Chapter 26: the failure in finance.
When the competent historian shall at last undertake a thoughtful work upon our great struggle, there can be little doubt that he will rank among the primary causes of the Confederacy's dissolution the grave errors of its financial system. These errors he will find not only in the theory and framework of that system-founded upon a fallacy, but also in the detailed workings of its daily management; and in persistent adherence to a line of policy, each day proved more fatal. In a previous chapter, allusion has been made to the feeling of conscious superiority, pervading all classes of government and people at the inception of the struggle, at Montgomery. This extended to all classes of the people; and the universal belief in the great dogma of secession--“Cotton is king!” --was doubtless the foundation of that cardboard structure of Confederate finance, which the first rude shock toppled to pieces, and the inexorable breath of demand shriveled into nothingness. At Montgomery, the promises of ease in money matters were all that could have been asked. The people, everywhere, had come forward with frank, unanimous selflessness. They had faith in the cause-faith in the Government — faith in themselves; and they proved it by their works, giving with lavish hand from their substance. It was felt that the great prosperity of the North had, in a great measure, come from the South; that the looms of New England were fed with southern cotton; that the New York custom house was mainly busied over southern exports; that the soil of the South was, by the alchemy of trade, transmuted annually into three-fifths of the gold in the Federal treasury. “ Egad, sir!-money is our last trouble, sir!” my old friend, the colonel, had cried with enthusiasm. “The country teems with riches --actually teems, sir! with gold. We have only to stretch out our  hands to gather it in — more than we want, egad! Men we need, sir! --but money, never!” And the colonel was right in theory. But that very overweening confidence in her strength proved the South's greatest weakness; and where was needed the strong, nervous grasp of a practical and practiced hand, to seize at once the threads of gold, and weave them into a solid cord of system-weak and shifting fingers were allowed to tangle and confuse them, till each in turn was snapped and rendered worse than worthless. Mr. C. G. Memminger, whom the President elevated to the Treasury Department, was untried and unknown out of his own State; but so great was the confidence of the people in their financial power-so simple did the problem of its development seem to them — that they were trustful and satisfied, until the stern grasp of necessity roughly shook them from their golden dream. And they awoke, like the sleeper of German legend, to find their hands filled with worthless yellow leaves and grains of chaff, where they had dreamed of treasure beyond compare. Immediately upon his appointment, thoughtful men — who could look a little beyond the rose-colored clouds of the present-had pressed upon Secretary Memminger the necessity for establishing heavy foreign credits, to draw against in case of future need. The currency of the southern banks was comparatively nothing, in view of increased expenditures. The cotton which was goldfood-clothing-everything to the South, with the open ports of the North, would be more worthless than the wampum of the Indians, so soon as the threatened blockade might seal up her ports and exclude the European purchaser. But, on the contrary, if that cotton were bought on the faith of the Government-and planters would willingly have sold their last pound for Confederate bonds; if it were shipped to Europe at once and sold in her market, as circumstances might warrant, the Confederacy would, in effect, have a Treasury Department abroad, with a constantly accruing gold balance. Then it could have paid-without agencies and middlemen beyond number, who were a constant moth in the Treasury — in cash and at reduced prices, for all foreign supplies; those supplies could have been purchased promptly and honestly, and sent in before the blockade demanded a toll of one-half; but above all, the interest and principal of such bonds to the planters could have been paid in coin, and a  specie circulation thus been made, instead of the fatal and endless paper issues that rendered Confederate credit a scoff, and weakened the confidence of the southern people in the ability and integrity of that department. In this sense-and this sense alone-Cotton was king! But the hands that could have lifted him safely upon a throne and made every fiber a golden sinew of war, weakly wrested the scepter from his grasp, and hid him away from the sight and from the very memory of nations. It was as though the youngest of the nations aped the legendary traditions of the oldest. After the potent and vigorous King Cotton was killed by starvation, Confederate finance treated him as Jewish myth declares dead King Solomon was treated. In his million-acred temple, he stood-cold, white and useless-leaning upon his broken staff; while timorous leadership gaped at his still majesty-
Awed by the face, and the fear, and the fameHad the Government bought — as was urged upon it in the fall of 61-all the cotton in the country, at the then prices, and paid for it in Confederate bonds at six per cent., that cotton-according to calculations of the best cotton men of the South-would have produced in Liverpool, during the next three years, at rapidly-increasing prices, over one thousand millions of dollars in goldl Granting this erroneous, even by one-half, it follows that the immense specie balance thus held, would-after paying all accruing interest-have left such a surplus as to have kept the currency issue of Confederate States' notes merely nominal, and even then have held them at a par valuation. The soldier, who freely bared his breast to the shock of a hundred battles for his country, his fireside and his little ones, could then have sent his pittance of eleven dollars a month to that fireside, with the consciousness it might buy those dear ones bread at least. But long before the darkest days fell upon the South, his whole month's pay would not buy them one pound of bacon. Secretary Memminger would seem to have had some theory, or reasons of his own, for refusing to listen to the plain common sense  in these suggestions from practical sources. With a strictly agricultural population to supply, he insisted on the issue of Confederate notes in such volume that the supply far exceeded the demand. For, had there been a large manufacturing population actively employed in the South, as there was in the North, the inflation of currency might have been temporarily concealed by its rapid passage from hand to hand. But with no such demand — with only the daily necessities of the household and of the person to relieve — the plethora of these promises to pay naturally resulted, first in sluggishness, then in a complete break-down of the whole system. Still, from the joyous days of Montgomery, and the triumphant ones after Manassas-through the doubtful pauses of the next winter and the dark days of New Orleans — on to the very Dies irae-there pervaded government and people a secure belief that the finances of the North would break down, and