate 
Treasury. The delay was presumably unavoidable; what 
robbed the tax entirely of its character was the general prac- 
tice on the part of the States to avoid the payment of the tax 
by borrowing the amount due and transferring the proceeds 
to Richmond. They followed the precedent of the States 
during the Revolution in meeting their quota of the taxes 
apportioned to them by the Continental Congress, not by 
raising the amount by taxation, but by issuing bonds or paper 
money. Each of the Southern States aimed ^^ to protect her 
own citizens from hardship and inconvenience, by extending 
to them that indulgence in the payment of their taxes, where 
necessary, which the Confederate States could not, in the 
nature of things, afford to grant." ^ In both cases the pol- 
icy increased instead of reducing the indebtedness of the 
people by substituting the States for the central government 
as borrowers. 

The war tax assessed upon Alabama citizens amounted 
to over 2 millions of dollars. On recommendation of the 
Governor, $2,000,000 were borrowed from the banks in the 
State — on condition that they suspended specie payments 
— and transferred to the Confederate Treasury. The loan 
was to be repaid out of the proceeds of future taxes, which 
presumably were never levied, as the loan was proposed by 
the Governor to meet the demands of the central govern- 
ment " without collecting it [the amount] from the people in 
the present condition of the country." ^ 

Arkansas' share of the war tax was $551,606.03. Of this 
amount $400,000 were advanced to the Confederate Treasury 
apparently by the issue of State treasury notes and their ex- 
change for Confederate notes. The eventual redemption of 
the notes out of the proceeds of taxation was promised, as in 
the case of Alabama. The balance due the central govern- 
ment had not been paid by July, 1863. In fact, the State 

^ Richmond Examiner, Feb. 5, 1863. 

« Offn Rec'da Rebellion, 4th S., I, 697-711 ; Ala. acts Nov. 27, Dec. 9, 1861 ; 
Feb. 20, 1863; Ala. joint resol'n, Dec. 8, 1862. 


bickered with the Confederate Treasury hy cluming an 
amount due the State, which it proposed to cancel in payment 
of ita quota.' 

Florida's share of the tax was fixed at $226,109.88. It was 
paid with an issue of State treasury notes. Georgia's share 
of $2,494,112.41 was similarly met by an issue of 8 % State 
bonds.' Louisiana presumably adopted similar means of 
meeting her quota, namely, $2,424,174.39. The State over- 
estimated her indebtedness to the Confederate Treasury in 
assuming the tax, and had the excess returned to her.' 

Mississippi's share amounted to 82,241,003.20. The Gov- 
ernor was authorized to issue State bonds and settle the account 
with the Confederate Treasury, which he no doubt did. The 
interest on these bonds was met from the proceeds of s special 
tax amounting to one-quarter of the regular State tax. Pre- 
sumably the Commissioner of Taxes and the Secretary of the 
Treasury had this tax in mind when they reported that the 
war tax had been levied and paid, and not compounded, in 

North Carolina, like Louisiana, overestimated the amount 
necessary for the composition of tiie tax, namely, $1,288,825.31, 
and the Congress appropriated a sum to reimburse the 
State. The State Convention discussed the question of as- 
suming the burden, and showed a disposttiou to demand of 
the Confederate Treasury that it should accept the State 
treasury notes or give the State credit for the advances made 
for military purposes. North Carolina was always ready to 
assert her States rights position as against the centralizing 
Richmond authorities. The State Convention passed an 
ordinance assuming the tax and providing means for its pay- 
ment by an issue of State treasury notes. Their redemption 
was not to be met out of the proceeds of ordinary taxes, but 

1 Ark. acts Not. 18, IB61 ; lUch. 31, sa, 1863 ; Cm/ed. AnAivet.- Bep't Comm'r 
Taxf, Not., 1863. 

> Flo. act Dec. 16. 1861 ; Ga. act Dec. II, 1861. 

* La. act Jan. 6, 1863; Confed. acti Oct. B, 1862; Maj 1, 1863. 

« MiM. act Dec. 20, 1S61 ; Confed. Archiva: Rep't Comm'r ruzM, Nov., 1863; 
Btp'l Stcr's Treai'-j, Doc. 7, 1863. 


from those of an additional tax which was assessed, but of 
which nothing more is heard, perhaps because the central 
government reimbursed the State for the above advances to 
an amount far exceeding the State's quota of the war tax.^ 

In South Carolina the State assumed its share of the tax, 
$1,798,076.82, and turned over to the Confederate Treasury 
that amount less some $150,000 to cover the tax on property 
in the parishes along the coast which were overrun by the 
enemy. The money was provided by a temporary loan. This 
was cancelled from the proceeds of the war tax, which the 
State officials put into force. They obtained the assessment 
books prepared by the Confederate officials, and set about to 
collect the tax, which was made payable before July 31, 1862. 
By that time three-quarters of the amount due had been col- 
lected, and by October 1, 1863, practically all the amount due 
was in the State Treasury.* 

Only one other State, namely, Texas, made an effort to 
raise her quota of the war tax by means of taxation. The 
amount due from the State was $1,654,278.05, of which three- 
quarters were raised, but apparently almost entirely by taxing 
or rather confiscating the property of alien enemies, so that 
the State's efforts to avoid the loan policy of most of the 
others calls for little commendation.^ 

Virginia followed the majority of the States in assuming 
the tax, and paid the central government $2,125,000, though 
nearly 2\ millions were called for. The difference repre- 
sented the tax assessed on residents of the sections of the 
State invaded by Federal troops. State bonds were issued 
to the banks which advanced the necessary sum.* 

In the border States Missouri and Kentucky no attempt 
was made to assess the tax; but in Tennessee $2,205,000 

1 Confed. act Oct. 8, 1862; N. C. act Feb. 17, 1862 ; Charleston Courier, ApL 
15, 1862; Newbem Progress, Dec 9, 13, 1861 ; Rep't N. C. Trea^r {N C, Con- 
vention 1865, Exec. Doc' a) ; N. C, Standard, July 3, 1863. 

3 S. C. acts Dec. 21, 1861 ; Charleston Courier, Dec 24, 1861 ; Jan. 8, 15, Nor. 
27, 1862 (Gov's mess.) ; Rep't Compfr Gen'l S. C, Nov., 1862, 1863. 

' Confed. Archives: Rep't Comm*r Toxet, Nov., 1863. 

* Ibid.; Va. act Feb. 21, 1862. 



were assessed, and 1 } millious paid to the Confederate govern- 
ment by the State, the amount being no doubt secured by 
some kind of loan.^ 
/ It is seen from the above that less than one-tenth of the 
I war tax was actually a tax and raised by a forced contribu- 
t tion. In all the States but South Carolina and Texas the 
tax was changed into a loan with a view to avoid patting a 
burden upon the people. Vice-President Stephens voiced 
the general feeling when he spoke of the government's object 
to make the burden of the war fall as lightly as possible upon 
the South, and said that it was therefore proposed to get along 
with as little taxation as p(»sible, resorting to that means of 
raising a revenue only when loans failed the government.' 
The authorities were evidenUy unwilling to test by heavy 
taxation at the outset the popular devotion to the Southern 
cause. Aside from the above misnamed war tax, no tax act 
*' was passed by the Provisional Congress, and a full year of 
the Permanent Congress elapsed — during which numerous 
issues of bonds and notes were authorized — before the first 
real tax act of the war was passed. During 1861 and 1862 
the popular dread of burdensome taxation prevented action.' 
The Secretary of the Treasury urged additional war taxes 
in March, 1862, and again more strongly in January, 1863. 
He pointed out the need of a substantial revenue from taxa- 
tion as a basis for loans, in spite of the popular clamor, and 
the insufficiency of the former war tax, which distributed the 
quotas among the several States and allowed the tax to be 
raised in any way agreeable to them, subject to delay and un- 
certainty. It is worth noting that the Federal government 
/ adopted a similar direct tax at the beginning of the war, — 
differing from the one in the South in being apportioned 

' Confrd. Anhivet: Rtp'l Comm'r Taxti, Nov,, IS63; Rtp't Secr'g Trtai'y, 

Dec 7. 18B3. 

» Applfton, ,dnn. Cyclopedia for 1861, p. 143 {Stephens's speech, Jal; II, 1861), 
'Pollard, Davii, 171; Alfriend, Davis, 483; Capers, Hfmaingtr, 341-2; 

CharUtI'm Merrunj, Ang. 94, 1863; Jnne 37, 1864; Rirhmond Esramincr, Jane 8, 

18&3; Raicigh Progress, Oct. 15, 1863 (qaoCing Charteslon iferairg); Richmond 

Whig, Oct. 8, 1862; Centurj Mag., LIU, 632 (Feb., 1837). 


among the States according to the Constitutional provision, 
— and, like the South, turned from apportioning taxes among 
the States to independent Fedeittl taxation, especially under 
the Internal Revenue System.^ 

Mr. Memminger leaned to taxing property and income in 
preference to levying stamp duties, excise or license taxes. 
His urgent suggestions met with popular approval in the 
early part of 1863. The newspapers claimed that there ex- 
isted a strong popular demand for heavy taxation, partly with 
a view to correcting the redundant currency and reducing 
prices, quite like the demands for the taxation of the rich 
during the French Revolution in order to lower the extrava- 
gant price level. One editor emphasized the unfortunate 
experience with the former policy of allowing the States to 
assume their quota of a Confederate tax, which they pre- 
tended to levy, but in reality borrowed.^ 

As a result of this agitation the Congress enacted a strin- 
gent tax measure on April 24, 1863, which avoided the 
objectionable features of the former war tax, and levied a 
great variety of taxes upon property, earnings, and occupa- 
tions,^ to be assessed on July 1, and collected on October 1, 
1863, — with exceptions to be noted below. The taxes were 
arranged under the following heads : — 

I. A property tax of 8 % was levied on the value of all 
naval stores, salt, wines and liquors, tobacco, cotton and wool, 
sugar, molasses and syrup, and on all other agricultural pro- 
ducts. Deductions were allowed for articles necessary for 
home consumption. The same tax rate of 8 % was applied to 
all kinds of money and currency on hand or on deposit ; and 
a smaller rate, 1%, to all credits, at home or abroad, on which 
interest had not been paid, and which represented capital not 

1 U. S. acts Ang. 5, 1861 ; May 13, Jnne 7, Jaly 1, 1862; Jane 30, 1864. 

3 Charleston Courier, Jan. 20, Mch. 14, 1863; Chattanooga Dailt/ Rebel, Teh, 
22, 1863; Richmond Examiner, Mch. 9, 16, 17, 21, 26, Apl. 15, 1863; Raleigh 
Progress, Mch. 16, 27, 1863; Charletton Mercury, Mch. 26, Apl. 1, 1863; White, 
Fiat Money in France, 52. 

