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

Content: 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. At that time, Treasury Secretary Chase suggested raising the unprecedented sum of $320 million to finance the war of rebellion through a combination of the sale of government bonds ($240 million), increased tariffs ($57 million), new taxes or duties ($20 million), and the sale of public lands ($3 million). [ 3] In response, Congress authorized the sale of $250 million worth of bonds and the imposition of an income tax. Both funding mechanisms proved inadequate. The income tax was not scheduled to be collected until mid-1862; and Secretary Chase was able to negotiate an agreement to sell only $150 million worth of bonds to a group of banks in New York, Boston, and Philadelphia. [