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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Chapter 25:

• Gettysburg and Vicksburg twin disasters for the Confederates.
-- their effect on the Confederate currency. -- the financial system of the Southern Confederacy. -- the modern system of public credits an encouragement to war. -- review of financial experiments in the modern wars of Europe. -- the three conspicuous examples of great Britain, France and Russia. -- the great financial errour in the American war. -- how a bank of exchequer would have operated in the war. -- the rule of reflux in currency. -- brief statement of financial condition of North and South at close of the war. -- suspension of the Southern banks in the first year of the war -- amount of specie in the South at the commencement of the war. -- principal measures of Confederate finance. -- how the Southern banks became involved. -- practical results of their loan to the Government. -- “making money by machinery.” -- sales of Confederate bonds. -- special occasions for this investment. -- unequal to relieve the currency. -- rates of depreciation of the Confederate money.Richmond, the centre of finance and trade. -- gold not a measure of value in the Confederacy. -- reasons for its extraordinary appreciation there. -- comparison of Confederate money with the Continental currency in the Revolution of 1776. -- two capital causes of the depreciation of the Confederate money. -- the influence of speculation. -- how the engrossers managed in Richmond. -- summary of the mismanagement of the Confederate finances

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Gettysburg and Vicksburg were twin victories for the Federals-twin disasters for the Confederates. They marked the line where the war turned, and the fortunes of the Southern Confederacy declined. The disaster of Vicksburg was a shock to the whole internal economy of the South; and this period of military disaster was coincident with a distress in material resources, in which some men already thought to discover signs of the fatal decay of the Confederacy. Money has been designated as “the sinews of war ;” and when it is known that the Confederate currency declined a thousand per cent. on the news of these military disasters, it may well be comprehended what occasions of alarm and anxiety they were. The whole concern of the Confederate finances invites a studious consideration, which may well take place here at a period which affected so much [416] their virtue and integrity. And the subject is so distinct that, without regard to any particular date of our narrative, we may extend our view of it through the whole period of the war.

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The financial system of the Southern Confederacy.

The South was in a condition of complete isolation in the war. The laws of finance were less disturbed by extraneous influences than was ever the case in any country of equal extent, population and civilization before. The community consisted of several millions of people, occupying a large territory without a specie circulation, and compelled to establish a thoroughly artificial system of finance adapted to the condition of war. The case was anomalous. Very valuable lessons in finance might be learned from the history of the Confederate system, if space were allowed to trace its development, step by step, throughout its extraordinary career, and to mark the influence which it exerted upon the social condition, the public and private morals, and the fortunes of the Confederacy. It may be said generally that the result of the war was powerfully influenced by the condition of the Confederate finances, as much so as by any other cause.

It is the most striking peculiarity of modern wars that they are conducted chiefly by means of credit in the form of paper issues. The system was inaugurated by Great Britain; and its result is the mammoth debt of the British government. The revolutionary governments of France, as they succeeded each other in the various stages of transition between the autocracy of the Bourbons and the Empire, copied the British example, and created enormous debts which shared the fate of the ephemeral powers which incurred them. All the governments of Europe, with scarcely an exception, now labour under the burden of obligations incurred in expensive wars. In proportion with the facility of public credit, has been the magnitude of the scale on which modern wars have been conducted. And if in America the people have reason to boast of the stupendous magnitude of the armies which they brought into the field, and of the extent and costliness of their military operations, the marvellous exhibition will be found to have been due, not so much to the boundlessness of their resources, as to the lavish and reckless manner in which they employed a credit never before brought into requisition. Nor would it be over-stepping the bounds of truth to say, that the war spirit in either section was fed and stimulated, in a very great degree, by the profits which the heavy public expenditures brought to large classes of persons directly responsible for the war, and connected with its operations. This modern scheme of throwing the burden of debts incurred in war upon the shoulders of posterity has done more to stimulate costly and bloody conflicts between nations and peoples, [417] than all the harmonizing influences of modern civilization and Christianity have done to restrain them. Until the system of credit is counterbalanced by some other scheme, by which the persons immediately connected with the public operations shall be impoverished rather than enriched by a state of war, we shall have no occasion to expect the Millennium.