' The act of April 24, 1863, was amended in its administratiTe details on Ma/ 
1, 1863, Feb. 13 & 17, 1864. 


employed in any business. Elsewhere in the act appear die 
provisions taxing the income of such capitaL 

II. A license tax upon a large variety of occupations, which 
was in keeping with the Southern custom in matters of taxa- 
tion, and was aimed at bankers and brokers, auctioneers, 
wholesale and retail liquor dealers, distillers and brewers, 
pawnbrokers, innkeepers, circus and theatre owners, lawyers, 
physicians and apothecaries, butchers and bakers, and other 
dealera. The tax rate was $50, *100, $200, or $500, accord- 
ing to the supposed lucrativeness of the occupation, supple- 
mented in some cases by a percentage on sales ; and, in the 
case of the distillera, by a tax on production, namely, 50 cents 
on the first ten gallons, and $2 a gallon upon a further output 

III. A tax on earnings, payable every January 1. Sala- 
ries of $1500 and less were taxed 1 % ; those above that 
amount, the same and 2% of the excess. Salaries of less 
than $1000 as well as those in the military or naval service 
were exempt. Ket income from other sources than salaries 
was also taxed at a progressive rate : Incomes of from $500 
to $1500, at 5%; those of from $1500 to $3000, 5% on 
$1500 and 10% on the excess ; those of from $3000 to 
$5000, 10%; those of from $5000 to $10,000, 12J%; and 
those of 810,000 and above, 15%. The net income was deter- 
mined by prescribing certain deductions from the gross rev- 
enue from rents, from manufacturing, mining, and other 
business enterprises, from the sale of merchandise, and from 
other occupations. 

IV. A separate 10% tax was levied on the profits during 
1863 from the sale of provisions and other food products, iron, 
shoes, blankets, and cotton cloth. This tax was aimed at the 
wholesale, not the retail trade. 

V. A tax in kind of one-tenth of the agricultural prod- 
uce during the year 1863 was provided. This tithe was 
to be delivered by the farmers to the post-quartermasters 
not later than March 1, 1864; and these officers were to 
distribute the food products direct to the army and the 
cotton to f^nts of the Treasury Department. The money 


proceeds of the other four taxes were to go to the regular 
tax collectors. 

The act was to be in force till the end of 1865, except that 
the 10% tax on profits and the 8% tax on naval stores and agri- 
cultural products was levied only during 1863. The property 
and income of charitable, religious, and educational institu- 
tions were, as usual, exempted from taxation. The tax ma- 
chinery was slowly set in motion. Each State was made a 
tax division with a State Collector to supervise the levy. 
The assessment of the tax was delayed by various causes, 
and the collection did not begin till the end of 1863. By 
April 1, 1864, nearly 60 millions of dollai*s had been raised, 
equal at the time to perhaps 3 millions in specie ; and during 
the following six months further 42 millions in currency, or 
perhaps something over 2 millions in specie.^ Up to April, 
1864, $82,262,349.88 had been collected in currency, the 
States contributing in the following proportion : Georgia, 22 
millions; Virginia, 21 J; South Carolina, 12 J; North Car- 
olina, 10; Alabama, 9^; Texas, about 3; Mississippi, 2; 
Florida, 1 ; Louisiana, $200,000 ; Tennessee, $140,000 ; and 
Arkansas, presumably nothing.* 

It is evident that the Southern Confederacy, like its pre- 
decessor, the Confederacy of Revolutionary times, was 
characterized by light taxation. In both cases the notion 
prevailed that posterity would reap the advantages of the 
war and should properly bear its burdens, a familiar excuse 
always offered for adopting a loan instead of a tax policy 
with a view to lightening the burden of the living generation, 
who are said to be bearing their proper share of the war's 
burdens in the direct loss of life and property.^ 

One peculiar objection was raised to such taxation as was 
embodied in the above act of 1863. The Provisional Con- 
stitution of 1861 had granted the Congress practically un- 

1 Act May 1, 1863; Richmond Examiner^ June 4, 1863; Rep*t8 Secr'i/ Treas'y. 

^ Con/ed. Archives: Register to Sec'rj Memminger, & T. Allan to same, 
Apl. 29, 1864. 

• Snmner, Financier Am. RevoVny IT, 6, 21, 72-8; SparVfi, Diplom. Corresp., 
Vn, 423 & 88. (Robert Morris, 1781) ; Charleston Mercury, Mch. 23, 1863 (edit.). 


limited powers of taxation, and had omitted tlie familiar 
requirement of apportioning direct tases according to rep- 
resentation. The war tax of 1861, therefore, was strictly con- 
stitutional. But the later act u'as subject to the limitations 
of the Permanent Constitution, wliich n"as then in force, and 
which contained a provision, similar to the one in the United 
States Constitution, that — 

" Represen tat ires and direct taxes shall be apportioned among 
the several States . . . according to their respective numbers by 
adding to the whole number of free persons, including those bound 
to service for a term of years, aud excluding Indians not taxed, 
three-fifths of all slaves." ' 

In the winter of 1863-4 the questioa of the constitntaon- 
ality of the Confederate tax of April 24, 1863, was freely 
discussed. The Charleston Mercury held the tax unconstitu- 
tional in being direct and not apportioned. President Davis, 
in his message of December, acknowledged the difficulty of 
properly apportioning direct taxes as provided by the Consti- 
tution, but argued that until the Confederate Census, called 
for by the Constitution, was taken, direct taxes need not be 
apportioned. Moreover, he proposed postponing tlie Census 
until after the close of the war. The question continued to 
be a subject for discussion, and gave an opportunity to the 
f advanced States rights advocates, among them tlie Governor 
of Georgia, to urge their position.' 

Similar States rights objections to the tax, such as that it 
could not apply to property exempt by State laws, or to bants 
of which a State was a part owner, were overruled by the 

The chief objection to the Confederate tax, however, was 
directed at that part of it which taxed farm produce in kind. 
The burden of the taxes which were payable in money could 

' Confed. Perm. Cm$l\ I, 8, 3 ; U.S. Caaiea, I, S, 3. 

' Charlftlon Mrrcury, Nor. II, 1863 ; Applptcn. Ann. Cydop.for 1863, p. 794, 
Uil Charlttlim Caaritr, Dec. 14, 1863 (Prea. Davia' ine»B.): Aa'yGm't'i Opin- 
ion!, 1864; Rnlt'igh Progreat, Dec. 29, MM; Mch. 4, 186S (Gov. Gft. mets.). 

• All's-Gtn'rt Opinion; Ang. 29, Oct. 4, 1864. 


be and was lightened by delay in paying on the part of the 
taxpayer, just as had been done during the Revolution. The 
increasing redundancy of the currency with its concomitant 
rise of prices put a premium upon delay in paying money 
taxes, and in the same measure injured the Confederate 
finances. With a view to obviating this diflBculty and assuring 
the government a prompt revenue, and one in the shape in 
which it was most needed, namely, of subsistence for the army, 
the Secretary of the Treasury had urged upon the Congi'ess 
the imposition of a tax in kind upon agricultural products. 
He saw in such a measure a means of relieving the govern- 
ment from the necessity of impressing goods or from driving 
up their price in the open market ; the currency would be re- 
lieved, prices would be restored to their normal level, and the 
tax would not be evaded or be subject to the price fluctua- 
tions.^ A bill embodying the Secretary's recommendations 
was at the time under discussion in the Senate, where it had 
originated.^ The bill became a part of the act of April 24, 
1864, as we have seen, and called for the payment to the gov- 
ernment of one-tenth of the agricultural produce of the year 

The directness of the tax in kind and its open attempt to 
put a burden upon the agricultural classes, which in many 
sections of the South had not yet come to appreciate the bur- 
dens of the war, made this tithing sjrstem extremely unpop- 
ular, especially in North Carolina. It was denounced in 
immeasured terms at the numerous public meetings held in 
that State during the summer of 1863. Some of tie resolu- 
tions passed are worth quoting.^ One of them declared that — 

" the act of Congress, in secret session, without consulting with 
their constituents at home^ taking from the hard laborers of the 
Confederacy one-tenth of the people's living, instead of taking 
back their own currency in tax, is unjust and tyrannical, and we 
solemnly protest against that act" 

1 Confed. Archives : Memminger to Pres. Senate, ApL 7, 1863. 

* Richmond Examiner, A pi. 3, 6, 1863. 

» N C. Standard, Aug. 25, 26, Sept. 1, 1863 {j- pauim). 


At another sach meeting it was voted — 

" tiiat we consider the tithing law not only onoonstitotional, anti- 
repablican and oppressive for the simple fact, that if the Con- 
federacy will famish the people with a sound cnrrency, the 
goTeniment will at all times be able to poichase such snpplies aa 
the army may need, provided the people have them to spare. In 
view of the above facta, and the probability that nine-tenths of 
the people in this section of the country will have nothing to 
spare, we are opposed to the payment of the same." 

Od another occasion it was voted that — 

"we pledge ourselves to each other to resist, to the bitter end, 
any such monarchical tax — any such contempt to our Stete — to 
pay such a tax to a Virginia titbingman." 

By another gathering the tax was called " unjust, tyranni- 
cal, and oppressive, and a relic of barbarism, which alone is 
practised in the worst despotisms," in which the remonstrante 
were not very far from the truth. On the other hand, they seem 
to have overlooked the iact that the government had to choose 
between a paper money policy and one of heavy taxation, to 
both of which the North Carolinians were naturally strongly 
opposed. A favorite stetement embodied in a large number 
of resolutions ran thus : — 

" We are in favor of a just and equitable system of taxation, so 
that all classes may bear their burden equally ; we are, therefore, 
opposed to the tithe system . . . discriminating against and tax- 
ing the labor and industry of the agricultural classes." 

Unquestionably the tax in kind bore heavily on the farm- 
ere.' The French Assembly and the Continental Congress 
had in their day met with similar opposition to such taxes 
which had been introduced with a view to meeting exactly 
similar currency difficulties." In all these cases the motive 

1 PeUnturg Expreu, Nor. 9, 1863; Ga. ticta Kot. 18, Dec. I, 1863; N. C. 
Standard, Dec. 4. 1863 {Qor. Ga. men.). 

■ von Sybel, French Recol'n {leiS),lV,337; Snnmer, Finaiicur An. Eerol'n 


which led the government to substitute a tax in kind for one 
payable in money was the chief cause of the unpopularity of 
the tax measure. The North Carolina farmers were " willing 
to pay any reasonable tax in money ^^^ but they resented part- 
ing with their produce. 

In its loan policy the Confederate government had similarly 
aimed to avoid the results of its paper money policy by insti- 
tuting produce loans.^ It will be remembered that, in at- 
tempting to exempt itself from the deranged money system, 
the government was forced to revert to barter and accept all 
the disadvantages of that earlier form of exchange. So, too, 
in the policy of taxing in kind, the wastefulness of that prim- 
itive process of collecting government revenue became very 
apparent. There were great delays in forwarding the supplies 
as they were collected ; means for packing them were often 
wanting; large quantities of food were left exposed and 
became ruined, a repetition of the Revolutionary experience.* 
There was also the familiar complaint of unauthorized persons 
collecting the tax.* 

The amount of produce collected by the tax in kind cannot 
be determined. By the end of 1863 its value was put ofl&- 
cially at a little over five millions of dollars, equal to less 
tlian $350,000 in specie at the time of collection, or equal in 
the open market to perhaps 425,000 bushels of com, or 1| 
millions of pounds of bacon. North Carolina, Georgia, and 
Alabama were the largest contributors to the tax, nearly two- 
thirds of its proceeds coming from those States. By June, 
1864, North Carolina had contributed nearly 3 millions 
of pounds of bacon, over 75,000 tons of hay and fodder, 
770,000 bushels of wheat, besides various quantities of other 
produce, valued at the time at perhaps $150,000 in specie. 
During the six months following April 1, 1864, the value of 
the produce collected by the tax in kind was over 140 mil- 
lions of dollars, or about $7,000,000 in specie, the further 

^ See pages 10 & as. 

