finances of the confederate states of america
DESCRIPTION
Directed study paper on the Finances of the Civil War, focusing on the how the Confederacy financed themselves throughout the war, and the effects that it had.TRANSCRIPT
FINANCES OF THE CONFEDERATE STATES OF AMERICA:
LOANS, TREASURY NOTES, AND TAXES
David Phillips
Phillips 2
Introduction
The purpose of this paper is to discover the ways the Confederate States of America financed themselves in the American Civil War from a historian, accounting, and finance perspective. This is meant to be written as an informational as well as an argumentative paper, using source documents compiled in The War of the Rebellion: A Compilation of the Official Records of the Union and Confederate by Brig. Gen. Fred C. Ainsworth and Joseph W. Kirkley; as well as the following works: Financial Failure and Confederate Defeat by Douglas B. Ball; Confederate Finance by Richard Cecil Todd; The Confederate States of America 1861-1865 by John Christopher Schwab. Many of these authors use each other as sources for their work, as well as the War of the Rebellion as their sources. This paper is meant to discover how Confederate fiscal policies and legislation changed by the rates of inflation that were funded by the Confederate government.
Some key terms that need to be defined, Finance: Money or other liquid resources of a government, business, group, or individual, the science or study of the management of funds, the obtaining of funds or capital.1 Treasury Notes: A note issued by the treasury for use as currency.2 Coupon Bonds: A bond on which interest is paid by coupons.3 Inflation: a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.4 Knowing these terms will help understand the paper and the way the confederacy financed itself.
CREATION
1 Merriam Webster Online2 Merriam Webster Online3 Merriam Webster Online4 Merriam Webster Online
Phillips 3
The Provisional Congress of the Confederate States of America Treasury Department came
about in the Provisional Congress of the Confederate States of America. The states of South
Carolina, Florida, Georgia, Alabama, Louisiana, and Mississippi met in Montgomery, Alabama
on February 4, 1861. They passed the Provisional Constitution of the Confederate States of
America on February 8, 1861, which created the Treasury Department, which with the President
of the Confederacy, Jefferson Davis, was responsible for financing and accounting for the
finances of the Confederacy.5
LOANS
Loans are a major part of the Confederate financing strategy, and as the war became longer,
contrary to the beginning school of thought that the Southern independence would be over
quickly, loans became the primary tool of the Confederate Congress, as will be shown
throughout the legislation passed throughout the course of the war.
The beginning of what would seem to become many different loan legislation throughout the
following years began on February 8, 1861 with the Confederate States accepting a $500,000
loan from the General Assembly of Alabama. As with most entities it is not uncommon for new
entities to begin their life with loans. The interesting part of this loan legislation would be the
flattering of the State of Alabama for its patriotism, “this Congress place the highest appreciation
upon this generous, patriotic, and considerate action of the State of Alabama, and realize in it the
zealous devotion of the people of that State to the cause of Southern independence.”6 This
became a common tactic that is used throughout the Confederacy in order to raise funds, troops,
and create a sense of national identity throughout the course of the war. The sum given by the
State of Alabama to the Confederate Congress was in part to pay for the expenses of the
5 Ainsworth and Kirkley, War of the Rebellion, Series I-Vol. I, 93-996 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 100.
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assembly as it met. This loan is different from other loan legislation as the general assembly of
the State of Alabama offered to the Provisional Confederate Congress, rather than the
Confederate Congress passing legislation to take loans from the States or other entities in order
to finance the Confederacy. Other states also offered and donated funds to the Confederacy, as
J.C. Schwab points out “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.”7
The next major piece of legislation in regards to loans would be what became known as $15
Million Dollar Loan or the Bankers’ Loan passed on February 28, 1861 by the Confederate
Congress.8 This act was to “raise money for the support of the Government and to provide for
the Defense of the Confederate States of America.”9 It authorized the President of the
Confederacy to borrow up to $15,000,000 on credit for the CSA, to summarize that, it allowed
the President to take up to a $15,000,000 loan in order to support the Confederate Government.
This became just one of the policies that the Confederacy used to finance themselves, and it
would continue throughout the coming months through more legislation.
