Ah, thank you again for an excellent reference. I will put this one on my Amazon wishlist, as I prefer to own books written by you to borrowing them!
It's interesting that Lincoln destroyed the southern economy largely by yanking the financial basis out from under it...but typically Davis destroyed their note-issuing function by taking their gold and printing Confederate notes...northern currencty held its value (supported by gold) while Confederate notes plummeted. (See "Graybacks and Gold," by James Morgan).
Forgive me for abbreviating your quote, but I didn't want to sandwich a brief reply between overly large paragraphs. I've noted the reference, and will add it to my library list.
Didn't the Confederate currency plummet largely as a result of quasi-official counterfeiting rings, which printed large quantities of fake Confederate notes in New York City and supplied these notes to Sherman's Army, who spread them all over the south? That's one of the claims made by Mr. Davis, though I can see it as being a potential usage of war (I believe the British did something similar in the War of 1812) between Christian belligerents.
...whereas in the north, Lincoln utilized an inferior system of "unit" banks by allowing them to retain their note-issue function, thus the number of "greenbacks" peaked at only $450m, and never constituted any major source of money in the north. More to the point...
The Federal debt in the war was an order of magnitude larger than the Confederate debt. Could that be a consequence of the Northern (more centralized) banking policy? Or merely a result of having an immensely larger army and war policy?
I would take what Jeff Davis said with a grain of salt. He had his own agenda.
I actually enjoy "Rise and Fall" to a great degree. I understand that he had his own agenda in writing what he did, but I'd argue that, as humans, we all have our own agendas. In its final form (and I'm not saying I accept everything in it at face value, merely commenting on its form), it comes across to me, the reader, as a very beautiful argument for the sovereignty of the people, versus the military might of a conquerer.
All one needs to know about the unpopularity of the war from the get-go in the south was that more southerners fought for the Union than northerners fought for the south---a lot more. In addition to the more than 80,000 black troops from seceded states who fought in blue, 100,000 white southerners (40,000 from Tenn.) fought for the Union, including the 4th Ark. Infantry, the 1st Mississippi Mounted Rifles, the 2nd Florida Cavalry, and the 1st Alabama Infantry.
Are all of these soldiers counted here voluntary? Or were they conscripted by the invading Northern army? (I'm not very intimately familiar with the military side of the Civil War at this point, I admittedly have quite a bit of work left to do to bring my understanding of those affairs up to par. Please forgive me for asking these questions out of such supreme ignorance, but they're the first questions that come to mind in reading the prior statement.)
Stanley Legergott, a well-known economic historian, has written an article in the Journal of Am. History in which he traced the quiet rebellion of the merchant and business classes against the Confed. government over the cotton embargo and high taxation, and found that by 1863, the blockade runners---who were operating under the financial support of these groups---were only bringing in jewelry, fancy clothes, combs, etc., which the merchants could sell at high premiums, NOT guns or ammo that were needed by the army.
I will see if I can find that article - It sounds rather interesting. I was under the impression that blockade running was fairly subdued after 1862, as most of the nations which would have been there to trade with the Confederacy were blocking military orders from being sent to any Southern destination, as a result of a "neutral policy." Is that a correct reading of the historical record?
In light of that, what do you think about the fact that these same nations, who were refusing trade with the CSA [which, in my opinion, was too interested in behaving honorably to be able to succeed in this type of affair], were on the other hand openly dealing in arms and soldiers to the United States. Was this considered fair treatment, in light of the usages of Christian war up until 1860?
(I tend to compare the Civil War with the War of 1812, wherein the British and the Northern armies were merely interested in conquest and domination of the Americans and Southerners; respectively. Do you think that's a fair allegory to use?)
As always, I am humbled and honored to hold you in the highest regard,
Most respectfully,
~dt~
No, the confederate currency plumeted because it was worthless. There was nothing of value to back it up. Dorie Goodwad wrings his hands over the ratio of debt to receipts in the Union ledger, the picture down south was even bleaker. The confederacy had no revenue to speak of. No imports, so no tariffs. No tax receipts in hard currency. The only hard currency it had at all was that U.S. currency that it seized from banks and mints when secession started. It was unable to borrow, other than a small loan in 1861 and an even smaller one in 1863 backed by a future cotton crop. So you have, at best $18 million in hard currency loans the first two years. Against that you issue over $700 million in paper currency. You issue another 700 million or so by the end of the war. So there is no surprise that the confederacy currency was worthless, and it had nothing to do with Yankee manipulation. It was worthless because there was nothing to back it with and there was too much of it out there.
The Federal debt in the war was an order of magnitude larger than the Confederate debt. Could that be a consequence of the Northern (more centralized) banking policy? Or merely a result of having an immensely larger army and war policy?
It depends. If you consider the confederate currency as debt then one could say the confederacy issued about a billion and a half dollars in debt against maybe 18 million in revenues through the course of the war. That's over 90 dollars in debt for every dollar in other reveunue, as opposed to the union ratio of roughly 5 or 6 dollars of debt for each dollar of other revenue. How can that financial picture be better than the one facing the United States?