3 N. C. Standard, Sept. 8, Dec 4, 1863 (qaoting other newspapers). 

» Ojfl Rec*ds Rebellion, Ist S., XLVUI, pt. 1, p. 1311. 


equivalent in the market of aay 15 mUlions of pounds of 
bacon, 45 millions of pounds of meal, enough to constitute 
SO millions of rations according to the then prevailing regu- 
lations, or enough to suppoi-t armies aggregating one million 
men during one month.* This computation roughly indicates 
the burden put upon the people by the tax in kind. It was 
natural that such a direct burden should be resented. In-, 
deed, the agitation against the imposition of such a tax 
became so strong Uiat the Congress was obliged to relax 
its provisions by an act of December 28, 1863, which aUowed 
the commutation of the tax upon sweet potatoes by its pay- 
ment in money. This was an important concession, and put 
the administration of that part of the tax in the hands of the 
Treasury officials instead of in the hands of the War Depart- 
ment. On January SO, 1864, a similar act was passed trans- 
ferring the collection of the tobacco tithe from the War to 
the Treasury Department. As long as the post quartermas- 
ters collected the tobacco, it was distributed among the 
trooijs ; but by entrusting the Treasury officials with its col- 
lection, the government acknowledged the desire for specula- 
tion in tobacco as its motive in obtaining a supply of that 
article, which with cotton formed the basis of the lucrative 
export trade to foreign countries and to the Nori^ as has 
been shown in a preceding chapter. 

Notwithstanding the opposition to the tax in kind, it was 
re-enacted on February 17, 1864, though with some modifica- 
tions by which its stringent features were somewhat relaxed. 
Liberal exemptions were provided, especially in the case of 
soldiers' families and of smaU farmers. A later act of June 
10, 18G4, made further concessions to the taxpayers by ex- 
tending the time of the delivery of the tax by three months, 
by allowing the com tithe to be commuted in money, and by 
exempting garden produce for family consumption and crops 

< Columbui, Ga., Daily Tima, J(ui. 26, 1864 {Pni. Davu to H'm of B.); 
Baltigh Progrett, July *, IBM (Rep't Collector. N. C.) ; Rep'' Stcr'y Trta^y, 
KoT. T, 186i; Off-l Efc-dt lUbellioa, 4th S., U^ p. S92 (Genl Order*, Ang. 16, 


destroyed by accident or by the enemy. This persistent 
tendency to allow the commutation of the tithe and there- 
by destroy its characteristic feature is noticeable. It re- 
appeared in the act of March 13, 1865, one of the last of the 
war. The frequent concessions to the burdened taxpayers 
are also noteworthy. 

In the discussions of the Congress during the winter of 
1863-4 which led to the passage of the famous Funding Act 
of February 17, 1864, plans for heavy taxation formed no 
small pai*t. The Richmond Examiner and other newspapers 
urged a policy of heavy taxation as the only means of correct- 
ing the redundant currency. It was truly said : " The Con- 
federacy has been more prodigal of its blood than of its 
money;" and a Representative declared the cry about ex- 
travagant taxation groundless. He claimed that upon a 
specie basis persons were being taxed 1 % or possibly 1} % 
of their property, and demanded an increase of the rates.^ 
The Secretary of the Treasury proposed, in his report of 
December 7, 1868, to raise 100 millions by taxation and 300 
millions by loans. On the basis of the assessment of the 
original war tax of 1861, he figured the then value of taxable 
property's being 3000 millions ; a 6 % tax would net say 120 
millions, half of which would be available for purchasing sup- 
plies, the other half for paying the interest on bonds for a 
thousand millions to be issued. This tax he proposed to add 
to the still existing tax on incomes and profits. 

The outcome of the Secretary's recommendations and the 
prolonged discussions in the Congress was, first and foremost, 
the famous Funding Act passed by the expiring fiijst Congress 
on February 17, 1864. On the same day the tax of April 24, 
1863, was re-enacted; its provisions remained unchanged, 
except in so far as they were affected by another act of the 
same date which levied additional taxes. These comprised 
10 % on the value of gold and silver plate, and 5 % on that of 

1 Richmond Examiner^ Dec. 3, 13, 19, 24, 25, 1863; Memphis Appeal, Not. 5, 
1863; N. C. Standard, Jan. 8, 1864; Ala. j*t. reflorn, Dec. 8, 1863; Charleston 
Courier, Oct. 2, Not. 26, 1863; Petersburg Express, Not. 29, 1863. 


all property not otlierwise taxed hy this act or by the tax in 
kind, — the assessment to be based on the market valne of 
the property in 1860 ; 5 % on all solvent credits at home and 
abroad, currency other than Confederate notes and not em- 
ployed in a business already taxed, coin and bullion, and all 
shares in corporations ; an additional 10 % tax upon the profits 
from any business ; and a 25 % tax upon the profits of any 
concern in excess of 25%. The usual exemptioiis were 
allowed, especially in the case of soldieis' families. The 
assessment of the taxes was to be made at once ; their collec- 
tion, on June 1, 1864, or as soon after as practicable, a farther 
extension of 90 days being allowed In the case of the States 
vest of the Mississippi River. The tax on invested capital 
included that invetited in Confederate bonds, provided the 
tax did not exceed the interest ; and the holdings of minors 
or lunatics were taxed only if the interest exceeded $1000. 
The wording of the act indicates that tnbre was a large 
amount of arrears from the former tax act, which the latter 
to some extent displaced. So, for instance, the 8 % tax on 
property and the 1 % tax on credits were suspended during 
1864, as was the tax upon income from property or effects. 

It is evident, from the report of the Secretaiy of the Treas- 
ury of May 2, 1864, that the chief difficulty with levying the 
tax was that the government's revenue consisted almost en- 
tirely of depreciating treasury notes and certificates, in which 
most of the revenue was paid. The more the government 
leaned to relying upon taxation in kind in order to avoid the 
difficulty, the more anxious were the taxpayers to substitute 
a money tax for the tithe ; and the Congress was compelled 
to yield to the popular demand, and, contrary to the advice 
of the Secretary, allowed the payment of the 5 % tax upon 
specie in its equivalent in treasury notes.^ The same act 
repealed the 5 % tax upon corporate stocks, and provided that 
corporations should be treated as individuals. 

On paper the existing taxes were extremely onerous, and 

were even added to on June 10 and 14, 1864, by a horizontal 

1 Act Jnne U, 1S6« (Sd C, in 8., ch. 44, } 3, 1). 


increase of rates of one-fifth, to apply to those levied in 1864, 
— the proceeds to go first to meeting the increase in the sol- 
diers' pay, — and by an additional 80 % tax upon sales made 
between February 17 and July 1, 1864. The imposition of 
these excessive rates indicates the straits to which the Con- 
federate government was driven. The hopeless condition of 
the revenue system is further suggested by the proposals 
made during the last session of the Confederate Congress, 
some of which were embodied in legislation at its very close. 
Secretary Trenholm renewed the recommendations of his 
predecessor.^ He proposed an increase of 5 cents in the cot- 
ton export duty, also enlarged import duties. These, how- 
ever, counted for little. The existing taxes on property and 
earnings he deemed merely nominal, amounting annually to 
only 1J% of the value of all property ; and proposed to in- 
crease them gfreatly. Bills were introduced in the Congress, 
which body, after hesitating long between note issue and 
heavy taxation, chose the latter, and enacted a tax measure, 
on March 11, 1865, which imposed extreme rates upon the 
objects covered by previous tax laws.* The assessment of 
the tax was to be made at once, and payment was due on 
June 1, 1865, "or as soon thereafter as practicable." The 
tax in kind was continued, and could not, as heretofore, be 
set of? against the money tax upon agricultural property; 
the taxes on incomes and salaries were also continued ; specie 
and foreign credits were taxed 20 % ; other credits were taxed 
5 %, except that the interest from State or Confederate bonds 
was taxed as income in lieu of taxing the principal ; profits 
from sales during 1865 were taxed 10 % in addition to the 
tax upon profits as income ; profits in excess of 25 % were 
taxed 25% ; all other property was taxed at the rate of 8%, 
but on the basis of the 1860 valuation ; and, finally, all the 
above rates were increased by one-eighth to provide a money 
revenue for the payment of the increased soldiers' wages. 

1 RepHs SecT^y Trea8*yy Nov. 7, Dec 15, 1864, Jan. 9, 1865. 

a Act Mch. 11, 1865 (text in MacPheraon, Rebellion, 613) ; OjgTl Re^ds Rebel- 
lion, l8t S., XLVn, pt. 3, p. 713 (Secr'y Trenholm to Gen. Lee, Mch. 11, 1865 ); 
N, Y. Time*, Feb. 25, 1865 (1-4), qnoting Richmond Examiner, Feb. 21, 1865. 


Even these severe rates did not meet Secretary Trenholm's 
wishes ,^ and on the last day of the Confederate Congress a 
characteristio act was passed' levying a 25% tax, payable in 
kind on April 1, 1865, upon all coin and biQlion and foreign 
exchange, provided the specie loan of the same date failed. 
This last tax act accentuates the difficulty the government 
had constantly labored under. By instituting a paper money 
policy it had on the one hand necessarily delayed the collec- 
tion of the belated taxes it levied by encouraging the tax- 
payer to postpone payment and let the constant rise in 
general prices relieve him of some of tJie tax burden ; on the 
other hand it put insurmountable difficulties in the way of 
the government's obtaining its revenue in a form available 
for its use, or in converting its revenue from currency into 
army supplies. 

The State and local finances of the South reflected the fiscal 
policy of the central government, as has been shown in describ- 
ing the extensive issues of State and local currency. In the 
matter of taxation the movement to relax its enforcement began 
early during the war, in Alabama, before hostilities had opened. 
The collection of the taxes for 1860 and 1861 was postponed. 
Similar action was taken by the Florida legislature. The 
Mississippi legislature was particularly active in extending 
the time for the payment of taxes to the State and to the 
counties. Assessments were postponed, and the collection of 
one State tax was deferred till a year after the close of the 
war, Georgia similarly deferred the collection of taxes, it 
was claimed for the benefit of the tax collectors and not of 
the taxpayers. Louisiana, too, postponed the collection of 
most of the State taxes,' 

' Ra'n;ih Projr<M, Mch. 14, 1865 (PreB. DaTls, meii.); Mch. 29, 1865; ffici- 
mond n'li.g, Apl. 14. 186S (Trenholra to Treas'r agent, Mch. 17, 1866J. 

« Act Mth. 18, 1865 {text in Bnltifih Pro^eti, Mch. 20, 1865). 