The 15-million dollar loan had several provisions for the Treasury Department to raise finances,
the first being the authorization of treasury bonds or stocks. The bonds issued are ten year bonds
at 8% per year, payable in semi-annual interest, at no less than a $50 issuing price. These could
be redeemed after five years with three month public notice, from the first of day of September at
that time. The equation for the bonds would be the Bond Pricing Formula which uses the
ordinary annuity formula, the whole formula is: ((Bond Price = C *(([1-[1/(1+i)^-n]]/i) +
M/(1+i)^n) where PV equals the present value of the bond (In this case would be $50), PMT
7 Schwab, The CSA, 6.8 Ainsworth and Kirkley, War of the Rebllion, Series IV-Vol. I, 116.9 Ainsworth and Kirkley, War of the Rebellion, Series IV Vol I, 116.
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equals the coupon payment, i equals the interest rate (.08/2 = .04), and n equals the number of
periods (2*10 = 20 periods) The interest payment can be calculated by taking the issue price
($50) and multiplying it by the semi-annual interest rate (4%) which can be found to be $2.00 per
interest coupon. The future value of these bonds is found to be $109.56, but as these are coupon
bonds, the accumulated interest is paid out on the semi-annual basis with the coupons. The
present value of the bonds is found to be $27.18, this is based on the $2.00 coupon that is to be
paid. (See Appendix A) These are all in nominal numbers, in real numbers at May of 1861
(closest date of information found) the bond purchase amount would be $55. This is found by
taking the issue price and multiplying it by the average value of one dollar in gold ($1.10) to the
Confederate Treasury notes.10 (Appendix B) This is assuming the issue price was fifty dollars,
and not more, as the legislation provided. This shows that the cost of inflation was prevalent
throughout the course of the war, and increased by the end of 1861. J.C. Schwab demonstrates
this in his work, “The bonds of the 15-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.”11 This loan
legislation passed before any conflict broke out between the Union and Confederacy.
Following the 15-million dollar loan, Confederate Congress passed the Produce Loan or 50-
Million Dollar Loan in the Act of May 16, 1861, the war now underway, both the North and
South needed to raise funds to the train and raise troops. This legislation allowed for the issuing
of $50,000,000 in bonds payable at the expiration of twenty years from the date of issuance, and
earning a rate of 8% annually, to be paid semi-annually. These bonds were different than the
10 Todd, Confederate Finance, 198.11 Schwab, The CSA, 7.
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previous legislation, because it allowed them to be “sold for specie, military stores, or for the
proceeds of sales of raw produce or manufactured articles, to be paid in the form of specie or
with foreign bills of exchange.”12 Because of this, it became known as the Produce Loan. This
even made provision for the Secretary of Treasury to be paid in foreign bills in exchange for
bonds issued under this legislation. The allowing of foreign currency or other stores to be used
for the purchase suggests that the inflation rate was already beginning to increase. It suggests that
this was a method to help back the Confederate bonds by using tangible goods, or with foreign
currency. Richard Cecil Todd shows “but whereas the 15-Million Dollar Loan had been directed
at the bankers and commercial interest, the 50-Million Dollar Loan being in part a produce loan,
was brought more specifically to the attention of planters and farmers,”13
This legislation also made provisions for the creation of Treasury notes, to the total amount
not exceeding $20,000,000. These notes were to be “without interest, and in denominations
of not less than $5; the said notes to be receivable in payment of all debts or taxes due to the
Confederate States except the export duty on cotton, or in exchange for the bonds herein
authorized to be issued.”14 The Treasury notes were to be payable at the end of two years
from their date of issuance, in form of specie. The Treasury note holders could at any time
within the two years convert them into Confederate States bonds. The bonds available upon
conversion would be ten year bonds, earning 8% annual interest, paid semi-annually. This
demonstrates that the Confederacy while trying to make treasury notes a form of currency,
also were trying to make the Bonds a form of investment and worth more than the Treasury
notes.
12 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 328. 13 Todd, Confederate Finance, 32.14 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 328.
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The legislation provided for more notes to be issued within the next ten years, as well as
stock that would not exceed $20,000,000, and extending punishment from a previous
legislation (March 9, 1861) to those found counterfeiting Treasury notes. This was an
important piece of the legislation, as the punishments for counterfeiting Treasury notes and
Bonds became more severe by early 1865. This suggests that there is a problem with how the
Treasury Notes are being printed. This will be discussed under the section on Treasury Notes.