The three most conspicuous examples of the abuse of credit for purposes of war, antecedent to those furnished by the two belligerents in the American conflict, were those of Great Britain, France, and Russia. The debt of the British government at the close of the Napoleonic wars, was eight hundred and eighty-five millions of pounds sterling. In March, 1863, after a lapse of nearly half a century, embracing the costly expenditures of the Crimean war, it had been reduced, by dint of resolute taxation, no lower than the amount of seven hundred and eighty million pounds sterling, or about thirty-nine hundred millions of dollars.

The amount of Assignats issued by the Revolutionary authorities of France, counting all the different series, reached the enormous amount of forty thousand millions of francs.¹ These were followed by a second species of paper money called Mandates, to the amount of twenty-four hundred millions of francs. The great bulk of both these forms of circulation, amounting in the aggregate to more than forty-two thousand millions of francs, or eighty-five hundred millions of dollars, proved a loss to their holders; a circumstance which is thought to have been fortunate for France rather than otherwise, in proving the means of divesting her, at the same time with the burden itself, of the spurious authorities that had imposed it.

The British debt was contracted almost altogether in the form of bonds at long dates, upon the faith of which the Bank of England put forth a proportionate amount of its own notes of circulation. It is true that the Exchequer bills issued by government for temporary purposes, went directly into the hands of the public; but they also soon found their way, for the most part, into the Bank of England; and constituted, like the bonds, a basis of additional circulation. In this respect, it will be observed, the English and French systems were essentially different. In England the circulation was not identical with the debentures of government, but was issued through the agency of a banking company, which made of the government bonds a basis for the security of the circulation. In France, the government itself put forth its obligations in the form of a currency, declared it to be the medium of exchange by law, and denounced heavy penalties against the refusal to accept it as money. The comparative merits of the two systems were strikingly exemplified by the result. The French issues, as we have seen, went on augmenting in volume until they reached [418] forty-two thousand millions of francs (in the aggregate of Assignas and Mandates, and continued to decline in value until the whole mass of circulation became utterly valueless. The volume of currency in England, on the other hand, never reached an unmanageable aggregate. The circulating notes of the Bank of England never aggregated quite thirty millions of pounds sterling, or one hundred and fifty millions of dollars Nor did the pound sterling, in proper form, ever experience a depreciation comparable with that which has generally attended the excessive issue of paper currency, during a state of war, in other countries; for the pound sterling note of England reached its maximum depreciation in 1814, when it sank to the value of £5 10s. to the ounce, or about 1.55 to the unit in gold. We shall see that in the United States, during the war, the greenback dollar sank to the value of 2.85 for one in gold; and that the Confederate paper dollar sank at the end, to the low value of 60 for one.

During the protracted wars which the Russian Empire prosecuted for a long series of years upon its Circassian frontier, a large employment of credit was found to be requisite. An expedient similar to that employed by Great Britain was resorted to, in the establishment of an institution called the Bank of Assignats. This establishment furnished the proper currency of the Empire for many years, and its circulation is believed never to have exceeded in periods of the most pressing military exigency more than eight hundred and thirty-six millions of roubles. A most remarkable circumstance connected with the history of this circulation is, that it underwent a most excessive appreciation, above gold in value, during the winter of Napoleon's Russian campaign, rising in value as the invader approached the heart of the country, and receding as he retired.

