Title: Financing the Civil War - Essential Civil War Curriculum
Headings: Financing the Civil War
Financing the Civil War
by Michael A. Martorelli

Content: President Buchanan also had to rely on borrowed funds to pay for his initiatives involving Cuba and the Mormon territory, as well as the expansions of the Navy and the postal service. Between 1857 and 1861, the Treasury issued more than $142 million worth of bonds and notes; during those years, the federal government ran a cumulative deficit of more than $76 million. [ 1]
In February and March 1861, with secession already in process, the prospects of civil war growing, and the Treasury’s cash position at a very low level, Congress passed two separate bills authorizing the issuance of $35 million worth of government bonds. When Abraham Lincoln took the presidential oath in March 1861, the federal debt stood at the unusually high level of almost $77 million. In the early days of the Lincoln administration, the appetite for any new debt was quite low; the normal assortment of banker and broker subscribers purchased only $16 million (45%) of the ten-year and twenty-year bonds just mentioned. [ 2] During the next few months, increased tariffs and another modest note sale added about $15 million to the Treasury. However, the initial costs of expanding the Federal Army and Navy to meet the overt belligerence of the CSA totaled more than $24 million. In order to secure Congressional approval of the financing needed to prosecute the war, President Lincoln called that body into special session in July 1861.