The next major piece of legislation passed is the extension of the Produce loan, which
increased it from fifty-million to one hundred-million. This legislation passed and signed into
law on August 19, 1861. The only major difference between the fifty-million dollar loan and
the one-hundred- million dollar loan was that it provided for a war tax. The war tax levied
$.50 on every $100 of real property, this will be discussed in greater detail in the section on
taxes. On December 24, 1861, new legislation was passed which extended the produce loan
even further, the only difference between this legislation and the two previous ones, was that
the bonds issued earned 6% annual interest payable semi-annually. By December of 1861,
inflation in the Confederacy was already beginning to show, as becomes apparent with a
decrease in the interest rates on bonds. These legislations extended the produce loan in part
to the blockade that the Union had imposed upon the Confederacy under the Anaconda plan,
which began during the summer of 1861. It helped create further patriotism in the
Confederacy by allowing planters and farmers to invest in the Confederacy using their goods.
It would allow them to do their part without actually joining the military, and using their
social status as a means to stay in a form of gentry.
April 18, 1862 brought the final piece of legislation to the Produce loan. It increased the total
amounts of the Treasury notes, bonds, and stocks to a total of $250,000,000, thus making it
Phillips 8
known as the $250-Million loan. It continued the 6% annual interest bonds, showing that the
inflation rates causing issues in the market. 1516 The extensions in the Produce Loan were
caused by the little response from planters and farmers and trying to sell cotton and produce
to the Confederacy at prices above the market prices, trying to make the biggest profit out of
the war. Other causes for the extensions were the inability of the Confederate government to
control the cotton crop, and the failure to export and break out of the blockade implemented
by the Union.17 Because of the failures of the Produce loan to increase the amount of
produce, cotton, and currency to fund the military and government, the Treasury Department
turned to other loan methods to finance the government.
The next major piece of loan legislation came a little under a year later. It was passed on
February 20, 1863. This legislation closed the 8% bond subscriptions, and would new ones
were being issued. These bonds and stock would earn 7% interest annually, paid semi
annually, and funded treasury notes. This was a major piece of legislation because it tied into
the next piece which was passed on March 23, 1863, which funded treasury notes.18 The
decrease in interest rates can reasonably assumed to be in regards to an increase in inflation,
with an increase in inflation, the interest rates decrease as do the prices of bonds. As bond
holders receive a fixed rate of return on the bond interest, when the market value of currency
decreases, so does the prices of bonds. With the decrease in the market due to inflation, the
bond interest would have to be lowered in order to pay out a fixed rate of return.
The legislation passed on March 23, 1863, provided that Treasury notes that were not bearing
interest, that were issued previously to December 1, 1862 would be able to be converted into
15 Schwab, The CSA, 167.16 Todd, Confederate Finance, 198.17 Ball, Financial Failure and Confederate Defeat, 86.18 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. II, 450-452.
Phillips 9
8% bonds until April 22, 1863. From April 22, 1863 to August 1, 1863, they could be
converted into 7% bonds. If the treasury notes issued were not converted by August 1, 1863,
they would be able to be converted into only thirty year, 4% annual interest, payable semi-
annual bonds. All call certificates for 8% bonds, were to be redeemed by July 1, 1863, if not
called by then they would only be redeemable in 7% annual interest, payable semi-annually,
with a term of thirty years.19 The purpose of this act was to reduce currency in the market and
use it towards funding the government. This act was a failure as it failed to reduce the amount
of currency, even though it sold more bonds than any of the legislation passed from July 1,
1861 through October 13, 1862.20
On April 30, 1863, the Confederate Congress extended the legislation passed on May 16,
1861.21 It increased the amount of coupon bonds, by extending the legislation. These were
extended to twenty year bonds, with the interest payments payable in coin or in bales of
cotton. The cotton was due to the failure of the confederate government to sell the cotton on
the market, and get through the blockade.