Unfortunately for themselves, neither of the two belligerents in America took any measures for establishing a proper relation between the efflux and reflux of the currency, during the gigantic war which we have under consideration. If a Bank of Exchequer had been established at the beginning, endowed with functions like those exercised by the Bank of England during the first two decades of the present century, having entire control of the circulation, and acting as the principal factor of the government in the negotiation of its bonds, the evils of a ruinously depreciated currency might have been avoided. As it was, each new demand of the government for money, instead of being supplied by the sale of bonds, and the receipt of a part of the circulation already outstanding, was met by a new and additional issue of notes; those previously issued still remaining, for the most part not needed and not employed, in the hands of the public. There was thus a perpetual efflux of notes of circulation; and no returning influx, to keep up an active demand for them and to sustain their value. The public credit was made the prey of a multitude of sharpers and brokers, who could all have been kept in due subordination by a great banking [419] corporation, having a capital of hundreds of millions of dollars, able to “place” the public bonds as rapidly as funds were needed; and, by means of large discounts, establishing a steady reflux current of circulation back into its own coffers. It is one of the plainest maxims of finance that if a currency be issued in a continuous stream, without any measure being taken to establish a counter-current of the same circulation back into the source from which it issued, depreciation is inevitable. Where a circulation is put forth through the agency of a bank, it is done in the process of discounting the negotiable paper of punctual men of business; and the reflux is created by the return of the same amount of circulation into the bank in payment of the discounted paper when it falls due. Every piece of paper that is discounted, has its pay-day; and the reflux of currency corresponds with the efflux. The bank may fail; but this efflux is not relaxed by that fact alone; for the necessity of paying the negotiable paper which it held under discount, will absorb precisely the amount of circulation which was issued in the act of discounting it. A powerful bank of exchequer, however unnecessary or vicious a part of our Federal machinery it may be in periods of peace, is an admirable agency in time of war for regulating the heavy circulation which is always found to be one of the necessary attendants of a state of warfare.

Neither of the two belligerent governments in the American war took the proper pains, if they took any pains at all, to ensure a healthful reflux current into the Treasury of the circulation which they so profusely issued. The outgo of circulation was enormous and continuous; while there was no income at all, or if there was any, none sufficient to create any sensible demand for the currency, or to impart any stable value to it.

Let us see briefly, for purposes of illustration, what was the financial condition of the two belligerents at the close of the war. The aggregate debt incurred by the Federal government, in the progress of the war, has been officially stated, in frequent monthly bulletins from the Treasury Department, at about two thousand eight hundred millions of dollars. It is the generally received opinion in financial and official circles that the debt, when all audited and settled, will reach the round sum of three thousand millions of dollars. There was outstanding in the United States in the form of currency issued from the Federal Treasury, on the 31st of July, 1865, the aggregate sum of seven hundred and eleven millions of dollars; composed of five per cent. notes, six per cent. compound interest notes, greenbacks not bearing interest, and fractional currency. Up to that date, the circulation of the National Banks had reached one hundred and fifty seven millions, and the supposed amount of the notes of State banks still in circulation, was about eighty millions. The aggregate circulation in the Northern States, therefore, had reached, at the end of the war, the prodigious amount of about nine hundred and fifty millions of [420] dollars. The circulation of the Bank of England, we have seen, did not exceed, at the end of the Napoleonic wars, one hundred and fifty millions of dollars, which is not one-sixth of the amount of the circulation which the war left in the North. The price of gold in New York, compared with greenbacks, for several months after the close of the war fluctuated near the point of one for one and forty-five hundredths; while the maximum depreciation of paper, during the war, was two and eighty-five hundredths. The maximum depreciation of the pound sterling note in England was one and fifty-five hundredths.

The total cost of the war to the Confederate government had reached at its close, according to the opinion of intelligent officers of the Treasury, about thirty-five hundred millions of dollars. Of this total about twenty-five hundred millions consisted of eight, seven, six, and four per cent. bonds of long dates; of Treasury notes outstanding of both the old and new issue; of unsettled accounts due from government, audited or in the process of being audited in the accounting departments; and of debt that had been cancelled in the form of the old currency, and income received in the form of taxes. The residue of the expenditure remained in the form of unpaid claims against Government in the hands of the people, for property purchased or impressed and damages sustained from the army, in fact, the cost of the war on the Confederate side, measured in Confederate currency, was nearly the same as that on the Federal side; for it i; to be observed that the three thousand millions of dollars at which the Federal debt is generally estimated, embraces only the Federal debt proper; and does not embrace the expenditures made by States, cities, counties, and corporations generally. An intelligent authority classifies the war debt of the North as follows: Federal debt, three thousand millions; State debt one hundred and thirty-five millions; city debt, one hundred millions; and county debt five hundred millions; making a grand aggregate of about three thousand seven hundred and fifty millions of dollars. The municipal indebtedness of the South, incurred on account of the war, was very inconsiderable. The complete disorganization which attended the disastrous termination of the struggle renders it impossible to arrive at an exact knowledge as yet either of the Confederate debt or of the municipal debt; but the latter was comparatively so inconsiderable as to constitute scarcely an appreciable element in the grand total of the Confederate finances. The system of bounties was wholly unknown at the South; a patriotic public opinion and an energetic conscription sufficing to force every man of self-respect into the army, or into some branch of the public service. The bounty system, with its frauds and corruptions, was a feature of the war known only to the North.

