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

Content: borrowing money, printing money, and raising money through taxation. From 1861 to 1865, both the USA and the CSA used each of these mechanisms, although in different and varying proportions. Historical sources differ a bit on the exact percentages of their wartime expenses those territories raised from various sources. However, the following table incorporates several estimates from scholars using different assumptions about inflation, currency values, and definitions. In many ways, describing these financing activities reveals a tale of two countries. Financing the Union
Borrowing Money
Prior to 1861, the USA relied on tariffs and custom duties for most of its revenue. A strong sense against accumulating debt characterized administrations from Thomas Jefferson to Franklin Pierce. Only in times of war did the federal government resort to selling bonds or notes to bankers, brokers, and their large customers. When James Buchanan became President in March 1857, the federal debt level was a modest $28 million. The financial panic that gripped the nation later that year led to a sharp decline in revenue from tariffs and duties, and required the Treasury to issue large amounts of bonds and notes to cover the shortfall.