The Funding Act passed on February 17, 1864. This act asked for and received the assistance
of banks and treasuries of several states. It asked that depositors close their accounts by April
1, 1864, or their deposits would be leveled to 1/3 of the deposit, or it would be awarded to
them in a 4% bonds. 22 This was declared to be a forced funding act, and it required the banks
cooperation with the Confederate government. This act was an attempt to reduce the amount
of currency in the market, and thus drive down inflation rates, as well as funding the
government to continue the course of the war. With a decrease in currency in the market it
19 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol II, 450-453.20 Ball, Financial Failure and Confederate Defeat, 183-183.21 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. II, 529.22 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 159-161.
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would drive down inflation rates, and thus bringing the value of the currency back up to
better rates with gold values. This can be shown to have worked for a short time period based
on the average values of gold to confederate currency. 23 (Appendix B)
The loans of June 13, 14, 1864 continued the Funding Act of February 17, 1864. They
allowed for the issuance of more twenty year, 4% annual interest, and payable semi-annually
coupon bonds.
The final piece of loan legislation passed on March 17, 1865. This legislation superseded the
legislation passed on March 13, 1865. This act was “an Act to raise coin for the purpose of
furnishing necessary supplies for the Army.”24 This legislation provided for the borrowing of
$3,000,000 in hard currency from banks. If the currency was not able to be acquired
immediately, it allowed a 25% tax to be levied on “gold and silver coin, gold dust and
bullion, and foreign exchange in the Confederate States”25 which was to be collected on April
1, 1865. This act only achieved raising $300,000 which came from the Bank of Richmond.
Less than a month later, the Confederate Government collapsed.
The Confederate Government resorted to passing a total of fourteen loan legislations, more
than any other form of financing legislation, with it being the most successful in raising
funds, but only equaling just over twenty percent of its finance. It was the most successful
because it was a manageable debt, whereas treasury notes created new paper currency and
therefore driving up inflation rates.26 Starting with a loan from the State of Alabama, up to the
end with the Act to raise coin for necessary supplies for the army, there was a wide array of
the legislation that was passed in regards to loans. With the beginning and its hopeful
23 Schwab, The CSA, 167.24 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 115525 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 1155-1156.26 Thornton and Ekelund, Tariffs, Blockades, Inflation, 75.
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optimistic outlook of bonds and playing upon the patriotism of the states and citizens of the
Confederacy, with bonds expiring in the short term, and moving to the beginning of 1862 and
seeing the realism set in that the war would not be over quickly and trying to plan for the
future with twenty year and longer bonds. The ending with trying to force banks to give up
hard currency in order to continue to fight a war that was quickly coming to a close. You can
see the transformation in the loans from the short term bonds coming due within 90 days, and
moving into those that had clauses stating they were payable in twenty years or upon notice
after peace was signed with the United States, as well as the taxes used to fund the interest
payments, starting with duties on cotton of 1/8th of cent, to the end with a 25% direct tax upon
gold and other metal valuables. (The loans are summarized with their total amounts, and total
loan indebtedness in Appendix B.)
TREASURY NOTES
A Treasury note is an immediate government obligation that has a set time period, a fixed
interest rate, and pays interest semi-annually.
Treasury notes issued throughout the Confederate States government very closely relates to
the Loan legislation, primarily because Treasury notes were included in the Bond and stock
legislations, this included the Produce loan, and Funding act, as well as others. Because of
the specie legislation that was passed, the Confederate Government by the end of the war had
to lower interest rates, and raise taxes in order to reduce specie in the market and reduce
inflation. The Confederate Government hoped to use bonds and the primary means of
accomplishing this, but even confederate government agents preferred to use Treasury notes
because they were easier to trade for items because of their dependable interest payments.
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The first legislation to include Treasury notes was passed on March 9, 1861.27 With this being
passed, Secretary Christopher G. Memminger contracted a private business to supply the
Treasury notes. This was the National Bank Note Company of New York, they were
contracted to print the Treasury notes with the belief that they would be recognized as a
foreign entity, and therefore have no problems with the printing of the notes. The first
Treasury notes issued totaled an amount of $1,000,000 bearing interest of 3.65%. Treasury
notes gain lower interest as they are a short term in comparison with bonds. With the
outbreak of war, the printing plates were seized by the Union Government, while they were
being attempted to be smuggled back to the Confederacy. (Appendix D.) This lead to the
printing of Treasury notes being contracted out to Mr. S. Schmidt of New Orleans, Louisiana.