We come now to speak more exclusively of the course of finance in the Southern States. Early in the winter of the first year of the war, and [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 [422] these measures other loans in heavy amounts, upon bonds at long dates, were periodically made; and the baneful system was instituted of Treasury notes put out in the form of notes of circulation, in amounts ranging from the fractions of a dollar up to notes of five hundred dollars. If to these measures we add the cotton bonds, which were employed in England and Europe for the purchase of war material, and the cotton loan upon which they were based at home, we shall have mentioned all the leading measures of finance employed by the Confederacy.

The fifteen million loan was early disposed of at satisfactory rates. For a time the interest which had been stipulated to be paid in specie was actually discharged according to the terms of the contract; but before the close of the war the bondholders were either not paid at all or consented to arrangements less difficult to the Treasury than the payment of specie. This fifteen million loan in fact produced sore inconvenience to the Government during the later years of the war, and was the first subject with reference to which it was obliged to forfeit its faith to the holders of its paper.

The temporary loans negotiated from the banks were easily provided for. By the time that the loans matured, the Treasury was able to discharge them by means of the Treasury notes prepared for circulation. But it was found in the sequel that these accommodations cost the banks dearly. It has already been mentioned that at the outbreak of the war the circulation of the Southern banks was quite inconsiderable in amount. To meet the demand of the Government for loans, the banks very consider ably increased their outstanding circulation ; in fact, they doubled, and, in many instances, qradrupled it; a thing which was perfectly safe during a suspension of specie payments. Indeed, a large increase of circulation was found to be quite necessary, after the disappearance of specie and under the stimulus imparted by the war to all branches of trade. The fifty millions of currency found in circulation by the war was wholly inadequate to the active state of business superinduced by the war. The banks accomplished two objects by one measure. In granting a loan to the Secretary of the Treasury, they placed a large amount of funds in the hands of the Confederate Government; and they supplied, by the same act, the deficiency of currency which was so stringently felt by the people. But the act proved their ruin. The notes of circulation which they thus put forth, following that law of finance which makes a base. currency drive out of circulation one less base, were hoarded. The bank notes, when lent by these institutions to the Government soon spread over the country. They were succeeded by similar paper issued in the form of currency by the Confederate Government. The Treasury notes were distrusted, and in proportion as they were distrusted, the notes of the banks were hoarded. The law of finance which has been adverted to had a quick and striking exemplification. The notes of the old familiar banks of the States were reserved [423] and put away by the people, and did not emerge from their retreat until after the close of the war. They then began again to be seen in the hands of the people. But they had come forth from their hiding places too late. The banks had been ruined, and were found unable to pay any part of their debts except a percentage upon their circulation. The notes of the different institutions varied in market value according to the accidental circumstances which influenced the original amount of accommodations which they had granted in 1861 to the Confederate Secretary of the Treasury.

In the aggregate these accommodations had considerably exceeded the capital stock of the banks. The Confederate Treasury had paid off the accommodation notes due the banks with Treasury notes. The whole amount of private discounts due the banks from individuals were discharged by the agency of the same medium. Thus the whole capital stock and assets of the banks were soon transformed into Treasury notes; while the heavy amount of their own notes which they had lent to the Government, disappeared from circulation and went into private hoards, where they could not be reached. They had a heavy debt outstanding, which could not be discharged; and their whole available means consisted of a daily depreciating currency, which they were obliged to receive in payment of all dues to themselves. At the close of the war this currency turned into dead leaves, and they were left in the possession of no assets at all except the small amount of real estate occupied by their counting houses, and the small modicum of specie which they had been able to save from taxes, impressment, and robbery. Stockholders thus lost all their shares, and the value of assets in hand was sufficient to meet but a meagre percentage of the outstanding circulation, which the banks had imprudently put forth in originally granting such liberal loans to the Confederate Government.

