Southern Historical Society Papers, Volume 35.
Reverend J. William Jones, Ed.

[129] were indebted to him for the supply of corn, bacon and household articles, it being the custom to obtain these in advance from their merchants and to pay when they sold their crops of cotton and sugar. Nearly all the great planters were thus in debt. Mr. Payne himself carried a considerable debt, and also carried a very large cash balance.

When the seven States which first formed the Confederacy at Montgomery, Ala., had passed their secession ordinances and organized their Government by electing Jefferson Davis President, they seem for the first time to have thought about finances. There is nothing more astonishing now than to look back and see with what utter disregard of consequences and lack of plans for the future that war was entered upon by the South. The South had no store of arms and ammunition, except as nearly every individual was the owner of a rifle or shotgun. They had few small factories capable of making cannons, guns or powder, and almost no clothing or shoe factories, and practically the Southern States were given over to the growth of cotton. Their leaders were highly intelligent people and held the ‘free trade’ doctrines taught by Mill and others, and in forming their Constitution inserted a free trade clause, thus depriving themselves of the benefit of custom revenues. They also, of course, maintained the doctrine of ‘State rights,’ and, therefore, did not authorize their newly-created Government to collect the direct tax necessary for carrying on the war; and when they had created a president and cabinet, these officers found themselves without any money or any provisions for setting in motion the wheels of the new Government.

Mr. Davis telegraphed from Montgomery to Mr. J. U. Payne, at New Orleans, announcing the formation of the Government and saying: ‘Your State calls upon you to do your duty and to come at once to Montgomery and bring with you all the money you can raise.’ Mr. Payne had been fortifying himself, owing to the ominous outlook, and succeeded in raising and took with him to Montgomery a large sum in gold coin, which he turned over to Mr. Davis. The latter insisted that he should have Government bonds for it, and there were accordingly printed at the old printing office in Montgomery 750 bonds of $1,000 each, roughly gotten up and promising ‘to pay sixty days ’