• Ala. acts Feb. 8, Dec. 10, 1R6I ; Fla. act Dec. la, 1R61 ; Miss, ai^ts Ang. 6, 
Dec. 20, 18BI; Jan. 29, 1862; Jan. 3, Nov. 23, 1863; Apl. 2, 5, 1864; Ga. act 
Dec. 11, 1861 ; Aag'atla Chroa. ^ Sent., Dec B, 1864 ; La. acU Jan. 23, 1862 ; 
Feb. 9, 1864; Va. j't reeol'n, Mch, II, 1861, 


In some cases particular taxes were altogether suspended, 
as in Mississippi, where the levee taxes were given up early 
in the war. In Virginia the issue of bonds and notes pro- 
vided such an ample revenue that the act of March 28, 1868, 
raising the tax rates to 1 % on property, $2 on polls, and 2J % 
on incomes in excess of $500 was suspended a year later. This 
action was excused at the time by the heavy burdens the recent 
Confederate tax measures were putting upon the people. There 
was a general feeling that if these were heavy, the State taxes 
could reasonably be made light ; in fact, the latter, it was said, 
had been little more than nominal during the current year.^ 

In Georgia the frequent laws limiting the tax rate to a 
certain figure, and exempting certain classes from taxation, 
are suggestive of the tendency to yield to popular pressure 
and reduce the tax burden at a time when people thought 
themselves sufficiently burdened with the immediate and 
direct effects of the war.* Arrears in taxes were common, 
as is evidenced by laws aimed at delinquent taxpayers. De- 
faulting tax collectors were also the subject of legislation.^ 

Nominally many of the States enforced their State and 
local tax systems during the war, and often raised the rates. 
In North Carolina the State tax on real estate rose from \ of 
1 % in 1861 to f of 1 % in 1868, and to 1 % in 1864. The 
revenue from the State tax correspondingly more than 
doubled between the years 1861 and 1868, at least as ex- 
pressed in currency ; in specie value the tax revenue of the 
State fell off one-third in 1862, and one-half in 1868.* Simi- 
larly in South Carolina the rates of taxation fixed for 1861 
were repeated for 1862 and 1868, and were considerably raised 

» Miss, acts Aug. 6, 1861; Nov. 2.5, 1863; Ala. act Feb. 8, 1861; Ark. act 
Nov. 12, 1861 ; Va. act Mch. 3, 1864 ; Richmond Examiner, Feb. 25, 27, Mch. 1-3, 

2 Ga. acts Dec. 12, 1863; Nov. 18, 1864; Mch. 4, 11, 1865. 

« Charleston Courier, June 7, 1862 ; N. C. act July 3, 1863; Va. act May 17, 
1862; CoUon States (Gainesville, Fla.). June 21, 1862. 

* N. C. acts Feb. 23, Sept. 23, 1861 ; Feb. 11, 1863; Dec. 23, 1864 ; Raleigh 
Progress, Nov. 19, 1862 ; Feb. 16, Dec. 18, 1863 ; Feb. 23, 1864 ; N. C. Standard, 
Dec. 1, 1863; Rep't N. C, Compter, 1861. 


for the two following years. The tax on land was raised 
from lf(j% o£ its asaessed value in 1861 to 2.93% in 1864, 
and 6% in 1865; on city lots from ^ % to ^j^S and to 1ft; 
on slaves from $1.26 per head to *2.84 and to 94 ; and the 
1 % tax on professional incomes as well as the elaborate license 
taices were correspondingly raised, and new ones were pro- 
vided, like one of 2J % on importing and exporting companies. 
The financial results were apparently no more favorable than 
in the case of North Carolina.^ 

In Texas State taxes were levied on property and polls, 
also the usual license taxes; but they were presumably not 
rigidly enforced.' In Virginia the State tax rates were fixed 
as follows in the spring of 1861 : -j^ of 1 % on real and per- 
sonal property, 1 % on incomes in excess of 8500 ; a poll tax 
of 80 cents on adult whites and free male negroes ; a variety 
of license tax was also provided for." The rates were some- 
what raised in 1862; their Increase in 1863 was repealed; 
and in 1864 the tax rate on property was lowered. The 
total tax revenue of the State during the fiscal year 1861, end- 
ing September 30, may be put at two millions in specie, — 
$400,000 less than in 1860; the figure for 1864 was over 
7J millions in currency, or say $330,000 in specie. This 
great falling off is only in part explained by the overrunning 
of parts of the State by the enemy and the defection of 
the western counties. Evidently the rise in the tax rates 
amounted to little in comparison with the inflation of prices 
in the case of specific taxes and the general laxity in assess- 
ing and levying the ad valorem ones.* 

In some States the tax rates were materially raised or 
speci.ll war taxes were levied, but we have no means of deter- 
mining their results, and are left to siu'mise that no consider- 

1 N-CacUJoQ. 28, Dec 21, 18G1 ; Feb. 6, Dec. 17, 1863; Dec. 23, 1864; 
Sep'lM S. C. Cnm/ifr.Gen'l. 

* Tex. acts Jso. 11, 13, 1B63; Mcb. e,Dec. le, 1S63; Aagaita Chron. ^ Sent., 
Oct. 28, 1864; Appletou, Ana. Ci/doped. for 1865, p. TSS; Baines, Six Dtcadtt 
in Ttxat, 478. 

* Va. acU Apl. 3, ISGI ; Hch. 37, 186s ; Mch. 28, 1863 ; Feb. 6. Mcb. 3, 1864 ; 
OoT.'s meu. Jan. 7,1661, Jan. 7, 16G3; Rep't Fa. .dud., Oct. 3, 1864. 


able revenue was thus provided, certainly no more than had 
been collected previous to the war. In Arkansas the coun- 
ties were authorized to levy a war tax upon property taxed 
for State purposes, the rate being limited to i of 1%. In 
Mississippi a special tax, equal to one-half of the regular 
State tax, was levied within a fortnight of the State's seces- 
sion, also a tax of ^^ of 1 % on money and credits, the proceeds 
to constitute a military fund. Two years later these taxes 
were suspended, except as regards the property of transient 
persons or venders, — an interesting suggestion of the pre- 
dominant particularistic feeling. The discontinuance of 
these "irrepealable " taxes was justified by the Federal raids 
and the general bankruptcy, public and private, of the com- 
munity. However, a special tax was authorized to provide 
for the relief of the destitute families of Confederate soldiers. 
Still later a direct tax in kind was levied for the same pur- 
pose, also a tax upon the profits of manufacturing. It is 
noticeable that in levying special taxes the States aimed at 
taxing objects hitherto imknown or untouched. So, for in- 
stance, the Mississippi measure was specifically directed at 
the large profits of the manufacturers, whose business, as we 
have seen, the trade restrictions of the war made especially 
profitable. Similarly in Alabama a State tax was aimed at 
discouraging speculation in government securities by levying 
a tax of 87J cents upon every $100 in State or Confederate 
bonds, imless these were bought direct from the government, 
or were expressly exempt from taxation. A year later an- 
other tax act was directed at profits from speculation. In 
Georgia, too, special tax measures were aimed at large profits 
from business as distinct from the earnings of the agricultural 
producers. The exorbitant rates fixed make it seem likely 
that they were not enforced with any degree of strictness. 
In North Carolina the manufacturers and transportation com- 
panies also received attention from the tax laws.^ 

1 Ark. ord. May 11, 28, 1861 ; Miss, acts Jan. 26, Dee. 16, 1861 ; Jan. 3, 1863 ; 
Brongb, Taa^n in Miss., 189-90; Ala. acts Dec. 10, 1861 ; Dec. 8, 1863; Dec. 13, 
1864; Ga. acts Apl. 18, Dec 14, 1863; N. C. acts Feb. 11, Dec. 12, 14, 1863. 



A general surrey of the financeB of the States trill show 
that they reflected the loan policy of the Confederate govern- 
l ment, and that little reliance was put upon taxation to meet 
i either the current or the extraordinary expenses of the States. 
We have already seen to what extent State treasury notes 
were issued, and how generally the States avoided raising 
their share of the first Confederate war tax by actually tax- 
ing their citizens, hut at all events they made large advances 
for military purposes at the outbreak of hostilities and even 
before, and were subsequently reimbursed by the Confedenite 

Alabama began her policy of borrowii^ by issuing one 
million dollars in notes in February, 1861, appropriating half 
of this amount to " the cause of Southern independence " by 
a loan to the Confederate Congress, The " liberal offer " was 
accepted on February 8, the day of the adoption of the Pro- 
visional Constitution. Almost immediately thereafter, the 
State legislature borrowed $100,000 to meet the salaries of 
its members. The same session provided for the issue of two 
millions in bonds ; and from then on the legislature continued 
to authorize loans, either treasury notes or bonds, and in gen- 
eral expressly for the purpose of meeting a deficit in the 
State treasury.* Arkansas presumably adopted the same 

Florida and Georgia plunged at once into debt, the latter 
two montlis before, the former a month after seceding; 
Georgia by creating a military fund for the defence of the 
State out of the proceeds of an issue of bonds, Florida by 
applying to the banks for a temporary loan and also author- 
izing half a million dollars in 8% bonds. Of the later finan- 
cial history of Florida we only know that note issue followed 
note issue; of Georgia we know that in the fall of 1864 
18 millions of State currency and nearly 6 millions of bonds 

1 AcM Maj 10, Aag. 30, 31, Dec 14, 1861 ; Jan. !7, Apt. 9, 1863. 

* Ain. acta Feb. 6, 8, Dec. 10, I86I ; Dec 9, 1S62; Dec. T, 1S63; Dec 13, 
1864; IkBow'a Rfv.. Jnlj, 1861, p. 9!. 

* Atk. act Not. IS, 1861 ; AppleCoD, Ann. Csclop./or I86I, p. 34. 


were outstanding, which indicates the extent to which the 
State relied upon its borrowing power in providing a 


In March, 1861, Louisiana similarly set aside half a million 
out of her levee and drainage fund, — which probably ex- 
hausted it, — as a military defence fimd, and at the same 
time the Governor was authorized to secure a temporary 
loan of $300,000 from the banks, but free of interest In 
1862 a large State loan was authorized, and two years later 
a still larger one, but their success could not have been 

In Mississippi note and bond issues went hand in hand, as 
has been shown above. The notes were exchangeable for the 
bonds, both of which were authorized in immense amounts.^ 
The last loan act of March 9, 1865, provided in desperation 
for half a million of 8 % bonds, and also for the sale at any 
price of Confederate securities, bonds, certificates, interest- 
bearing and old notes, which had accumulated in the State 

In North Carolina the same policy of issuing large amounts 
of notes and bonds was adopted. Five millions were appro- 
priated for war purposes before the State seceded, and there- 
after immense sums were set aside for the same purpose, and 
were raised partly by issuing notes, but to a large extent by 
floating State bonds. During the fiscal year ending Septem- 
ber 80, 1861, two-thirds of the State's receipts were from loans ; 
during the next year, nearly three-fourths. The State debt, 
which had been less than 10 millions of dollars in 1860, rose 
quickly to 21 millions in 1862, 26 millions in 1868, and 
80 millions in 1864, — to the last figure should also be added 
an accumulated county indebtedness of 20 millions.^ 

^ Fla. acts Feb. 11, 14, 1861 ; Ga. act Not. 16, I860; Memphis Daily Appeal, 
Oct 21, 1863 (quoting Augusta Constitutionalist) ; Augusta Chron, 4r Sent,, Oct 27, 
1864 {Rep't Ga. Compfr-Gen'l), 

s La. acts Mcb. 20, 1861 ; Jan. 23, 1862; Feb. 8, 1864; 37 La. 412; DeBow's 
Rev., Jalj, 1 861, p. 94. 

' Miss, acts Jan. 26, 1861 ; Jan. 29, 1862; Aug. 9, 13, 1864; Mcb. 9, 1865. 