He was contracted to print the remainder of the notes that were not fulfilled by the National
Bank Note Company.
With the passing of the loan legislation on May 16, 1861, authorizing stocks, bonds, and
Treasury notes. The Treasury notes were funded by the stocks purchased. “in lieu of bonds,
to an amount not exceeding $20,000,000, the Secretary of the Treasury, with the assent of the
President, may issue Treasury notes to the same amount, without interest, and in
denominations of not less than $5; the said notes to be receivable in payment of all debts or
taxes due to the Confederate States except the export duty on cotton, or in exchange for the
bonds herein authorized to be issued.”28. The Treasury notes were to be payable two years
from its issue date for specie, or at any time be converted into ten year bonds earning 8%
interest, payable semi-annually.29 Issues arose with the printing of these notes, these included
Mr. Schmidt never producing a note, and choosing to print bank notes for New Orleans banks
27 Ainsworth and Kirkley, The War of the Rebellion, Series IV-Vol. I, 328-329.28 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 328.29 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 328-330
Phillips 13
first,30 the lack of printing manufacturing within the confederacy, failures in security
violations which would later result in counterfeiting,31 and as a result of these issues the
Confederate government found other avenues, which included J. Manouvrier of New Orleans,
and Hoyer & Ludwig of Richmond. (Appendix E.) With some of the work being
counterfeited the legislation of May 16, 1861 provided for punishment of those caught
counterfeiting.
The next legislation passed with Treasury notes would be under the one hundred-million
dollar loan legislation on August 19, 1861. It moved from the $20,000,000 passed on May 16,
1861, and authorized the printing of $100,000,000 Treasury notes. These Treasury notes were
non-interest bearing, and were receivable “in payment of the war tax hereinafter provided,
and of all other public dues except the export duty on cotton, and shall also be received in
payment of the subscriptions of the net proceeds of sales of raw produce and manufactured
articles.”32 These Treasury notes were funded by twenty year bonds, earning 8%. These notes
were to be “payable to bearer at the expiration of six months after the ratification of a treaty
of peace between the Confederate States and the United States.”33 They could also be
redeemed at any time for Confederate State bonds. The significance of these notes were that
they were non interest bearing, which means that they are sold at a discount and mature at the
face value. For example, a fifty dollar treasury note would be purchased at twenty-five dollars
and mature for fifty dollars at the end of the time period that is listed on the note. The other
significance of this legislation is the ability to purchase bonds, increasing long term debt of
30 Ball, Financial Failure and Confederate Defeat, 115.31 Ball, Financial Failure and Confederate Defeat, 116.32 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol.I, 568-574.33 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol.I, 568.
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the confederacy, showing the loan indebtedness as the most successful source of financing for
the Confederacy.
As these notes were under the Produce loan legislation the amounts of the Treasury notes
were increased under the December 24, 1861 legislation. This increased the amount of non
interest bearing notes to $150,000,000, and $30,000,000 twenty year, 6% call certificates.34
The call certificates were issued to help counter balance the inflation on the notes, a problem
that plagued the Confederate economy from early on which can be seen by the separation of
currency to gold values.35 (Appendix B)
The next piece of legislation for Treasury notes passed on April 17, 1862. This legislation
created new Treasury notes up to $165,000,000. These notes were payable six months after
peace with the United States. Unlike the other Treasury notes, these earned $.02 per day per
$100. Of these the denomination was not to be less than $100. It also provided for
$5,000,000 of Treasury notes to be in the denominations of $1, and $2. 36
While the April 17, 1862 legislation was being passed another Treasury note legislation was
in the Confederate Congress, it was introduced on April 12, 1862, but not passed until April
18, 1862. It allowed for $215,000,000 total of stocks, bonds, and Treasury notes to be
issued. Of this $50,000,000 was to be Treasury notes, and $10,000,000 of that was to be held
in reserve to be paid out for called deposits.37 This piece shows that there was market
uncertainty within the Confederacy, and the Government was taking steps to prepare
themselves in the case of a bank run. This would then imply that the inflation rates were high,
and this would be due in part to the taxation legislation that had been passed. A bank run
34 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol.I, 812-813.35 Schwab, The CSA, 167.36 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol.I, 1071.37 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol.I, 1057-1058.
