financially, or at least lessened the misery on the home front. The amounts of paper currency in circulation were not solely responsible for their decline in value, but rather, it was that there was a growing suspicion (as early as 1863) that, if the Confederacy survived, it would repudiate all its debts and begin anew with respect to financing.
This was not entirely baseless as laws had been passed stipulating that certain denominations of paper currency must be converted into low interest Confederate bearer bonds by a fixed date, or else they could not be used as legal tender at all. In mid-February 1864, a very complicated law was enacted as a last desperate measure to reduce the amount of currency in circulation and stabilize its value. All non-interest bearing notes larger than $5 (C.S.) had to be exchanged for 4% bonds before April 1; if this was not done the currency would be de-valued by 10% monthly until the notes were valueless. For some odd reason any $5 (C.S.) notes in circulation would retain their full value until July 1, at which point they would be reduced by 33% in value.
This act effectively took away the right of the Treasury to issue additional paper currency, except in exchange for old notes at 2/3 of the face value. The results were predictable…loss of confidence in the government, financial panic, and confusion. The record keeping of the Treasury was so incomplete that little certain knowledge of monetary supply was to be had. “Bill Arp” (a/k/a Charles H. Smith), a humorist of the times reported on the situation as follows:
Secretary Memminger was asked to say about how much paper (money) he thought was in circulation…and he said he to the best of his recollection it was either six hundred millions or six thousand millions, but he wasn’t sure which…
Meanwhile in March 1864, the Confederate Congress ignored the new initiatives and passed legislation to issue another $80,000,000 in currency to pay the back wages due to the Confederate troops in the field. President Jefferson Davis vetoed the measure. Vice President Alexander H. Stephens lamented privately that,“Our finances are now a wreck…past all hope in my judgment.”
The old paper money was eventually collected and mutilated by cutting a hole through the center then burned. The newly issued Confederate currency was very much like the old, and the Richmond Daily Examiner (February 16, 1864) could not resist lampooning it.
To see the faces on the notes with that unchanging expression of ineffable melancholy which the engraver has given to all of them…Davis is doleful and Stephens saturnine, Hunter is heavy and Clay clouded with care, Memminger is mournful and (Judah) Benjamin the buoyant is bien trist, having had in sight evidence of the country’s impecuniosity. It was enough to drive a well-regulated mind to lunacy.”
The term “bien trist” means “a sad fate.”
Craig L. Barry was born in Charlottesville, Va. He holds his BA and Masters degrees from the University of North Carolina (Charlotte). Craig served Watchdog Civil War Quarterly as Associate Editor and Editor from 2003–2017. The Watchdog published books and columns on 19th-century material and donated all funds from publications to battlefield preservation. He is the author of several books including The Civil War Musket: A Handbook for Historical Accuracy The Unfinished 2011), Essays on Confederate Material Culture Vol. I and II (2012, 2013). He has also published four books in the Suppliers to the Confederacy series on English Arms Accoutrements, Quartermaster stores and other European imports.