^ Newbem Progress, Mcb. 28, 1861 ; N. C. acts Mcb. 11, Jane 28, Sept 8, 20, 


Immediately upon passing the ordinance of secession, 
South Carolina authorized the issue of ^00,000 of 6 S bonds 
for the militaiy defence of the State. This was soon followed 
by a larger issue of 7S bonds, and thereafter by BuccesuTe 
issues of still larger amounts, generally for the military de- 
fence of South Carolina, but also to make loans to intending 
builders in Charleston after the destructive fire in the fall of 
1861 ; and also two years later to supply the State with the 
capital necessary to subscribe to the stock of the Importing 
and Exporting Company of South Carolina. We gaUier 
from the scanty records available that South Carolina kept 
within bounds in her loan policy. The State debt rose to 
nearly 5 millions in the fall of 1861, and to 6} millions a 
year later, but did not materially exceed that figure during 
the rest of the war. Moreover, as we have seen, the State 
v^ stood first in raising her quota of the Confederate war tax 
by actual taxation. The revenue from taxation for State 
purposes was considerable, even during the last year of the 

The State finances of Tennessee are connected with the 
Southern cause during the first part of the Civil War. At 
the time of the State's secession an issue of 5 millions in 8 % 
bonds was authorized by the legislature. By the fall over 
four and a half millions had been raised by this issue of 
bonds, the rest almost entirely by loans, presumably forced, 
from the Bank of Tennessee.^ 

Of Texas' State finances during the war we know very 
little. Evidently the State and counties borrowed to meet 
increased expenditures, but there are indications that the 

Dec. 1, 1S61; Feb, 36, Dec W, 1B6S; Feb. 6, D«c. U, 1S63; Dec IS, 1864; 

Bep'fN. C. Compt'r; Balagk Proffrtu.'SoT. 17, 1863; Dec IS, 1863; Jone 19, 
Nor. 26, 1664 ; Sept. 8, 1865; N. C. Standard, Dec. I, 15, 1863) Jane 31, 98, 
1864 ; N. C. Convention 1B65. Exte. Doc'm. 

1 S. C. acts Dec. ST, I860; Feb. sa, Dec 31, 1861 ; Dec IT, 1863; CharUaon 
Courier-, Mch. T,ai,NoT.6,Dee.lO, 1861; JnneS, Kor. aT, 28, 1862; Bep'uS.C. 
Compt'r- Gen'l. 

3 Appletoo, Arm. Cydop. for 1861, p. 681 ; OJTI Ree'di Rtbttiion, Ut S., Lit, 
H), 159. 


Staters credit was not extensively employed at the begin- 
ning of the war. By the end the State had accumulated 
a large floating debt. We surmise, however, that the dis- 
tance from the scene of active military operations relieved 
her from the heavy financial burdens which were put on most 
of the other Southern States.^ 

In Virginia the issue of State bonds fell far behind that of 
State treasury notes. The large bonded indebtedness of the 
State in 1861, — S3 millions, — which was largely the result 
of the "improvement" craze of the decade before the war, 
was not greatly increased during 1861-6. The State's credit 
was such that it made it practically impossible to float any 
bonds in addition to those that had been put on the market 
during the fifties.* The interest due on the State bonds held 
by some of the trust fimds was appropriated to the military 
defence of the State. The payment of interest due to non- 
resident bondholders was stopped by the Virginia Conven- 
tion in June, 1861. This must have amoimted to at least 
one-third of the total interest charge. The remaining bond- 
holders apparently received their interest till January, 1862 ; 
thereafter it remained unpaid.' 

North Carolina must have followed Virginia's example. In 
the fall of 1862 there was half a million of unpaid interest 
upon the State bonds ; in 1863, over one million ; in 1864, 
2^ millions ; and in 1865, over 4 millions.* In some of the 
other States efforts were made to raise the necessary amount 
to meet the interest charge. In Alabama the sum was bor- 
rowed ; in Texas cotton bonds were sold for the purpose ; in 
Tennessee at least those loyal to the South received their 

^ Tex. acts ApL 8, Dec 9, 1861 ; Jan. 11, 1862 ; Mch. 3, 1863 ; Augusta Chron. 
^ Sent., Oct. 28, 1864; Appleton, Ann. Cydop,for 1865, p. 788. 

« Gov. Va., mess., Dec 2, 1861, Jan. 7, Sept. 3, Dec 7, 1863, Rep*U Comm'rs 
Sink'g Fund (State Doc's) ; laA U, S. Census (47tli C, 2d S., Misc. Doc. 42, pt 7, 
pp. 554-5). 

* Va. acts June 26, 1861 ; Mch. 13, 1862 ; 18 Gratton,338 (ApL 15, 1868) ; Rich- 
mond Dispatch, Dec. 4, 1862 ; Rep*t Sink*g Fd Comm'rs, Nov. 19, 1863 ; Gov. Va. 
mess., Dec. 7, 1863. 

* Raleigh Progress, Nov. 17, 1862; Nov. 26, 1864; N C, Standard, Dec 15, 
1863 ; N C. Convention 1865, Rep't Trea^r, 


interest in 1861; and in Soath Carolins no distiiiction was 
made between resident and non-reflident bondholden.^ 

The limited view we obtain of the finances of the Sonthem 
cities daring the war presents in miniatnre the same picture 
as that offered bj tiie fiscal policy of the States and of the 
Confederacy. We have already seen ' how the cities fell in 
line with the latter in issuing large quantities of paper money. 
In the matter of taxation, too, the coUection of monicipal taxes 
^v!^a postponed and delayed. The revenae &om taxation, for 
instance in Charleston, of which we have the best and fullest 
information, fell off considerably, while the tax rates remained 
unchanged, and indeed were much rednced in 1864. The 
figures available for the other leading cities are too fragmen- 
tary to more ihaa suggest their fiscal policy, which must have 
become lai^ly involved by the issue of municipal notes, and 
to some extent by bond issues. Unquestionably some moni- 
cipal taxes were levied and collected, but they were pre- 
sumably not very extensive.* 

To the student of our country's history that of the Confed- 
:^ ^ -^. - erat« States is the story of a fierce stru^le against over- 
whelming odds, the culmination of an inevitable conflict the 
.'.''"' ' _ foundations of ■which were laid in an earlier period. To the 
,-..^ ' j economist the history of those four years is the picture of 
^, ■. - " anomalous economic conditions. He studies the financial 
i ^ j^.., ( and industrial phenomena presented there as the psychologist 
, seeks enlightenment in the study of abnormal psycholt^. 
J,' '■ ', ' To the economist the war does not centre about the heroic 
^; ■», t ' effoi-ts of the South to resist the strategy of the Northern 
I generals, but it centres about the picture it presents of the 

' ■ - negation of normal economic forces, 

'. ' > Ala. ad Dec B, ises; Tex. act M*v SB, IBM; Merdianlt' Mag.,XLV,*H 

, - ■' ■ (1861); Charlttlm Courier, Jan. U. IB63. 

^ Seepagea 153-9. 

'' '■ ■ ■ • CAurfeMm Coaritr. Mch. 15, Oct. 10, IS, 17, 1861 ; Feb. 8, Mch. 10, Dec. 31, 

^ ..■'."• 1862; Jan. 24, Mch.4,0rt 31,1968; May 31, 1864; City ordinance, Feb. 8, 1862. 

quoted in Charlatim JUercarg, A pi 30, 1862; Richmond Eiamimr, Feb. 24, Dec. 

16, IT, lB63;Ta.acti Mch. IB. 1861; Mch. 18. 1864; Ga. act Not. 26, 1863; Neie 

Orltaiu Price Current, Jaoe 15, 1B61 ; Raleigh Progrets, Jan. 9, 1B65. 


The war, by its pressure from without and its coercive 
measures from within, wrecked the industrial organization of 
the South, — aside from the emancipation of the slaves, an 
after effect of the war, which does not come within the 
purview of our study. The blockade — the most effective ^ 
military weapon of the North — forced upon the South an ^*i- 
economic isolation, which deprived her of all the advantages 
that modem international trade and credit relations might 
otherwise have offered, and compelled her to revert to earlier 
industrial forms. This reversion was the more disastrous to 
the South owing to the backwardness of her industrial devel- 
opment in comparison with the North's, largely the result of 
slavery as an institution. The blockade together with the 
inflated currency deranged prices, and inevitably led to violent 
speculation, which contributed largely to the social and po- 
litical disintegration that characterized the South during the 

This social disorder was the natural reaction against the ^ . 
military despotism, the necessary outgrowth of the war, ftfid (K ^^ Cu^wAt' 
which implied a flat contradiction of the fundamental notions 
involved in the formation of a "Confederacy." Coercive 
measures, aside from the compulsory enrolment in the army, 
were concerned with the financial expedients aimed at a 
forced transfer of capital from those who had it — the farmers, 
planters, and capitalists ; in a word, from the producers — 
to the government and the army which consumed it unpro- 
ductively. The effect of this wholesale destruction of capi- 
tal we see in the impoverishment of the South, from which 
it is only slowly recovering, and from which certain sections 
will perhaps never recover. The capital of the South repre- 
sented by coin in circulation was the first to go, at least so 
much as the early loans of the government secured for its 
use. Trust funds and the investments of educational and 
similar institutions were quite generally turned into govern- 
ment securities, and the capital they represented was swept 
away, as were in general the savings of the community. The 
accumulated wealth of the past was consumed, and not re- 


placed. Invested capital of even iita most pemianeiit chat^ 
actor was worn ont or destroyed. 

The methods employed by the Confedetate govenunent to 
bring about this transfer of capital can be fairly criticised on 
the score of their ineffectiveness. Taxes were neglected and 
the fiscal policy which was adopted — the dependence upon 
paper money issues — immensely ^^ravated the difficulty of 
securing the necessary sapplies for the army, and weakened 
the social structure of the South. But the history of Europe, 
and especially that of the United States, indicates that no 
statesman or body of statesmen could have devised means of 
carrying on the war without reconise to such arbitrary and 
disturbing fiscal devices. War forces inevitably throw those 
of normal industrial progress out of gear, and put into oper- 
ation coercive and socially deranging forces, the effects of 
which in the South have been presented in the foregoing 

The verdict passed upon the career of the Confederate 
States will not emphasize the mistaken financial policy 
adopted by the government, but rather the fact that, in spite 
of it, the South maintained herself so long. The Soathem 
cause evoked as much devoted loyalty as has been called 
forth by any cause in history ; and that cause was supported 
at a cost greater than in any similar conflict. The South- 
emera' sacrifices far exceeded those of the Revolutionary 
patriots. They lost evetything in their desperate effort to 
protract the war and avoid ito inevitable conclusion ; it is 
probably of little comfort to them to read that something 
might have been saved from the wreck if the government 
had adopted other fiscal measures. 





















I ■■ J 





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Report, ComptroUer-General, South Carolina, Nov., 1862. 
The same, Nov., 1863. 

Report, Confederate Commissioner of Taxes, Nov., 1863. 
Report, Major-General Hindman on his Operations in the Trans-Mississippi 
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Report, Virginia Joint Committee ... on Conscription of State Officers. 
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Reports, Secretary of the Navy (United States). Washington, 1863-5. 


Stportt, Secretary o/th* Tretutay : 

May 10, 1861. Capera, Memmmger, 417-21; Con/ed. Arcbivn. 

July 20, ISal. Confed. AtcMbu. 

July 24, 1861. Ibid. 

July 20, 1861. Ihid. 

Nov. 20, 1861. Ibid, h Capers, Meominger, 422-8. 

Mch. 14, 18S2. Capers, Meniminger, 420-37; Confed. Arehvi>et. 

June 7, 1862. Confed. Arehivet. 

Aug. 18, 1862. Charleston Courier, Stpt. 2, 1862; Richmond Dit- 
pauA, Aug. 28, 1862. 

Jan. 10, 1863. Capers, Memminger,iS9-6a; Confed. Archiva : C. S. 
Atmanae for 1864, 46; MoPhereon, SebelUon, 868; CharUtton 
Courier, Feb. 24, 1863; Off'l Eee'ds RAdUon, 4th S., 11, 308. 

