Confederate reliance on printed money caused runaway inflation

Evidence

The Confederate government, on the other hand, bungled its finances. The Provisional Congress, in August 1861, imposed a direct tax of one-​half of one percent on all property (except Confederate bonds and money). The states were supposed to collect the tax themselves and pay it over to the Confederate government. This concession proved to be a disaster; rather than collect the money from the public, the states issued treasury notes or required local banks to furnish the money. The Confederate treasury became “the greatest money factory in the world.” It created “wealth out of nothing” by “magic revolutions of the printing press.” The natural result was wild inflation. The notes “drove prices to fantastic heights. Counterfeiting … ran riot. Faith in the government vanished.” The Confederacy never really undid this early mistake. — Lawrence M. Friedman, A History of American Law, 3217

Categorization

• XREF: connects to: French reliance on German reparations forced interest-driven deficits and inflation. — Mark Blyth, Austerity: The History of a Dangerous…, 546

Broader Connections

• French reliance on German reparations forced interest-driven deficits and inflation. #corroborates (0.75) — Mark Blyth, Austerity, 546