Civil War Money Trouble: Part 1

Posted by Derek Sawchenko on

Times of strife and war have an immense impact on any given culture. This holds true for the American Civil War. More American lives were lost during the Civil War than any other conflict in history. More than either world wars, the Korean War, the Vietnam War, or the currently ongoing conflicts in Iraq, and Afghanistan. Besides the loss of human life, war has, as you would imagine, a monumental effect on the economies of those involved. And it affects currency, as it did with American currency during the Civil War. The antebellum period, and the time during the war itself, had some very interesting coins and interesting stories behind them.
     Precious metals and metals, in general, were sought after during the Civil War, for their obvious use in the making of weapons and materials for war. This lead to a shortage of coins, as people, either melted down coins for use in war or hoarded them as a security policy to protect their coffers. Prior to the war, coins were the main currency. There were some paper notes floating around, but they were not government-sanctioned legal tender. This changed during the Civil War as the coin shortage dragged on. The Union, or really, the United States government began producing paper money in 1862 to combat the coin shortage for use in daily transactions. At the time the paper money was called United States Notes, or Legal Tender Notes. To avoid inflation the North raised taxes, which proved to be beneficial to their economy during, and after the war. The South tried a different strategy...

When the southern states seceded from the Union and formed the Confederate States of America, it was immediately obvious that if they truly wanted to be recognized as a sovereign nation, they would have to have a self-sustaining economy and the currency to show for it. Thus, they sought to mint their own coins. One advantage to this plan was that the south had three mints already in their purview. The Dahlonega, Charlotte, and New Orleans mints in, respectively, Georgia, North Carolina, and Louisiana were all in Confederate territory and came under their control. Unfortunately, these already established mints had one major problem, they lacked a substantial amount of bullion and raw material to produce coins at length. So the Charlotte and Dahlonega mints were quickly relegated to assay duties. Because of this, the Confederacy’s plan to set up their own economy with its own currency became problematic and increasingly difficult. This ultimately had an adverse effect on the south’s ability to wage war.

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