Dec. 7, 1863. Capen, Mmminger, 457-76 ; Confed. Archiva ; 
McPheraon, Rebellion, 368; Richmond Examiatr, Dec. 12, 1863; 
Charletton Mercury, Dec. 28, 1868 ; N. C. Standard, Dec. 22, 

Feb. e, 1864. Richmond Examiner, Feb. 8, 1804. 

May 2, 1S64. Confed. ArchiveM; Capers, Meniminger, 477-48. 

May 20, 1864. Charlalon Conner, May 30, 1864. 

Not. 7, 1864. CharUtton Courier, Not. 18, 1864; ChaHetton Mer- 
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Appleton, Ann. Cydoped. for 1864, 194. 

Not. 24, 1864. Augusta Chron. fr Sentinel, Dec. 7, 1864. 

Doc. 15, 1864. Confed. Arckiua. 

Jan. 6, 1866. Ibid. 

Jan. 9, 1865. Ibid. 
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Rule* and Regtilatian* fir Proceedings in the Confederate States Patent Office, 

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America. Richmond, 1864. 
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MilUary (Written for the London Times). New York, 18SI. 
Rnaaell, William H. Recollections of the Civil War. (No. Am. Bev., 

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APPENDIX 11 821 

Sabre, Zdent. O. E. Nineteen Monihe a Prisoner of War, New York, 

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Sargent, F. "W. England^ the United States^ and the Southern Confed- 
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Savannah and Boston : Account of Supplies sent to Savannah, Boston, 1865. 

Sohari; J. T. History of the Confederate States Navy. New York, 1887. 

Sohii^ab, J. C. The Confederate Foreign Loan. An Episode in the 
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Schwab, J. C. The Financier of the Confederate States. (Yale Rev., 
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Semmea, Admiral Raphael Memoirs of Service Afloat. Baltimore, 

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SigiUologiay Being some Account of the Cheat . . . Seal of the Confederate 
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Smedea, Soaan D. A Southern Planter. London, 1889. 

Smith, Ghiatavua W. Confederate War Papers. New York, 1884. 

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Statutes at Large of the ConfederaU States of America, First Congress. 
Richmond, 1862. 

Private Laws of the Confederate States of America, First Congress. Rich- 
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Public Laws of the Confederate States of America, 1863-4. Richmond, 

Statutes at Large of the Confederate States of America, Second Congress. 

Richmond, 1864. 



Pmae£atio/tkeCamfeJeraUStiaa»/Amtriea,SteamdCmgnn. Ueb- 

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(Storeiwon, "VT. O.) TUrUen Mtmlkt m lie SOd Armg. B; aa Im- 
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(Sterenaoit, W. O.) Trtae moil dant VarwA det nUZct. Genfevc, 

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Thlan. Ra{duwt P. (CMef Clerk Adjniant-GeDeral'a Office, WasUng- 
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Thompson, Maiiilc«. Tie Storg of Louiiiana. Boston, 1680. 

Tomes, Robert. Tie War witi tie Souti. New York, 1862-7. 

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Ameriea. Boston, 1890. 

Tmo Months in tie Confederate Stale*. By an English Merchant. Lon- 
don, 18S3. 

Waddell, Joseidi A. AnnaU of Augatta Comity, Virginia, ^cbmood, 
1886 (ch. Xin-XYIT). 

Walt, H. I^ The Blockading Service. (Dlinois Commandery Loyal 
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Walker, Robert J. Jefferton Davi* and Repttdiation. London, 1863. 


Walker, Robert J. Jefferson Davis: Repudiation^ Recognxtiony and 
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Letter III, ibid., 1864. 

WarrocVs Virginia and North Carolina Almanac for . . . 1865. Rich- 

Watkins, J. L. Production and Price of Cotton for One Hundred Years. 
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Washington, 1895. 

Wataon, VTilliam. Life in the Confederate Army. New York, 1888. 

Weeka, Stephen B. A Bibliography of the Historical Literature of North 

Carolina. Bibliographical Contributions, no. 48, Harvard Univer- h # 
sity, 1895. ^ — ----- - jy 

VTiae, John 8. The End of an Era. Boston, 1899. 
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Mag., LVI, 408. July, 1898.) 



" Alabama," how paid for, 43. 
Arms, see Foreign Supplies, Manu- 

Army: organizatdon, 5, 214; rations, 

177-8; tee Bounty, Conscription, 

Desertion, Impressment, Wages and 

Ashe, T. S., Member of Congress, 89. 

Baldwin, J. B., Member of Congress, 

Banks: condition in 1860-1, 124-33; 
projects for a central bank, 137-9 ; 
cotton banks, 135-7 ; profits of bank- 
ing, 134-5; banks' specie, 141-5; 
tee Speculation. 

Banks and the Confederate GrOTem- 
ment : attitude toward treasury notes 
in 1861, 139^0; in 1862, 23; toward 
discredited notes under Funding Act 
of March, 1863, 54; under Funding 
Act of February, 1864, 73; banks 
loan to the government in March, 
1861, 8, 141^; make temporary 
advances in 1861, 141-2; lend spe- 
cie in March, 1865, 81-2. 

Bank Suspension, in 1861 : in Virginia, 
127-8, 142 ; Georgia and North Car- 
olina, 128; Alabama, 129; South 
Carolina, 129-30; Mississippi and 
Florida, 130; Louisiana, 127, 140-1 ; 
effect on success of first government 
loan, 7-8; the result of debtor in- 
fluence, 122. 

Banknote Inflation: in Virginia, 130, 
132, 133-5 ; Mississippi, 131 ; North 
Carolina, 131, 133; South Carolina. 
132; Louisiana, 143; redemption of 
banknotes in Virginia, 134; see 

Barksdale, E., Member of Congress, 

Barnwell, R. W., Member of Congress, 
3-4, 19, 71, 89, 120. 

Barry, W. S., Member of Congress, 4. 

Barter, prevalence of, 163-4 ; 'see Cur- 
rency, Tax in Kind. 

Bartow, F. S., Member of Congress, 4. 

Benjamin, Judah P., on Confederate 
funds abroad, 38. 

Bigelow, John, on foreign loan, 41. 

Blockade: declared and established, 
236; efficiency, 236-7, 242; see Im- 
ports and Exports, Embargo. 

Bond Issues: 15-million loan of Feb- 
ruary, 1861, 6-8; 100-million loan 
of May, 1861, 10, 12 {see Produce 
Loan) ; loan of December, 1861, 12; 
of April, 1862, 22; of September, 

1862, 24; of February and April, 

1863, 25; of February,' 1864, 66; of 
March, 1865, 81-2; State bond 
issues, Alabama, Florida, and Geor- 
gia, 306; Louisiana and Mississippi, 
307; North Carolina. 307-8; South 
Carolina and Tennessee, 308 ; Texas, 
308-9; Virginia, 309; see Foreign 

Bonham, M. L., Member of Congress, 

Boocock, T. S., Speaker of House of 
Representatives, 19. 

Bounties: for enlistment, 193; to in- 
dustries unconstitutional, 241, 247. 

Boyce, W. W., Member of Congress, 3, 

Bridges, J. L., Member of Congress, 63. 

Brown, A. G. : offers legal tender bill 
in Congress, 94; views on impress- 
ment, 207. 

Brawn, J. E., GorenioT of Oeorgii 
vela«e legal tender bill, 100 ; oppose* 
Buspeiiiian of habeai corpus, 188-9 
i in press ment, 208; conKription. 200; 
vieoB OD StatsB rights, 314-15; oa 
peace proposal!, 221. 

Bntlget, stt FinaDCOB. 

Bnllock, J. D., foreign •gent, SS. 

Cabinet : peraonnel, 4 ; attack upon, 

210 1 right to teati in CongreM, S13 ; 

proposal of British cabinet sTstem, 

Campbell, J. A. P., Member of Con' 

grese, 3. 
Ceiealii: qnarterlj price, ITS, ITS; 

monthl; price. Appendix L; Mt 

Ctuue, S. P. : SecT«tM7 of the United 

States Treaaniy, 4-5 ; Tiewa on legal 

tender legislaCion, 91. 
Chattanooga, Battle of, effect on eon- 

BcriptioD, 194. 
Clark, Charles, Governor of Misnssippi : 

opposed to (nspennon of habeas car- 

Cla7, C. C, Jr., Member of Congress, 

Cobb, Howell, Member of Congress, 3-4. 

Coffee: qaacterly price, ITS, ITT; 
monthly price. Appendix T. 

Coin : Coofederate coinage, 85-6 ; legal 
tender foreign coini, B4-5 ; seiinre 
of Kew Orleans banks' specie, 143; 
amonnt of coin in ciicnlation, 164; 
amount spcnred by the government 
in 186], T; Bhipments to Enrope,B; 
government anpply, 43, 144; «« 
Gold Premium, Speculation. 

Confederate States; organiiation of the 
government. 3-S, 9 ; conflict with the 
SCnteg. tte Habrai eorpiti, Conscrip- 
tioa, States Rights. 

Conflscation: acta of May and Aagnst, 
1861. 113-20; their relation to the 
similar Doited SMtes acta, 114-16; 
rcvenne derived. 120 ; conflscation of 
Sonthem debts due the North. 110- 
!1 ; their character and extent, til- 
ls : State acta, ISO-!. 

CongTcai: personnel, 3, 19-20. TI ; 
committees, 4, 19-20, 71, 89. 

Conrad, C. VL, Member of CongnM, 
3, 63. 

Conscription: act of Mifr*'. IB6S, 10, 
lTO-1, 193; of April, 1861, 195-« ; 
npheld by Attomey-^neral and by 
Circnit Court, 195 ; also by Alabuns 
conrt, 196; act of September, 1863, 
193; negro conscription, 194; sab- 
ftatDtes, 196 ; exempted classes, 196- 
7 ; such as State officials, 197-8 ; and 
plantation overseers, 198; opposition 
to oonscription in North Carolina 
and Virginia, 193, 198, 201; see 
Boonties, Desertion. 

Constitntions, Confederate States : pr». 
visions affecting legal tender legis- 
lation, 64, 97-8, 100; confiscation, 
116-19 ; suspension of kaitat eorpat, 
211; increase of President's powers, 
21! ; his right to veto parts of appro- 
priation bills, 21 1 ; his six years' 
term, 212 ; lessening of the powers of 
Congress, 212-13; export datiee, 240; 
protective dnties, 241 ; direct taxes, 
294 ; BeUaapporting post-office, S4T. 

Cotton Bonds, ue Prodnce Loon. 

Cotton Crop : govertunent urged to buy, 
14, 38, 233; policy of disconisgiDg 
large crops, 3(M-S; by legislation, 
3TT-9 ; nte of crops, 279. 

Cotton Kxporta ; by government, 2(r-7 ; 
353-5, 266 ; by States. 218,256. 366; 
■« Imports and Exports, Specula- 
tion by Government, Trade with 

Cotton Rxport Dnty : established in 
Febrnary, IB61, 6-7, 239-40; bear- 
ing on foreign loan, 31 ; its constiln- 
tionalil^, 240. 

Cotton Loons attempted, 2T-8, 81 ; ms 
Foreign Loan, Produce Loan. 

Cotton Banka, set Banks. 

Cotton Planters : demand relief of gov- 
ernment. 14; of banka, IS; State 
relief granted in Miatiasippi and 
LoQisiana, 16-17; ut Prodnce Loan, 

Cotton, Price of : quarterly, 175-6 ; 
monthly. Appendix I. 