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would be of concern to the Confederacy as the inflation rates had continued to climb, even
with currency reduction legislation being introduced. It would be a concern because
merchants already at this time had become wary of confederate currency and in some cases
were demanding hard currency, and with this it could cause an undermining of the paper
currency in circulation.
As was previously mentioned in the loan legislation, On March 23, 1863, all non-interest
bearing Treasury notes that were issued previous to December 1, 1862, would be fundable by
8% bonds, until April 22, 1863. After April 22, 1863, the Treasury notes were fundable by
7% bonds or stocks until August 1, 1863. After August 1, 1863, the non-interest bearing notes
were no longer fundable to the holder. All Treasury notes issued after December 1, 1862,
were fundable by 7% stock or bonds, within ten days of this act, until August 1, 1864. After
August 1, 1864 the Treasury notes were fundable by 4%, thirty year bonds, which would be
payable upon six months of a treaty with the United States. 38
The final legislation of Treasury notes was passed on February 17, 1864. It allowed “the
holders of all Treasury notes above the denomination of five dollars, not bearing interest,
shall be allowed until the first day of April, 1864, east of the Mississippi River, and until
the 1st day of July, 1864, west of the Mississippi River, to fund the same, and until the
periods and at the places stated the holders of all such Treasury notes shall be allowed to
fund the same in registered bonds payable twenty years after their date, bearing interest at
the rate of four per cent. per annum, payable on the 1st day of January and July of each
year.” 39 This meaning that the treasury notes were able to turn in the notes for twenty
year treasury notes, earning 4% interest, and payable semi-annually.
38 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. II, 450-453.39 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 159- 161.
Phillips 16
Treasury notes were the most used financing option that the Confederacy used.
Government obligations are typically considered a safer investment, because they are
supposed to be more stable. The Treasury notes, just like the stocks and bonds, were sold
playing on the notion of patriotism, Southern independence, and the Southern sense of
honor and pride. Examples of this can be seen on the designs of the Treasury notes
(Appendixes D & E), with George Washington, Justice, Liberty, and Eagle. “Because
inflation is such an easy means of finance, it encouraged the Confederate administration
to extract and waste large volumes of resources.”40
TAXATION
The last major part of the Confederate financing was its taxation. As taxation is a major part
of most government financing and operating, it is important to consider this as a portion of
the Confederate financing. The taxation legislation was also mixed with the loan legislation,
and the Treasury note legislation.
The first taxation legislation passed was on August 19, 1861. This created a war tax, the tax
was levied upon property including “Real estate of all kinds; slaves; merchandise; bank
stocks; railroad and other corporation stocks; money at interest or invested by individuals in
the purchase of bills, notes and other securities for money, except the bonds of the
Confederate States of America, and cash on hand or on deposit in bank or elsewhere; cattle,
horses, and mules; gold watches, gold and silver plate, pianos, and pleasure carriages”41 these
were all to be taxed at the assessed value of $.50 per $100 in value; unless the taxable
property that was mentioned for the head of household was under $500 in value. It created a 40 Thornton and Ekelund, Tariffs, Blockades, and Inflation, 75.41 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 567-574.
Phillips 17
tax system, including assessors, collectors, and tax districts. It also allowed for fines of non-
payment and fines for collectors who did not submit the taxes collected.42
The next major piece of taxation legislation was passed on April 24, 1863. This was called an
act to lay taxes for the common defense and carry on the Government of the Confederate
States. This tax was “levied and collected upon the value of all naval stores, salt, wines and
spirituous liquors, tobacco, manufactured or unmanufactured, cotton, wool, flour, sugar,
molasses, sirup, rice, and other agricultural products”, “on all moneys, bank notes or other
currency on hand, or on deposit” “the value of all credits on which the interest has not been
paid, held or owned by any person, co partnership or corporation”43(Ainsworth) The tax
levied against the liquors, tobacco, cotton, wool, flour, sugar, molasses, syrup, rice and other
products was at 8% , for the others listed it was taxed at 1%. It also created form of income
tax upon certain industries, such as bankers, auctioneers, wholesale dealers of liquor and
spirits, retail and wholesale dealers, pawnbrokers, distillers, brewers, and hotels, and
innkeepers, brokers, tobacconists, theaters, recreation halls, livestock merchants, butchers,
peddlers, apothecaries, photographers, lawyers, physicians, and confectioners. This also
created a tax upon salaried employees, unless they were military or navel service, which
amounted to 1% of the gross salary.