Are all of these soldiers counted here voluntary? Or were they conscripted by the invading Northern army? (I'm not very intimately familiar with the military side of the Civil War at this point, I admittedly have quite a bit of work left to do to bring my understanding of those affairs up to par. Please forgive me for asking these questions out of such supreme ignorance, but they're the first questions that come to mind in reading the prior statement.)
Conscription in the North was limited to white soldiers and was a dismal failure. Somewhat less than 10% of all Union soldiers in the last year of the war were conscripts. Contrast that with the confederacy where somewhere between one third and one quarter of all troops were conscripts, and most of the rest had had their enlistments involuntarily extended for the duration of the war in April 1862.
Northern debt exceeded Confed. debt in part because the north was successful. That is, one of the reasons the north won was that it bought more weapons, paid more soldiers. But that debt was overwhelmingly BOND SALES, not inflation. Indeed, prices in the north were relatively stable without any "price controls" from government. The same could not be said for the south. Any time you reduce competition in money, as the south did, you have less valuable money. (We could get into an extended discussion of why, on the whole, we haven't seen rampant inflation in modern post-WW II dollars, but it still comes down to competition: we are free to deal in gold, Euros, Yen, whatever, even if we can't pay taxes in it).
As for counterfeiting rings, there is no southern monetary authority I am aware of---and I read Morgan, Ball, and all the "classics"---who ascribed Confederate money problems primarily, or even substantially, to counterfeiting. There is a good reason for this: for a counterfeit to work, it has to be a counterfeit of something valuable and real. Southern currency started to plummet almost immediately.
I should add, remember that in addition to the Confed. government heaping taxes on individuals, businesses, etc., the STATE and LOCAL governments layered on their own taxes, too. All of this has a pretty deleterious effect on money.
Now, as to "centralized" banking policy, realize that prior to 1913, there was simply no such thing. Even the infamous First and Second Banks of the United States have been shown to have very little capability to influence the money supply or prices, let alone the economy. (Peter Temin's "The Jacksonian Economy," 1969, destroyed the notion that Andrew Jackson---someone I don't care for at all---had any negative impact on the banking system when he "killed" the 2nd BUS). The 1863 Bank Act established a series of national banks. These were primarily bond-purchasing units, not central banks of any type. The only connection between them was that they had to get their charters from the Federal Government---but they were each privately, individually owned; there was zero coordination of loans or transfer of information; and the National Bank Notes they printed were highly regulated by GOLD reserves (even though gold payments were temporarily suspended, the absence of price variations suggests that in the north, unlike the south, everyone believed that no matter what happened, the banks would resume paying gold for paper, which they did). Moreover, each bank was limited in how many notes it could issue based on that gold reserve. But in the Confed., those constraints were gone: the gold was stolen by the government, and the only other basis of value was slaves, which was a) immoral and b) not long for this world after the Emancipation Proclamation.
On southern soldiers fighting for the north: this one is easy to figure out---there was NO draft in Alabama or Mississippi or Arkansas or Tennessee by the Union :) These were all volunteers, many of them (obviously, by the names) from state volunteer regiments. I'm sure most either went north at the beginning of the war because they disagreed with the Confed., or moved to Louisiana and Tennessee as the war came closer.
Your questions on the blockade are good ones. First, think of yourself as a blockade runner. If you have an economic agenda, as opposed to a purely "patriotic" agenda, you would bring in those products that you could sell at the highest price. That would be luxury items that were going at a very high premium (as Lebergott shows) in the south. Whether Britain or France would sell weapons is not too difficult to figure out: there were something like 100,000 British rifles in use on BOTH sides of the war; so obviously they didn't hesitate to sell rifles. Cannon were too difficult to get on blockade runners in any number to make profits. And the French didn't have a rifle that was worth buying at the time.
One of the most fascinating aspects of the Civil War economy is that the south, supposedly an agricultural region, committed suicide early by insisting on the stupid "king cotton" strategy. They thought that Br. and Fr. could be brought to their knees by a cotton embargo; so the Confed not only didn't encourage southern farmers and plantation owners to grow food, but actually encouraged them to KEEP PLANTING COTTON! By 1864, this had the perverse effect of starving Confed. armies in the field, while mountains of cotton sat on southern docks. We have lots of diaries and other evidence of southern troops actually exchanging MANUFACTURED GOODS and tobacco with northern pickets for . . . food. So once again, the short-sightedness of the command/control economy in the south was inferior to the largely free market north, where aside from a few tariffs on, say, iron, Lincoln's government allowed people to do what they did best and did not try to direct the economy in any way. Indeed, the north used private boot makers, salt suppliers, beef and wheat farmers, clothing manufacturers, and had dozens of different gun designers (including the famous Shaprs, Spencer, Gatling, Rodman, Dahlgren, Ericcson, and I could go on and on.) The Confederacy didn't produce a single "genius" of this type because of the centrally-planned system. The closest they came was Mr. Hunley's sub, which was . . . privately built! Meanwhile, there is a book called "Rebel Storehouse" that details how the Confed. government owned and ran salt plants, cattle ranches, and virtually all of the arms industry. Once again, whenever a free market is stacked up against a centrally-controlled system, the market wins.