With the negotiation of the fifteen million loan, and the exhaustion of the means of the banks, all regular financiering ceased with the Confederate Government. After that, money was manufactured by machinery to meet the wants of the Government, and paid out as rapidly as it was needed. Thus the volume of the circulation increased almost in equal ratio with the expenditures of the Government. Considerable loans in the form of bonds at long dates were authorized, and a good deal of success was obtained in disposing of the bonds. But these sales were exceedingly out of proportion to the magnitude of the expenditures; and the heavy margin of deficiency was boldly made up by the issue of Treasury notes. We might recite here in detail the various acts of Congress that were passed authorizing the different loans and directing the preparation and employment of Treasury notes of circulation. But the recital would be tedious, dreary, and insipid. Suffice it to say that no measure whatever was taken to secure a reflux of the circulation to the source of issue, and thereby to [424] restrict the volume of currency within manageable limits, and create a demand for it essential to the maintenance of its value. The patriotism of the people, however, provided a partial demand for these notes. The growing redundance of currency produced high prices; and high prices produced large funds for investment in the hands of the wealthy classes. These made it a point of patriotism to invest their surplus capital in the securities of the Government. Legislatures authorized and the courts directed the funds held by fiduciaries to be invested in the eight and seven per cent. bonds of the Confederacy. Necessity also came in aid of patriotism to promote these investments. The great majority of capitalists knew not what better disposition to make of their Treasury notes than to convert them into Confederate bonds. The bonds drew interest; the notes drew none; except indeed those hundred dollar seven-thirty notes, which in fact were bonds. For a brief period after the first rise of prices consequent upon the inflation, real estate came briskly into market, and a great deal of it changed hands. But this species of investment soon terminated. Speculation in the necessaries of life and in the staples of the country was resorted to extensively by the class of men known as sharpers; but it was distasteful to respectable people and highly disreputable in public opinion. The consequence was, that the wealthy and respectable capitalists, who were men of public spirit and patriotic impulses, eschewed these questionable operations, and converted their treasury notes into interest-bearing bonds, drawn at long dates. Many, indeed, in an unbounded faith in the success of the Confederacy, purchased negroes; but the amount of this property available for purchase was very small in proportion to the vast capital accumulated in the hands of the people.

It so happened, therefore, that the very redundance of the currency produced in partial degree a remedy for its own cure. The very excess of circulation produced a necessity for its conversion into bonds. But the misfortune was, that the remedy, as long as it lasted, always came too late for the cure of the evil. It did not come into action until the depreciation of the currency had taken place. The reflux did not return by a natural flow, but resulted from a damming — up process. A competent agency should have been employed, which should have watched, directed, and controlled the movement from the beginning; an agency clothed with absolute power over the circulation, and endowed with a sufficient capital to ensure a ready sale at reasonable prices of the public bonds.