The act of April 24, 1863 was amended on February 17, 1864. This amendment was designed
to have those working register with the tax collector of their district. It provided for penalties
for not registering, and provisions for exceptions to the act passed on April 24, 1863. It also
increased the span of businesses to be taxed, and the amounts in different industries or
services.
42 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. I, 567-564.43 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. II, 514-524.
Phillips 18
The amendments of February 17, 1864, were increased with the act passed on June 14, 1864.
These amendments decreased the amount of tax on real property from 8% to 5%. Gold,
Silverware and plates, jewelry, jewels, watches were to be taxed at 10%. It exempted
schools, churches, and other charitable institutions from the taxation.44
The final acts of taxation were passed on March 11, and 17, 1865. The final piece of taxation
legislation was passed on March 17, 1865. It increased the amount of tax on “the amount of
all gold and silver coin, gold dust and bullion, and foreign exchange in the Confederate
States, payable in kind.”45 It increased the amount of tax levied on those valuables to 25%, on
those that are greater than $200 in value. This tax was also levied on top of all other taxes on
the same valuables.
Overall the Confederacy was able to raise about twelve percent of its expenditures through
taxes, making it the least successful of the three major choices of financing the confederacy.
46”Unable to impose taxes to finance the war, the Davis administration followed the timeworn
practice of currency depreciation.”47 This can also be demonstrated by comparing appendixes
C, D, and G, in the total amounts. Appendix C showing the total funded debt and
indebtedness through loan legislation, Appendix D showing the amount of Treasury notes
issued to fund the confederacy, and Appendix G showing the of funds raised through
taxation.
The final legislation on all of the major parts of the financing of the Confederacy shows the
desperation to stay afloat, amid a losing war, and a poor economy. Their financing acts show
hopeful optimism from the beginning and a realistic sense of ending to the war. With the
44 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 140.45 Ainsworth and Kirkley, War of the Rebellion, Series IV-Vol. III, 1155.46 Hughes and Cain, American Economic History, 267.47 Thornton and Ekelund, Tariffs, Blockades, and Inflation, 33.
Phillips 19
information presented it becomes easier to see how and why the confederacy chose to use
funded debt (loans) in order to finance itself, with it being the most successful, as well as
showing the lesson of not to place all of the finance upon a single source, in the case of the
confederacy, cotton., and that causing high levels of inflation can lead to the downfall of a
government.
Phillips 20
Appendix A.
Phillips 21
Appendix B
1861 1862 1863 1864 1865 January - $1.25 $3 $20 to 20.50 $45 to 60
February - 1.25 4.00 22.50 to 25 45 to 65 March - 1.30 5.00 23 to 24.50 70 to 60
April - 1.40 5.50 22 to 23 60.00 May 1.10 1.50 5.50 18 to 21
June 1.10 1.50 $7 to 8 17 to 19 July 1.10 1.50 9.00 20 to 23
August 1.10 1.50 12 to 13 22.5 to 25 September 1.10 2.50 12 to 13 22.5 to 27.5
October 1.15 2.50 14.00 26 to 27 November 1.15 3.00 15 to 17 27.5 to 33.50
Average Value of $1 Gold Compared With Confederate Treasury Notes During Each Month of The War From May 1861 to April 1, 1865 (Todd pp 198)
