Edward Alfred Pollard, The lost cause; a new Southern history of the War of the Confederates ... Drawn from official sources and approved by the most distinguished Confederate leaders.

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[421] rather earlier than was supposed to be necessary, the banks of the Southern States suspended specie payments. The specie in their vaults at the time, as shown by their published reports, was about thirty millions of dollars in the total, and the paper circulation outstanding, in the form of bank notes, was about fifty millions. An estimate of the quantity of specie at the time in circulation among the people of the South must be conjectural; but the weight of intelligent opinion is in favour of the conclusion that this amount did not exceed twenty millions of dollars. Thus the war found the South in possession of only about fifty millions of coin, and with a paper circulation afloat of about the same amount. No reports were made to the Confederate authorities by the banks, of their accounts, and the foregoing data are derived from reports made shortly antecedent to the war. The specie in the hands of the people was of course immediately hoarded; and was afterwards employed to a great extent in contraband trade; that in the vaults of the banks remained for a long time unused; but afterwards was in part secreted, in part taken possession of by the Confederate Government, or turned over to its custody, and some of it captured. Yet much of it must have gone abroad through the blockade during the war, as the termination of the struggle revealed a very small portion of the thirty millions, at first held by the banks, as still in their possession.

The suspension of the banks early in the winter of 1861-1862 was not from any inability to protect their circulation. This latter had recently gone down very much in amount; and the banks were abundantly able to provide for it. The suspension was resorted to for the purpose of preventing the drain of specie which would have resulted from the large purchases of merchandise at the North which the prospect of a long embargo would have induced. The specie was saved; but it proved a curse rather than a blessing to the country. If by some talismanic power every dollar of it could have been transformed into iron coins like those of Lycurgus, the Confederacy would have been a gainer. It was extensively used in the smuggling trade throughout the war, and the goods brought in through its agency were sold at such enormous prices in Confederate currency as to contribute very powerfully to the discredit of that circulation among the people. True, the patriotic men and women of the country prided themselves in homespun; but far too many manifested a more eager desire for exotic fabrics than ever before.

The first financial measure of the Confederate Government was the issuing of the fifteen million loan, bearing eight per cent. interest, payable in specie, for which an export duty of one-eighth of a cent per pound on cotton was levied and pledged. The second financial measure was the negotiation of heavy loans from most of the banks in the form of discounts upon negotiable notes drawn by the Secretary of the Treasury. After