The progress of the depreciation of the Confederate money was at first gradual; but afterwards very rapid. In was worth at the brokers' shops in Richmond one dollar twenty cents in currency. In January 1863, the value varied from twelve to twenty. It afterwards, as we shall [425] see, fell much lower. It must be observed, however, that these brokers' rates, were invariably a long period in advance of the rates acted upon in the interiour. As late as the summer of 1862, Confederate money was taken at par in the settlement of all transactions originating before the war and made the basis of the general transactions of the country at the old rate of prices. The brokers' rates were either unknown to the people or totally disregarded by them. Not until the volume of the currency had swollen beyond all reasonable proportion, did the people at large consent to fix a depreciated value upon this money. Even then they did so under compulsion. Remorseless speculators had succeeded in engrossing the entire stock of many of the comforts and prime necessities of life. These were held at exorbitant prices; and in order to compass the means of purchasing them, the yeomanry of the country were obliged to rate their own property at higher prices in Confederate money than the old prices obtaining before the war. It is a well-known fact that the Richmond rates of Confederate money were, throughout the war, far below those which prevailed in the Confederacy at large; and it is a general fact, that the rates of this money improved as the distance from Richmond increased. This fact was partly due to the circumstance, that Richmond was the great focus of Government disbursements, and was constantly flooded to excess with the currency; partly to the circumstance, that it was the base from which all smuggling operations were carried on, at which of course gold for the smuggling trade was more in demand, and commanded the highest prices; and thirdly, to the circumstance that it was the centre and resort of the speculating classes, and the principal depository of their wares, at which the final sales and last profits on the commodities bought up in the country for speculation, were realized. It may be remarked, without a material aberration from the truth, that after the first eighteen months of the war had elapsed, and the Confederate money had become very redundant, the business of the country, at a distance from Richmond, was done, for probably as long a period as twelve months, upon the basis of five for one in Confederate currency. After that period, the change of rate to fifteen or twenty for one was rather abrupt; and upon the latter basis transactions proceeded for another twelve months; after which the rate was very unsettled in the interiour.

Another observation must be made with reference to the brokers' prices of gold. A comparison of Confederate money with gold did not, during the war, afford a true criterion of the value of either commodity. Gold was unnaturally scarce and dear in the Confederacy. The old dollar's value, in property not affected by the condition of war, was not sufficient to purchase a dollar in gold. Real estate did not approximate the prices in gold which it had commanded before the war. Boarding at the best hotels could be procured for fifty cents a day in gold, which had cost two dollars [426] and fifty cents before the war. A suit of clothing which before the war would have cost thirty dollars, could now be obtained for ten or fifteen in gold. In short, gold had greatly appreciated in the Confederacy, and the gold dollar no longer represented the old dollar's worth. The extraordinary demand for it produced by blockade running, and the smuggling trade, and the small supply of it which the war had found in the Confederacy, rendered still smaller by the process of hoarding, had imparted to it an extraordinary value. It had thus ceased to be a standard of value, and had become a very scarce commodity of commerce. The real value of Confederate money is not to be estimated by the quantity of gold which it commanded at the brokers' shops.

The case of gold was different at the North, from that which we have just described. There commerce was unaffected by a blockade; the usual supplies of gold continued to be received; no extraordinary demands of specie for exportation were experienced, and it remained, throughout the period of war, as accurate and reliable a standard of value as ever. The depreciation of Federal currency can therefore be measured with absolute certainty by comparing it with gold. In the Confederacy, however, the case was not the same. As we have seen, gold bore an abnormal value; and conclusions in regard to the depreciation of Confederate money founded merely upon its relation to gold, would be erroneous. The old dollar's worth, if it could be definitely ascertained, in such commodities as were not affected by the condition of war, would be the true standard of value. Until the final six or eight months of the Confederacy, the general transactions of the interiour country proceeded on a basis of value for Confederate money measured by the old dollar's worth, which was much higher than the values furnished by the brokers' quotations in Richmond.

It is interesting to observe the similarity of career which is presented in the cases of the money of the Southern Confederacy, and of the Congress of the first American Confederation. We have already stated the gradual depreciation of the one. The progress of the depreciation in the old Continental money, though somewhat more tardy, was in the same degree. In May, 1777, the Continental paper dollar was worth at the rate of two and two-thirds for one in specie. In December it was worth four for one. In March, 1778, it was worth five for one; in December, six for one. In February, 1779, it was worth ten for one; in June, twenty; in September, twenty-four; in December, thirty-nine. After the year 1779 it seemed to have no value. The total amount of this old Continental money that was issued, was two hundred millions of dollars; and it was worth to those who received it, at the period when paid out by the Government, only thirty-six and a half millions of dollars. A similar scaling of the money of the Confederate Treasury would reduce the cost of the war on the Southern side to less than a thousand millions of dollars. The difference [427] between that sum and the nominal cost measures the aggregate depreciation of the money.

