wartime economy Flashcards
(16 cards)
union initiatives
knowledge 1
the legal tender act was passed on the 24th of feb 1862, authorising the issuance of $150 million in non interest bearing. the act was similar to confederate example however all individuals banks and governments were required to accept the us notes as lawfully money, unlike confederate example.
(it was declared a legal tender of all debts, public and private with the exception of imports)
until initiatives
analysis 1
this was effective as it stabilised the union economy, preventing extreme inflation as the union only faced 80% of inflation in comparison to the staggering 9000% the confederacy faced.
union initiatives
knowledge 2
the union blockade had started just weeks after the war, the confederacy had little industrialisation and was unable to produce weapons for its armies like the union. however the confederacy did control 2/3 rds of the worlds cotton exports, relying on trade with foreign powers.
union initiatives
analysis 2
if the confederacy was able to keep its ports open they could’ve been able to exchange cotton for weapons and other essential supplies.
the union blockade restricted the confederacy’s use of expediting goods and collecting tariffs as a way of financing the war.
union initiatives
counter analysis
blockade runners stood at a 75% success rate, importing 60% of small arms and 75% of potassium nitrate (essential for gunpowder and cartridges)
union initiatives
evaluation
by the end of the war the confederate economy had collapsed due to the union blockade which resulted in low morale and a lack of essential supplies. the impact extended onto the battlefield with soldiers starving as a lack of food and essential military supplies. therefore this shows how union initiates created a financial burden for the confederacy.
confederate mismanagement
knowledge
meminger enacted the direct tax after in august 19th 1861, imposing a one half percentage tax on real estate, enslaved people and other properties.
confederate mismanagement
analysis
however this was in effect as confederate states had the ability to impose the acts imposition if they payed the required sum in confederate notes.
by 1862, the direct tax act had only raised $17.5 million whilst the confederate budget was over $160 million.
confederate mismanagement
counter analysis
confederacy were able to acquire a loan from a french financer emile erkanger, who provided the confederacy with over $1.4 million from a single loan operation.
confederate mismanagement
evaluation
the direct tax act esssnrtial failed and the delay from the confederate government in implementing more successful measures suggests mismanagement.
historian merton couler finds that the confederacy only raised 1% of revenue in its taxes, indeed the fiscal approach by the confederacy was carried out too cautiously due to the rampant nature of inflation. if the fingers were able to manage their funds for effectively. then they wouldn’t of faced such economic backlash.
problems from the offset
knowledge 1
the south economic state was catostropjix in comparison to the norths, an industrialising estate whereas the south relied on an agrarian system dependant on slave labour. this would hinder the sounds ability to finance a LONG WAR.
by 1860 despite have 35% of the us popuslrion, only produced 10% manufactured output.
problems from the outset
analysis 1
the confederacy had few good reserves and most of its wealth was in land and insisted people.
additionally, they were doomed from the start as they only possessed 30% of national wealth in form of real and personal property, 12% of circulating currency and 21% of banking assets
problems from the outset
knowledge 2
this highlights how the southern wartime economy faced problems as when the secretary of treasury sought to fund the war by increasing direct taxation, he was ignored by the confederate government.
they were reluctant to pay taxes as they weren’t used and could impose a strain on southern loyalty to the confederacy due to the southern traditional lifestyle.
problems form the outset
analysis 2
this is reinforced by donald, holt and baker who state “with souther commerce so meager, and southern hospitality to taxes so strong, the treasury’s options were limited”
moreover the confederate government had no machinery for levying taxes and did constituents had no way of paying them
problems from the offset
counter analysis
they were able to provide $1.544 billion in confederate notes, 3 times the northern greenback amount.
problems from the outset
evaluation
mcpherson — “under the pressures of blockade, invasion, and a flood of paper money, the south’s unbalanced agrarian economy simply couldn’t not produce both the guns and the butter”
the south’s economic reliance on slavsdy led to its failure.