Connterfeitfl : prevalence of. 159 ; pre- 
vention of. 160; Korthem connter- 
feits of Soathern notes, 161-3. 



Conrt, Sapreme : attempts to establish, 
219; opposition, 220; see Magrath. 

Crops : size of, 206, 275-6 ; discouraged 
bj impressment, 204-5 ; see Cotton 

Cnrrencj: amount in circulation at 
yarions times, 165-6 ; alleged scarcity, 
146-8; fiat monej doctrines, 148-9; 
State note issues, 149-53; city note 
issaee, 153-5; personal note issues, 
1 56-9 ; attempts to suppress them, 
157-9 ; United States currency in cir- 
culation in the South, 162, 255-6; 
XKWtage stamps in circulation, 163; 
reversion to barter, 163-4 ; see Coun- 

Curry, J. L. M., Member of Congress, 3. 

Customs Duties, see Tariff. 

Daroan, E. L., Member of Congress, 

Davis, George, Member of Congress, 
19, 89. 

Davis, Jefferson: elected President, 
3-4; re-elected, 19; views on prod- 
uce loan, 14 ; on funding policy, 59 ; 
feelings toward Memminger, 69 ; 
recommendations in November, 1864, 
78; vetoes bill for further issue of 
notes in March, 1865, 80; opposes 
legal tender legislation, 95; favors 
suspension of habeas corpus, 190; 
favors negro conscription, 194; views 
on conflict with States, 200, 257-8; 
on blockade, 250; on trade with 
United States, 261 ; on direct taxes, 
294; opposition to Davis, 209-10, 

Debt, see Finances. 

Debtor Interests, see Legal Tender, Stay 
Laws, Confiscation. 

Den^gre, J. D. : advice to Treasury 
Department, 23 ; opposes legal ten- 
der legislation, 86 ; favors taxation, 

Desertion: common in 1863, 170; in 
North Carolina, Alabama, Missis- 
sippi, Louisiana, Georgia, and South 
Carolina, 198-9. 

Distilling Industry : movement to check 
distilling, 279-80; government dis- 
tilleries, 280. 

Donations to Treasury, 6. 
Dortch, W. T., Member of Congress, 

Embargo: free trade policy adopted, 
244-6; then restrictions put upon 
trade, 246, 248-52; to coerce Great 
Britain, 250-2; State embargoes, 

Erlanger, see Foreign Loan. 

Expenses, see Finances. 

Exports, see Imports and Exports. 

Extortion, see IMces. 

Finanobb: expenses and receipts in 
1861-2, 18, 20, 24, 44; in 1862^, 
55; in 1864, 76-7; iu 1865, 80-3; 
State and local finances, 302-10; 
city finances, 310. 

Foote, U. S. : Member of Congress, 20 ; 
offers legal tender bill, 92; opposes 
suspension of haheas corpus, 189 ; 
attacks Davis, 210. 

Foreign Loan : suggested in 1861, 28-9 ; 
attempted, 30; contract with Er- 
langer, 31-2 ; the loan floated, 32-5 ; 
foreign attitude toward it, 33, 37; 
the bankers' profits, 35-6; the gov- 
ernment's profits, 39-^2; the bonds 
after the war, 37-9. 

Foreign Supplies: remittances for, 8, 
21, 24-5, 28-9, 42-3 ( see Foreign 
Loan); by North Carolina, 26. 

Forstall, E. J., opposes legal tender 
legislation, 86. 

Foster, T. J., Member of Congress: 
offers legal tender bill, 92. 

Free Trade : see Imports and Exports, 
Embargo, Tariff. 

Funding Notes in Bonds: provision 
avoided in first loan, 7; adopted in 
May, 1861, 10; renewed in August, 
1861, 11-12, 20; and in April, 1862, 
22; compulsory funding proposed 
and defended by Memminger, 46-9; 
Funding Act of October, 1862, 46; 
of March, 1863, 52-3; its effects, 
54-7 ; further funding measures dis- 
cussed in 1863-4, 56-64; Funding 
Act of February, 1864, 64, 171 ; its 
effects, 66-9, 72; its constitutional- 
ity, 98; its amendments, 74-5; the 

- -^ 

StBtM' MtioD, TS-J( ; deriM to induce 
tiotehalden to depocit notes in the 
^Tenini«Dt Treaaai; in Febnuijr, 
1865, 81 ; State fonding Bcb, 46-7. 

QJIBI.1HD, A. H., Member of Congrou, 
87, 89. 

Oarnett, H. R. H., Member of Con- 
giew, 19. 

G&rtrell, L. J. : Member of Congieaa, 
20, 89-90 ; offeiB legal tender bill, 9S. 

GettyBbucg Campiign : eBect on Con- 
federate flnBDCsa, 3fr-e, 91-3, 16»-T0 ; 
on coDBcriptioii, 193. 

Oibbea, J. G., foreign agent, 80. 

Gold Freminm ; flnt appearance, I6S ; 
local diOereocee, 166; relation to 
amount of notes ontstanding, 167-8; 
BTeiage moothl; premittm, 167 and 
Appendii L ; qnarterly arerage, 173 ; 
the meaaiiTe of the popular eetimate 
of the proapectiTe end of the mr, 
168-73 ; specnlatioo baaed on, 331-3. 

Graham, W. A., Senator, 71. 

Qraj, F. W., Memtiec of Congieu, 63, 

Green, Dnft, financial proposal*, 61. 

Greenbacks, let Coirenc/. 

Babbas CkiRPUS, Snspeniion of; in 
March, 1863, 30, 170, 186; in Octo- 
ber, 1SS3, IBT; bilU in Congreea in 
1864-5, 189-90 i oppoeilioD in Mis- 
sissippi and Georgia, 188-9 ; in North 
Carolina, 190-3; soapenBion in the 
North and Sonth compared, 1 90. 

Heiskell, J. B., Member of Congress, B9. 

Henr/, G. A., Memtiei of Congieis, 
19, 89. 

Hill, B. H. : Member of Coogreaa,3, 19; 
offers bill to organise Supreme 
Coort, 319. 

Holcombe, J. P., Member of Congress, 

Eolden, W. W.. $ee Peace Party. 

Holt, H., Member of Coogrew. 19. 

Hunter, R. M. T., Member of Congress, 
19, 71, 89. 

Hose, Caleb, foreign agent, 38-3. 

338-9; importing and exporting com- 
panies, 343-3; trade with Mexico, 
355-6 ; hoetilitj to importati<m of 
Inxnries, 343-4; free trade policy, 
344-6; naTigation laws repealed, 
344 ; let Blockade, Embargo, Bpacu- 

Impressment : system adopted, SOS ; 
extent and effect, 303-4 ; waatefol- 
ness, 305 ; illegal Impreeamenti, 306 ; 
opposition in Geitfgia, 308 ; in North 
Carolioa, 209. 

Indians : treaties of peace with, TS ; 
troBt fmids of, 75. 

Ininrance Companies : growth of bnsi- 
nees, 343 ; issue circulating notes, 1S6. 

Intereet Payment: on 15-million loan, 
6-7, 75 ; on foreign loan, 39-^3 ; de- 
fault after 1863, 76 ; on State bonds, 
131, 309-10. 

JiMiBon, R., Jr., Senator, 71. 
Johnson, H. V,, Member of Congress, 

Johnston, General J. £,, views on im> 

preasment, 203-4. 
Jones, G. W., Member of Congress, 19, 

Rbexah, a. H., Member of Congress, 

Reitt, L. H., Member of Congress, 4. 
Kenner, D. F., Member of Congress, 

3-1, 19, 36. 

Lamar, O. B., tnvoWed in trade with 
the United States. 359. 

I<each, J. M., Member of Congress: 
opposes snEpension of habtat corpus, 
189 ; TiewB on peace proposal, 223. 

Lee, General R. E. ; favors legal tender 
legiilation, 92; and negro conscrip- 
tion, 194; views on speculation by 
army officers, 233 ; legalizes trade 
with the United States, 362, 264. 

Legal Tender; constitntiooal provis- 
ions, 84, 97; attempts to eoact a 
legal tender law, 86-98; attitode of 
the newapapers, 91-3, 95-7 ; attempts 
to compel the acceptance of notes, 
102 ; State legal tender legislation, 



Loans, see Bond lasnes, Note Issues, 

Foreign Loan, Funding. 
Lyon, F. S. : Member of Congress, 19, 

63, 79 ; ofEers legal tender bill, 99. 

McClbllak, General 6. B., Presiden- 
tial candidacy and defeat of, effect 
on the South, 36, 171, 227. 

Machem, W. B., Member of Congress, 

MacLean, B., Member of Congress, 19. 

McRae, C. J.: Member of Congress, 
3-4 ; foreign agent, 25-7. 

McRae, J. . Member of Congress, 19. 

Magrath, Judge A. 6. : of Confederate 
District Court, 219: upholds confis- 
cation act, 116-18, 120; and conscrip- 
tion act, 195. 

Manufactures: arms, 268-9; ammu- 
nition, powder, and saltpetre, 270-1 ; 
iron and steel, 269-70; paper and 
miscellaneous, 271-2 ; profits of man- 
ufacturers, 272. 

Martial Law, see Habeas Corpus, Sus- 
pension of. 

Mason, J. M., and the foreign loan, 34. 

Meat Products: quarterly price, 175, 
178 ; monthly price. Appendix I. 

Memminger, C. 6.: Member of Con- 
gress, 3 ; Secretary of the Treasury, 
4; reports of May, 1861, 9-10, 15, 
242 ; of March, 1862, 20-1 ; of Janu- 
ary, 1863, 45-51 ; of December, 1863, 
55-60, 299; of May, 1864, 69, 300; 
resignation in June, 1864, 69 ; favors 
taxation, 9, 284-5, 290-1 ; urges State 
guarantee of Confederate bonds, 
49-50 ; attitude toward cotton plant- 
ers, 15-16, 21, 24 ; Tiews on funding, 
20, 45-9, 57-9, 164; contract with 
Erlanger, 30; views on legal tender 
legislation, 90-1 ; on bank suspension, 
127, 140-1 ; on govemment specular 
tion in cotton, 233-4; attacks upon, 
210 • seat in Senate, 214 ; position as 
a financier, 70. 

Miles, W. P., Member of Congress, 4, 

Mitchell, Nelson, opposes confiscation 
act, 116-7. 

" Monitor," victory of : effect on Con- 
federate legislation, 20. 

Moore, J. W., Member of Congress, 89. 

Morals : extravagance, 280-1 ; gam- 
bling, 281 ; drunkenness, 282 ; row- 
dyism, 282. 

Murrah, Pendleton, Governor of Texas, 
opposes militazy despotism, 215. 

Natioation Laws, see Lnpozts and 

Negroes, see Conscription. 

Nesbit, E. A., Member of Congress, 4. 

New Orleans : effect of capture on Con- 
federate finances, 20, 170 ; seizure of 
United States Mint, 85 ; condition of 
banks in 1860-1, 124-5, 127, 131; 
their suspension, 140-1 ; seizure of 
their specie, 143; debts due North- 
erners, 122-3. 

North Carolina, see Habeas Corpus, 
Peace Party, States Rights, Vance. 

