Crisis in Confederate Currency

Christopher Memminger Confederate Secretary of the  Treasury

            In the great Civil War era novel, Gone With The Wind, Scarlett O’Hara found her hopes of paying Reconstruction taxes quickly dashed when she realized that her father converted all of his money into Confederate bonds. The movie illustrated the historical fact that from the start of the Civil War, the Confederacy struggled with inflation and the lack of a sound currency. 

            Christopher Gustavus Memminger inherited the hopeless task of organizing the Confederate treasury.  Born in Nayhingen, Wurttemberg, Germany on January 9, 1803, his mother and grandparents immigrated to Charleston, South Carolina, shortly after the death of his father.  Orphaned at the age of four, Memminger was adopted five years later by Thomas Bennett, Jr., who became governor of the state.  Educated as a lawyer, Memminger entered politics and served as a member of the South Carolina state legislature from 1836 until 1852, and again from 1854 until 1860.  During his tenure in the legislature, he acquired a reputation as a reformer of the state’s educational system.  As a delegate to the Confederate Provincial Congress, he was responsible for writing the constitution of the Confederate States of America.  He also served as Secretary of the Treasury between February 21, 1861 and July 18, 1864.  Memminger resigned the post amid personal criticism for the Confederacy’s failing economy. 

            Although the Confederacy took possession of the federal mints at New Orleans, Dahlonega, and Charlotte, none of these facilities had any significant supply of bullion.  Therefore, no coins were minted for general circulation.  There was one attempt to issue a 50-cent piece, but only four coins were actually struck. According to numismatic historian, Douglas B. Ball, “The four coins were distributed to various officials.  Three are now in museums and the fourth, the piece captured with President Jefferson Davis’s baggage in 1865, is now worth approximately $500,000.00.”

The inability of the Confederacy to coin money was compounded by hoarding of coins and massive bank failures immediately following secession.  Davis, Memminger, and the government immediately turned to issuing paper money.  In order to attempt to curtail inflation resulting from fiat currency, the government attempted to fix official prices.  As Fred Reinfeld noted, “…but these efforts failed miserably.  Thus the ‘fixed’ price of a pound of bacon rose from $1.00 a pound (a high price to begin with, for those days) in May, 1863, to $4.00 in March, 1865.  During the same period the ‘fixed’ price of a bushel of beans skyrocketed from $4.00 to $30.00.”  The result was an inflationary trap.  The more paper money the Confederacy issued, the more prices rose; and the more prices rose, the greater was the pressure to print more money.

Estimates as to how much paper currency was issued by the South vary from one to two billion dollars.  Perhaps the most reliable source on this subject was compiled by Douglas B. Ball, who analyzed the various issues of bonds and currency.  He set the issue amount at more than $1,563.540.  However, this figure did not include bonds and currency issues by the individual states, counties, cities, and private companies.  Reinfeld also noted that the Cherokee Nation issued its own money, which was redeemable in Confederate currency. 

To cover the cost of the war and their currency issues, the South optimistically hoped to secure European loans and finance the conflict by the sale of cotton abroad.  This plan may have worked had it not been for the efficiency of the Union blockade.

In the early years of the war, Cuba served as a market for Southern cotton in exchange for durable goods.  James Cortada addressed the issue of Spanish neutrality in an article for the Encyclopedia of the Confederacy.  “The Union seized dozens of blockade runners in Cuban waters, which created diplomatic tensions between Spain and the United States.”  The source also noted that by the fall of 1863 it was no longer common to see dozens of Confederate ships in Havana Harbor.   

There were attempts to curb inflation but these were unsuccessful.  W. Buck Yearns indicated, “In 1863 Congress tried to stem inflation by forced funding.  On March 23 it ordered a gradual reduction of the interest rate of bonds into which notes could be funded; after a certain date they would be acceptable only for government dues.  In the same act, however, Congress authorized Memminger to issue $50 million of notes a month.  Meanwhile the rapid inflation made bonds an increasingly poor investment.”

Reinfeld also noted that “the financial difficulties of the South were aggravated by the manufacture of bogus Confederate notes in the North which were subsequently passed into Southern territory by people who crossed the lines.  Such notes were advertised openly.  One Philadelphia counterfeiter, for example, publicly offered a hundred counterfeit $20 Confederate bonds for a total of 50 cents!   He concluded his advertisement with an announcement that he would have counterfeit $100 Confederate note available for sale the following week.”  As a deterrent, the Confederate government made counterfeiting a capital crime, punishable by death.  

Samuel Upham Philadelphia engraver

There seems to be indication, however, that Samuel C. Upham of Philadelphia, who was credited with being the most famous of all the counterfeiters of Confederate currency, never considered himself a counterfeiter.  As Southern Comfort: Civil War History and Confederate Currency noted, “He advertised his lithographed notes as ‘facsimiles’ and ‘mementos of the rebellion.’  On the margin of each and every note was printed ‘Fac-Simile Confederate notes sold, wholesale or retail. by S. C. Upham, 403 Chestnut Street, Phila.’”  Also, in this same account, the author contended that Upham advertised these curiosities in several of the most widely circulated papers in the Union.  According to Upham, Senator Foote gave in a speech in Richmond, whereby Foote accused him of doing “more to injure the Confederate cause than General McClellan and his army.” Upham’s claim may not have been such an idle boast, since many Confederate soldiers toward the end of the war refused to accept payment in currency unless they were paid in Union greenbacks.

Douglas B. Ball rendered exceptional description of Confederate currency, in which he noted that the higher denominations were printed using a copper plate and had green backs, while the $20 bills and lower denominations were lithographed with blue backs.  Ball also indicated, “The $2 and $1 notes had no backs because they were not worth copying.” 

The artwork on the currency tended to be rather detailed and artistic, and the face of the bills honored prominent persons in the Confederacy.  Portraits of Mrs. Lucy H. Pickens, the wife of South Carolina’s governor, and Secretary of War George Wythe Randolph appeared on $100 notes; while President Davis’ picture graced the $50 note, Vice President Alexander H. Stephens was portrayed on the $20 bill, and a former secretary of state Robert M. T. Hunter appeared on the $10 note.  Lower denominations honored Treasury Secretary Christopher G. Memminger ($5), Secretary of State Judah P. Benjamin ($2) and Alabama Senator Clement C. Clay ($1).  To compensate for the lack of coinage, the Richmond government also issued a paper 50-cent note with the image of President Davis.  It was not until February 1864 that a $500 note with the image of Stonewall Jackson was added.

In spite of the fact that the Richmond government was overhauling its currency in 1864, Texas realized that Confederate money was still virtually worthless, and discontinued the use of it as legal tender.  As the May 11, 1864 address of Governor Pendleton Murrah noted, “Congress owned the fact that the confederate currency was almost worthless, and provided for its withdrawal from circulation.  The act was bold, if not approved by wisdom and good faith.  It was an act of financial destruction, if not of financial skill.  They created, they destroyed.  I have no comments to make.  I shall deal with the legislation of congress as it affects the finances of the State.”  Later in the same speech, he added, “The State, so soon as the necessary measures can be put in operation, should cease to pay out this currency.  After the first of July, if it can be avoided, no payment should be made with it.  Whether the old can be exchanged for the new issue, and taxes gathered in the new, with sufficient expedition to meet the wants of the government, is a matter for your immediate inquiry.” 

Long before the end of the war, the Confederacy was on its last financial leg.  According to Reinfeld, when the Confederacy collapsed, its coffers consisted only of $85,000 in gold, $36,000 in silver coin, and $700,000 in Confederate currency.