Title: Government During the War | Boundless US History
Headings: Government During the War
Government During the War
Government During the War
Key Points
Key Terms
Union Governance
Confederate Governance
Union Finances
Key Points
Key Terms
Confederate Finances
Key Points
Key Terms
Union Politics
Key Points
Key Terms
Confederate Politics
Key Points
Key Terms

Content: Annual income of U.S. residents was taxed at a 3 percent rate, while those earning more than $10,000 per year were taxed at a 5 percent rate. An additional means of financing the war was printing money, a strategy also employed in the Confederacy. The Legal Tender Act of 1862 was enacted in February 1862 to issue paper money to finance the war. As the paper money depreciated, it became the subject of controversy, particularly because debts contracted earlier could be paid in this cheaper currency. Apart from instituting new taxes and printing money, a third major source of funding was government bonds. For the first time, bonds in small denominations were sold directly to citizens. Among the Union’s most important war measures was the creation of a system of national banks that provided a sound currency for industrial expansion. These new banks were required to purchase government bonds, directly financing the war. The Greenback bill issued by the United States during the Civil War: The Union printed paper money, which was used in lieu of gold and silver, to finance the war.