Note Issues: 3.65% notes of March, 
1861, 9; notes of May, 1861, 10; of 
August, 1861, 11 ; notes and call cer- 
tificates of December, 1861, 12, 62; 
notes of April, 1862,22; 7.30% notes 
of April, 1862, 22-3, 56 ; small notes 
of April, 1862, 23, 56; unlimited 
issue of September, 1862, 24; issues 
of March, 1863, 52-3 ; of February, 
1864, 66-8; of March, 1865, 80; 
amount of notes outstanding at vari- 
ous times, 165-6; value of Confed- 
erate and United States notes com- 
pared, 172; State note issues: Ala., 

149, 306 ; Fla., 150-1, 306 ; Georgia, 

150, 306-7 ; Louisiana, 151 ; Missis- 
sippi, 307; North Carolina, 151-2, 
307 ; Virginia, 152-^, 309 ; issues by 
private corporations, 155-6 ; see Cur- 
rency, Funding, Gold Premium. 

Oldham, J., Member of Congress, 3 ; 

opposes conscription, 195. 
did ham, W. S., Member of Congress, 

19, 71. 
Orr, J. L. : Member of Congress, 19, 

71 ; offers legal tender bill, 94. 

Patent Offios established, 272. 

Peace Party: in North Carolina, dis- 
content general in 1862-3, 72, 170-1 ; 
public meetings, 201, 220-1 ; Vance- 


IIold«D Campaign, S3t-T ; elaetion 
of lUproMDtativM, 71 ; peace com- 
mlMiouen ptopowd, 221 ; peace party 
in CleorKla, 331 ; ut IlabtoM Corpai, 
Statui ItiKbta, Vance, Brown, J. B. 

PeadloUin, Uaueral J. C., laTora tiade 
with fiiemy, !tG3-S, 

Ferklni, James, Jr., Member of Con- 
grcuM, «. 

I'ettlgru, J. L., oppotei conflicatUin 
act, lie. 

Phelan, Jamoi, Member of Congreu, 
ottan legal tender bill, M. 

I'laiitura' Itolief, m* CoCIod PUnteri. 

I'dlk, Uenerol Leonidai, favon trade 
with euBmy, SS3--4. 

PoUaril, K, A. : attacks Uemralnger, 
69; tarori legal teoder legitlatioa, 
ee ; attack! Dav[i, 310. 

Poit-<)fllce^ Bclf-supporting by contti- 
tutiunal reqnirameiit, 247 ; rate policy, 
147-S ; poatage stamp cnrrency, 1 63. 

Frii'Di : ai affected by aiaoatit ot notes 
uutitauJiun. 174; local diSerencea, 
1*4 ; muDthly price of commodities 
Incurrency.AppendixI. ; qnarterlyin 
tbe Unileil States, 173 ; quarterly m 
gold. United States and Confederate 
States compared, 173-1, 178-9; max- 
imum price laws, 1S3-3 ; price cou- 
veiitloui. 183; impreaameut prices, 
903 ; attempts to reduce bigh pric«a 
keep guuils from tbe market, ISO ; 
pricca as affected by the Fnadiug 
Act of Man'h, l!i63, H-i; by the 
FuiidiDg Act of February, 18S4, 67 ; 
«w lm|>Tuiameat. 

IVoduce Uian: proposed br Memmio- 
ger, 10. l^; utopUxl iu MaT,l!<61, 13; 
aud rairiMi nnt, 13-lS. 16. S3 i uew 
loan propiised, 31, 34 j authorised in 
April. 1063, 34 ; aud lu Febraarr 
aud April. Id63. 3i; State •Mttou 
bonils ot Ts-'tas, 36; of Misxuaippi 
and Xurth Caruliua. 36 ; cottun bn- 

Pngh, J. L., Member of CuogrMi^ 

ltAiia«it>s: cuaditi»a in IMI. ST3-3: 
delirrioniivii danug tt:« war. 3T3-4 ; 
profiB, 374 : g<»T«nimei>t subaidiea. 

STB; notelMoet.! 
cotton, 274. 

Beagan, J. H. : Uember of CoagrsM, 
3 ; Postmaster-General, 247. 

Beceipu, see flnancea. 

Bepndiation, sst Funding. 

Bevolution, American : histbiical par- 
allels, 28-9,69, 105,157, 159,185,253, 
362, 265, 381, 293, 3»6; French, his- 
torical parallels, 14, 49, 99, 101-4, 
ISO, 148-9, 159, 161, 168, 186, S07, 
230-1,381-3, 296. 

Bbett, R. B.: Member of CongicM, 
3-4 ; shan in framing constitation, 

Richardson, J. P., oppose* legal tender 
legislation, 87. 

RoBseU, C. W., Member of CongtMS, 

SiiLiBiii, tet Wages and Salaries. 

Salt; obtained by evaporating sea wa- 
ter, S67 ; from salt springs, 267 ; salt 
works at Saltrille, Virginia, S6S ; ob- 
tained by trade with the enemy, 264. 

8af ingt banks : issue circulating note*, 
133-4, ISS ; their business, I3S. 

Scarcity of Food : the reenlt of the im- 
preeimeut policy, 307-8, 276-7 ; the 
result of the blockade, 237-8. 

Seddou, James A., Member of Con- 

es, 87. 

T. J., Senator, 71-80, 85, M. 

Sequestration, Me ConflscatioQ. 

" Shiuplasters." tte Currency. 

Simms, W. E., Member of Cougreas, 
19, 89. 

Skipwitb, P. H., farora legal tender 
lefpslalion, 87. 

Slidell, Johu, and tbe foi«ign loan, 33. 

Smedes, W. C, &Tors legal tender 
legislation, 87. 

Smith, William, Goremor of Virginia: 
faTora negro conscription, 194 ; op- 
poees conscripttoD of State oSciab, 
198 ; Tiews on speculation. 233, 235. 

Spam>w. G.S., Member of Con g iesa,4. 

Spevnlation: nature ot, S39, 234; for- 
bidden. 333, 835-6 ; (peculation in 
gold. 231-3: in cotton, 336-9, 242-4. 

Specntation by the Goiemment: in 
Uiuted States cnrrency, I6S. 253-6; 



in cotton, 27-8, 233-4; bearing on 
the embargo policy, 252-5; fipecola- 
tion by the State governments, 234, 

Spence, James, foreign agent, 30. 

State Guarantee of Confederate Bonds : 
proposed by Memminger, 49 ; acted 
upon by the States, 50-1 ; and by 
Congress, 51. 

States Rights : aronsed by conscription, 
195, 197,200; by impressment, 208-9; 
opposition in North Carolina to the 
central goyemment, 209-28; Con- 
federate govemment overrides States' 
military organization, 214-16 ; inter- 
feres with inter-State commerce, 217 ; 
with State prohibitory laws, 217-18 ; 
with States' exporting and importing 
goods, 218, 257; opposition to estab- 
lishing a Supreme Conrt, 220; pro- 
posal of peace commissioners, 220-2 ; 
States rights recognized in the consti- 
tution, 223 ; the right to secede from 
the Confederate States, 223-4; con- 
stitutionality of direct taxes, 293-4 ; 
tee HabeoM Corpus, Conscription, 

Stay Laws: the character and extent 
of the debtor interests, 106, 110; the 
States' stay laws, 107-13; for the 
benefit of soldiers, 107, and of debtors 
in general, 107-13 ; Southern indebt- 
edness to the North in 1861, 110-23 
(see Confiscation). 

Stephens, A. H. : Member of Congress, 
3 ; share in framing the constitution, 
213-14; elected Vice-President, 3-4 ; 
re-elected, 20; views on funding 
policy, 72 ; on suspension of habeas 
corpus, 187-9; opposes conscription, 
200; and the niilitary despotism of 
Davis, 208-10; views on peace pro- 
posals, 221. 

Sugar and Molasses: quarterly price, 
175, 177-8; monthly price. Appen- 
dix L 

Swan, W. G., Member of Congress, 
offers legal tender bill, 93. 

Tariffs: of March and May, 1861, 
240-2; customs revenue, 239-40; 
protective motives, 241-2 ; constitu- 1 

tional provisions, 241 ; free trade 
policy, 244-6; growth of protec- 
tionism, 248-50. 

Tax Acts : war tax of August, 1861, 56^ 
285; its levy, 286-7; its assumption 
by the States, 287-90; act of April, 
1862, 291-2; effect on currency, 53, 
56; act of February, 1864, 171, 299- 
300 ; of June, 1864, 300-1 ; tax bills 
in Congress in 1864-.5, 79; acts of 
March and April, 1865, 301-2; State 
tax acts: Alabama and Arkansas, 
305; Louisiana, 302; Mississippi, 
Georgia, South Carolina, and North 
Carolina, 303, 305. 

Taxation: postponed in 1861, 11, 18, 
284 ; urged by Memminger, 9, 284-5, 
290-1 ; tax revenue in 1861-2, 18 ; in 
1863-4, 77-8; Confederate taxation 
of State bonds, 21 9; constitutionality 
of direct taxation, 293-4 ; burden of 
taxes, 294-5, 297-9 ; State aod local 
taxation, 302-10; suspended, 330; 
and relaxed, 303-4; city taxation, 

Tax in kind: of April, 1863, 292; 
amount raised, 293, 297 ; North Car- 
olina protests, 295-7 ; act of February, 
1864, 298-9; opposition to, 294-7; 
acts of March and April, 1865, 301-2. 

Tilden, S. J., Presidential candidacy, 
1876 : effect on foreign bondholders, 

Tobacco: quarterly price, 175, 178; 
monthly price. Appendix L 

Toombs, Robert : Member of Congress, 
3-4; opposes Davis, 208-9; opposes 
protective tariff, 241. 

Trade, see Imports and Exports, Em- 

Trade with Mexico : cotton exchanged 
for army supplies, 265-6. 

Trade with the United States: on the 
Virginia border, 259-60, 264; in Alar 
bama, 260; in Mississippi, 260, 263- 
5 ; in Louisiana, 261, 265 ; attempts 
to prevent it, 187, 262-3 ; winked at 
by the government, 259-66. 

Tredegar Iron Works, 269; see Man- 

Trenholm, G. A. : appointed Secretary 
of the Treasury, 69 ; report of No- 

TembeT, 18U,TS; of Deeamber, 1864, 
80 ; of Jaatuaj, IS6a, BO-l ; inteieit 
in blockade-rnuniDg, S53; viawi aa 
fnndiDg policy, 73; on tszation, TB, 

Dhioh Sentiment Id tbe Sonth, SST ; 

M( Peace Party. 
United States foiKU aeiied by the Con- 

fedeiate Statea, a, 9, 85, lis, lU. 

Vamce, Z. B., Goremoi of North Caro- 
lina : oppoeitioQ to conscripcioD, 198- 
!02 ; to BOBpenoion of iabtat eorpas, 
190-2 ; to impreHment, 106 ; to Coo- 
fetlerate coatrol of the States' mOi- 
taryorganiutioD, 215-16; to Confed' 
erate diatillgriea, 917 

Interferanc* whh Stataa' impoita and 
exports, 31B, SS7-8; Vanee-Bolden 
campaign, SU-6 ; hii relation to the 
peace party, SI4-5 ; vieira cm fpecii- 
lation, S3A ; ihuo in blockad^nuk- 
ning, aS«-7 ; u* Statei Bighti, Peacs 

Waois aad Salariet : affected by ind 

I, 181; 

,181 J 

MddieiB, 183. 
Walker, B. W, Member of Congren, 4. 
Wigfall, It. T., Hember of Congnas, 

19; Tiewi on the •omeigQ^of the 

Confederate StalM, 199. 

Yamcwi, W. L., Hember of CongraM, 





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