The principal cause of the depreciation of this money, in the last twelve months of the war, was the distrust of success entertained by the classes who controlled the value of the money. The principal causes of its deprecation in the antecedent period, were the excessive issues of it by Government, and the influence of speculation. It is probably useless to declaim against a vice so prejudicial as speculation to both the individual and general interests of a country circumstanced like the Confederacy. It is a display of the worst form of selfishness; a selfishness that feeds upon the privation, want, and necessity of fellow-citizens engaged in mortal struggle with a formidable public enemy; a selfishness that appropriates all that it can grasp, at a time when each individual should give up for the general good all that can be spared; a selfishness worse than that for which Ananias and Sapphira were struck down by the hand of God, inasmuch as it seeks not only to withhold what is one's own, but to engross also whatever else can be compassed by craft and greed. The best communities contain persons of this sordid temper; and the temptation to its indulgence in a country isolated and beleaguered by armies and blockading fleets, where the supplies of every article are limited, are too strong to be resisted by the class whose inclinations are set in that direction. The speculation commenced in such articles as cut nails, salt, and leather. There were but two nail factories in the Confederacy, and the stocks of these establishments were accessible and easily engrossed. Within the first six months of the war, the entire stock of cut nails in the Confederacy were in the hands of less than half a dozen speculators in Richmond; and the price was abruptly put up from four dollars to seven, and then to ten per keg. There was but one considerable saline in the Confederacy, and this was operated by a single firm, which ran up the price of this prime necessary of life, within two years, from the ante-war price of one cent per pound, to twenty-five cents per pound in specie or fifty cents in Treasury notes. Leather was one of those articles which, though tanned in very numerous establishments conducted on a small scale throughout the country, yet was everywhere found to be in smaller quantity than was needed by the people, and which might safely be bought up right and left wherever found. These are but examples of the subjects of the speculation and extortion that became rife throughout the Confederacy. The effect was greatly to augment and aggravate the burden of the war upon the people; but its most serious evil was in the depreciating influence it exerted upon the currency. The great mass of the people were desirous to receive this money at the normal rates; but finding themselves obliged to pay extortionate prices for commodities which they stood in need of purchasing, they were driven, against their will, to demand increased prices for the products and property which they [428] sold. The fury and intensity of speculation forced the people into reluctant acquiescence in the depreciation of the currency. But there is this consolatory observation to be made on the subject: namely, that the classes who devoted themselves assiduously to speculation, as a general rule, cane out losers at the close of the war; while the masses of people who eschewed this disreputable avocation, generally saved a comfortable portion of their original means.

That the depreciation of the Confederate currency was partially superinduced by speculation and circumstances other than its mere redundancy, is sufficiently proved by the fact, that the grand total of circulation in the North reached the stupendous figure of nine hundred and fifty millions of dollars, while the depreciation of greenbacks, at the close of the war, was less than one and a half for one. It is plain, therefore, that depreciation is not the necessary result of mere redundancy, and may be prevented by provident and timely measures. The ability with which the Federal finances were conducted, especially in avoiding this depreciation, is one of the most remarkable incidents of the war.

If early and proper measures had been adopted, the Confederate currency would doubtless, likewise, have proved as manageable as any other branch of the Confederate finances. These measures should have looked to the provision of an adequate demand for the circulation that was issued in such profusion. This demand could have been abundantly established by means of taxation, of the sale of Government bonds of long dates, and by the intervention of a system of discounts through the instrumentality of a Bank of Exchequer. The circulation should not have been issued directly from the Treasury. It should have been placed under the absolute control of an issuing agency, which would have served as a regulator and balance-sheet in the movement, and preserved an equilibrium between the efflux and influx of the circulation. Taxation should have been imposed from the beginning, and executed promptly; not postponed several years, and then tardily put in force. The sales of bonds should have been conducted by a great and respectable banking institution, directed by eminent and reputable financiers; not entrusted to ignorant and irresponsible stock and exchange brokers. Such a financial institution could have established and maintained an influx of the circulation commensurate with the efflux. With this reflux in full flow, the volume of the currency might have been increased with impunity. And, if, besides, the circulation had been in the form of notes of the bank, rather than in that of notes of the Treasury; then, when the unfortunate end came, the debts due to the bank would still have given a partial value to this circulation; and prevented the total wreck of cash means which at last overtook the people of the South.