1861 1862 1863 1864 1865January 1.2 3 21 53February 1 1.2 3.3 23 58March 1 1.3 4.1 22 61April 1 1.5 4.5 21May 1 1.5 5.2 19June 1 1.5 7 17July 1.1 1.5 9 20August 1.1 1.5 12 22September 1.1 2 12 23October 1.1 2 13 26November 1.2 2.9 15 30
Average Monthly Value In Currency of One Gold Dollar (Schwab pp 167)
Phillips 22
Appendix C (Todd Pg 82-84)
TABLE OF THE FUNDED DEBT OF THE CONFEDERATE STATES OF AMERICAAlabama Loan of February 8, 1861 $ 500,000
Loan of February 28, 1861 Coupon Bonds $ 10,882,750 Exchanged for Stock $ (245,900) $ 10,636,850 Stock $ 6,674,200 Certificates Erroneously issued $ (3,650)
Transfer Certificates $ (2,317,400) $ (2,321,050) $ 4,353,150
Loan of May 16, 1861 Coupon Bonds $ 958,500 Stock $ 12,235,600 Less Transfers $ (3,870,400)
$ 8,365,200 Less Certificates Redeemed $ (237,100) $ 8,128,100
Loan of August 19, 1861 Coupon Bonds $ 74,880,050 Less Bonds Redeemed $ (457,350) $ 74,422,700 Stock Issued $ 35,389,450 Less amount of transfers $ (10,241,550) $ 25,147,900
Loan of December 24, 1861 6% Call Certificates issued $ 69,006,870 Less Certificates Redeemed $ (12,516,400) $ 56,490,470
Loan of April 12, 1862 Coupon Bonds $ 2,818,100 Stock Issued $ 448,550 Less Transfers $ (44,100) $ 404,450
Ealanger Loan January 29, 1863 $ 15,000,000
Loan of February 20, 1863 8% Coupon Bonds $ 81,668,100
Phillips 23
8% Stock Issued $ 21,372,100 Less Transfers $ (6,459,300) $ 14,912,800 7% Coupon Bonds $ 54,183,100 7% Stock Issued $ 16,788,000 Less Amount Transferred $ (4,029,900) $ 12,758,100
Loan of March 23, 1863 Coupon Bonds 6% Issued $ 16,740,300 4% Issued $ 22,300 $ 16,762,600 6% Stock Issued $ 5,023,800 Less Transfers $ (745,700) $ 4,278,100
Loan of April 30, 1863Coupon Bonds $ 8,372,000
Loan of February 17, 1864 20 year 4% Registered Bonds $ 10,198,800 Less Transfers $ (14,900) $ 10,183,900 30 Year 6% Coupon Bonds $ 145,755,000 4% Call Certificates $ 65,500,000 20 Year 6% Bonds $ 6,000,000 6% Non-Taxable Certificates $ 38,045,000 4% Coupon Bonds $ 16,263,500 Stock $ 32,040,000
Loan of June 13, 1864 Coupon Bonds $ 2,164,000
Loan of June 14, 1864 $ 4,000,000 Loan of March 13, 1865Loan of March 17, 1865 (Superseding March 13, 1865) Richmond Bank Loan $ 300,000
Total Indebtedness $ 712,046,420
Phillips 24
Appendix D (Todd pg 119-120)
AMOUNT OF EACH ISSUE OF CONFEDERACY TREASURY NOTES
Act of March 9, 1861 $ 2,021,100.00
Act of May 16, 1861 $ 17,347,955.00
Act of August 19, 1861 Total $ 292,101,830.00
Less: Notes Destroyed, Stolen, etc. $ (140,000.00) $ 291,961,830.00
Act of April 17, 1862Total $ 128,561,400.00 Less: 100's Destroyed $ (320,000.00) $ 128,241,400.00
Act of October 13, 1862Total $ 140,403,200.00
Less: Ones & Twos never issued $ (2,400.00) $ 140,400,800.00
Act of March 23, 1863Total $ 517,995,278.50
Less: Ten's printed but never issued $ (24,000.00) $ 517,971,278.50
Act of February 17, 1864 $ 456,142,990.50
Total Issued $ 1,554,087,354.00
Phillips 25
Appendix E.
Phillips 26
Appendix F
Phillips 27
Appendix G.
AMOUNT OF TAXES COLLECTED IN THE CONFEDERACY
Act of August 19, 1861 (Payable in Treasury Notes)
$ 17,446,736.28
Acts of April 24, 1863, February 17 and June 14,
1864
Tax in Kind $ 62,000,000.00
Tax payable in Treasury notes
$ 118,845,744.57
$ 180,845,744.57
Acts of March 11, and March 17, 1865
Duties and taxes collected in the Trans-Mississippi Dept.
and not shown above $ 5,768,457.42
Total Taxes Collected $ 204,060,938.27
Phillips 28
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