the war collapse for want of money! And so tenacious were people and rulers of this ingrained belief, that they cherished it, even while they saw the greenbacks of the Federal Government stand at 25 to 30 per cent. depreciation, while their own Treasury notes dropped rapidly from one hundred to one thousand! Let us pause for one moment to examine upon what basis this dream was founded, before going into the sad picture of wantde-moralization-ruin! into which the errors of its Treasury plunged the southern people. Accepting the delusive estimate that all the property of the United States, in 1861, represented but one-fifth more than that of the Confederate States; and that over three-fifths of the gold duties were from cotton and cotton fabrics, and products of the South alone, it was easy for the southern eye to see a future of trial, if not of ruin, for the North. Then, too, at the beginning of the war it was reasoned that the northern army of invasion, working on exterior lines, must necessarily be greater far in numbers and in cost, than the army of defense, working on interior lines. Moreover, the vast-proposed blockade, by increasing to a point of anything like efficiency the vessels, armament, and personnel of the United States navy, would cost many millions. Thus, in short, the southern thinker could very readily persuade himself that the annual expenditures of the Federal  Government must-even with the strictest economy and best management-run to unprecedented and undreamed — of sums. The demand for increased appropriations with the very first call of Mr. Lincoln for troops, justified this belief; the budget of 1862 to the United States Congress went far beyond all expectation; and the wild waste, extravagance, and robbery that swelled each succeeding estimate, were but more and more proof to the southern thinker, that he must be right. But he had made one grave miscalculation. Into the woof of delusion which he continued to weave, for enwrapping his own judgment, such reasoner omitted wholly to cross the warp of combined result. He neglected that vastly-important filament-proper and value-enhancing handling of his valuable production; the reality that southern cotton, sugar and rice had become so great a factor in national wealth, mainly through manipulation by northern hands. He did not stop to calculate that-those hands removed and, in addition, the ports of the South herself hermetically sealed-all product, not consumable, must become as valueless as the leaves and dross of the German's dreamer! The expenses of the North have ever been paid by the South, he reasoned. This sum now withdrawn, it follows that not only will the increased expenses of the North not be paid; but the heavy balance will be efficient in the southern Treasury, to meet our far smaller expenses. With equal ability in management, this result might have happened; for there is no sort of doubt that depreciation in southern money was, in some regards, reason for appreciation in northern. But while the policy of the southern Treasury was weak, vacillating and destructive, that of the northern was strong, bold and cautious. While Mr. Memminger-instead of utilizing those products which had heretofore been the life-blood of northern finance-allowed the precious moments to pass; and flooded the country with paper, with only future, instead of present and actual, basis of redemption, the northern Secretary struck boldly at the very root of the matter and made each successive disaster to northern arms another link in the strengthening chain of northern credit. The Union finances did indeed appear desperate. The stoppage of a sure and heavy means of revenue, at the same moment that the spindles of New England stood still for want of food; the increased  demand for fabrics and supplies, that had now to be imported; and the vast increase of expenditure, coincident with decrease in revenue, left but had one door open to escape. The North was flooded with greenback promises to pay, issued with one sole basis of redemption --the chance of absolute conquest of a people roused, warlike, and determined to yield nothing save their lives. To meet this issue and the interest of the vast debt incurred, taxation in the North rapidly increased, until the oppressive burden represented, in one or another shape, near 20 per cent. of the real property of the people. Besides, the North, unlike ourselves-argued the hopeful southern financier-does not go into the war as a unit. New York, the great money center, is entirely opposed to the war; New England is discontented at the stoppage of her factories and the loss imposed upon her people; and the great West, ever more bound to the South than to the East, by community of interest and of pursuit, must soon see that her only road to salvation is down the great river that has heretofore been the one lung that gave her the breath of life! Will the cute Yankee of New England submit to be ruined, and starved, and taxed in addition? Will the great commercial metropolis let the grass grow in her streets and the.vessels rot at her wharves, that once laughed with southern cotton? Will the granary and meat-house of the Union yield all her produce for baseless paper promises and, in addition pay heavy tax to carry on a war, suicidal as she must see it? Such were the delusions of the South-based, it may be, upon reason, and only delusions because underestimating and despising the great ingenuity of the enemy, and the vast cohesive power of interest! If the Washington government could not make the war popular, it could at least make it a great money job. If it could not bring it at once to the hearts of its people, it could at least force it directly upon their pockets. The vast increase in army and navy gave sudden and excitingly novel employment to thousands of men then out of situations; the unprecedented demand for materials of wararms-munitions-cloth-ing-supplies-turned the North and East into one vast armory and quartermaster's store; while the West was a huge commissary department. Then the Government paid well and promptly, if it did pay  in greenbacks. These daily changed hands and nobody stopped to inquire on what the promise to pay was based. Great contracts were let out to shrewd and skillful moneyed men; these again subdivided became the means of employing thousands of idle hands-while each sub-contractor became a missionary to the mob to preach the gospel of the greenback! But above all was the shrewdness and finesse with which the bonds were manipulated. The suction once applied, the great engine, Wall street, was pumped dry; and self-preservation made every bondholder a defacto emissary of the Treasury Department. Banker and baker, soldier and seamstress, were equally interested in the currency. It became greenback or nothing, and the United States used the theory of self-preservation on which to build a substantial edifice of public credit. These were the hard, real reasons that dissipated at last the dream of the South; that kept the greenback promise of the manufacturing North at little below gold, while the grayback of the producing South went down-down — from two--to ten-twenty-at last, to one thousand dollars for one.
Of the dead king standing there;
For his beard was so white and his eyes so cold,
They left him alone with his crown of gold!