vi
8 "Cbc Conservative.
THE CONFEDERATE CURRENCY : A
WESSON IN FIAT FINANCE.
[ Compiled from Pollard's Southern History of
the. War-Currenry of the Confederate States. ]
Before the outbreak of the civil war in
18(51 ( , the amount of specie held in the
vaults of the banks in the eleven seced
ing states was about thirty millions of
dollars. At the same time , the paper
circulation outstanding in the shape of
bank notes in those states was about
fifty millions of dollars. In addition to
this currency it was estimated by the
financial authorities at that time , that
the specie in circulation among the people
ple of the South did not exceed twenty
millions of dollars. Thus the approxi
mate amount of currency of all kinds in
the confederate states was perhaps fifty
millions in coin , and a paper circulation
of about the same amount.
The first thing that happened when
hostilities were fairly begunwas a hoard
ing of specie in the hands of the people.
The thirty millions of specie in the
vaults of the banks continued long un
employed. A large part of it was se
creted from motives of safety , another
part was taken possession of by the con
federate government , and a small portion
tion captured in the course of military
operations by the federal authorities.
Yet a very considerable portion of it was
shipped abroad during the war , to pay
for munitions of war and other supplies
in behalf of the confederate cause. At
any rate , the close of the war found a
very small fraction of the thirty millions
held by the banks in 1861 still in their
possession.
The condition of the currency in the
Southern states before their government
had begun to put out its flood of confed
erate currency , was eminently a healthy
one. The banks , it is true , suspended
specie payments just before the close of
the year 1801 ; but this suspension was not
from any want of ability to take care of
their circulation. With only fifty mil
lions of paper in circulation , and at least
the same amount of coin in the South ,
the larger part of which was held by the
banks themselves , the latter were quite
able to provide for their paper currency.
* But the suspension of specie payments
< j
was resolved upon in self defence. It
was to prevent the certain drain of
specie that would have ensued from the
largo purchases of merchandise at the
North and elsewhere , which theprospecl
of a long war and an increasing embar
go would have induced.
One of the first things found out at
the South as the war advanced , was thai
the stimulus of all branches of trade
would absorb a largo increase , of paper
circulation. Thus the fifty millions o :
currency afloat at the outset was quite
unequal to the active condition of busi-
icss brought about by the war. The
Confederate government immediately
sorrowed from the banks in the form of
liscounts upon notes drawn by the Con-
'ederate secretary of the treasury.
These loans to the government were ad
vanced in extra issues of paper money ,
) y the Southern banks themselves.
They thus supplied the government for
a time with the sinews of war , and at
the same time supplied that deficiency
of currency which was stringently felt
among the people. Nevertheless these
oans ultimately proved the ruin of the
banks. The issue of Confederate treas-
iry notes , or irredeemable paper , which ,
once begun had to bo continually re
sorted to , soon filled the Southern coun
try with two competing paper mediums.
Of these two , the Southern people some-
low had an instinct that the Confeder-
xto money was the least valuable. As a
esult , the notes of the Southern banks
were hoarded , on that familial1 financial
mnciple that of two conflicting curren
cies the least valuable will drive out of
circulation the more valuable. As sil
ver and gold were hoarded at the North ,
jecoming virtually demonetized for
years , so the notes of the Southern
banks were hoarded at the South , and
their place was supplied by the new cur
rency issued in torrents by the Confed
erate government.
The first emission of paper authorized
by the 'Confederate congress was an
issue of treasury notes to the amount of
one million dollarsto run one year and to
be not less than fifty dollars face value.
This act was dated at Montgomery , Al
abama , March 9 , 1861 , and the paper
bills were engraved by the National
Bank Note company of New York.
Two months later , on May 16 , 1861 , the
Confederate congress at Montgomery
passed another act , authorizing an issue
of treasuiy notes to the amount of $20-
000,000 , to embrace issues as low as five
dollars in value , and redeemable within
two years after date. These Confeder
ate treasury notes are comparatively
common. Instead of the finely-engraved
copper-plate work of the National Bank
Note company , they exhibit a cheap
lithograph face , muddily printed on thin
white paper , and bearing the device
"Two years after date the Confederate
States of Ameiica will pay five dollars
lars to bearer , Richmond , July 25,1861. "
The notes were inscribed at the head
"Pundablo in eight per cent stock or
bonds of the Confederate States ot
America , " and on the lower portion of
the notes they bore the inscription , "Re
ceivable in payment of all dues excepl
export duties. "
The notes wore quickly worn out , and
specimens of them , when found , are
commonly in a very dilapidated condi
tion. Poor as they were , however , they
constituted the principal sinews of wai
for a long time to the Southern arms
At a later period , the Southern con
'ederacy , through its active agents ,
succeeded in importing all the materials
'or turning out Confederate gray backs ,
ncluding the stones , paper , inks , colors ,
and even printers. The latter were im
ported from England.
Only three months after the last issue ,
or on the 19th of August , 1861 , the Con-
'ederato congress passed an act author-
zing the emission of treasury notes to
the amount of one hundred millions
more. These were to be of donomina-
lations not less than five dollars.
Their condition of payment was
changed from the last issue , which had
been made "redeemable in two years , "
and the hundred millions were to run
until "six months after the conclusion
of a peace between the Confederate states
and the United States of America. "
The Confederate notes emitted under
; his last act all had backs of plain white.
3y continued attrition and hand
ling , however , the white soon became
a dingy , dirty gray. Hence the term
'gray backs" as applied to the Con
federate currency.
The issues of the year 1861 of non-
interest-bearing Confederate notes
amounted to $161,500,000 ; in 1862 there
were issued $123,000 more ; and in 1868
the enormous amount of $511,182,000 of
this paper money was put forth. From
time to time there was recalled or paid
back to the Confederate government of
notes total of
non-interest-bearing a
$177,012,960. The Confederate govern
ment acted precisely as the French
Directory did , in the days of the
assignats : money was manufactured
over night to meet the financial demands
of the next morning. Printing presses
were kept continually running , and the
money paid out as fast as it was needed.
Besides the large amount printed by
outside contractors , Colonel Blanton
Duncan and others , the note division of
the Confederate treasury department
itself had grown to two hundred and
fifty employees who prepared the notes
for issue after they came from the
printers. They issued fully a million
notes a week , making daily reports
thereon. Each engraved plate made
530,000 notes , and when the quantity ex
ceeded a hundred thousand another
series was commenced.
The following table exhibits the pro
gressive decline and fall of the Con
federate currency. The amounts re
quired to buy one hundred dollars in
specie were in
SPECIAL
VAMJK OFI.
Dccomljur , 1801 $ 120 .8 ! }
1802 iiOO . 3U
" 1801 } 1,1100 .05 $
5,000 .02
March , 1805 0,000 .01 ? . , '
The Confederate States did the best
that could be done with a currency ex
clusively of paper ; they provided it in
sufficient quantities to suit ; they based
it upon the faith and credit of their
government ; they made it a legal tender
for all debts , public and private ; they