Page:Cambridge Modern History Volume 7.djvu/647

 1863-5] Financial devices. 615 and in many districts were bitterly opposed to it. During the six months following April 1, 1864, an amount of food-products was collected from them sufficient to feed 1,000,000 soldiers for one month on the basis of the legally established army ration. The demand for relaxation was answered by the Congress, and the tax amended accord- ingly. In particular, the payment of the tax in money instead of in produce was allowed in exceptional cases ; whereby the burden of the tax was generally lightened, and the farmer enabled to keep his produce and sell it on the rising market. Additional Tax Acts increased the rates in the spring of 1864, and again towards the end of the war. But it is clear that taxation did not weigh very heavily on the Southerners, except upon the producers of food. These bore the chief burden of the war under the financial policy of the Confederacy, fed the armies, and were impoverished thereby. The finances of the individual States and local governments reflected the financial policy of the Confederacy. The collection of taxes was often postponed or even suspended ; and, even where extraordinary war- taxes were levied, the results were meagre. Taxes in kind were attempted in some States. But, in general, the States, counties, and cities followed the example of the central government, and adopted a loan policy early in the war, issuing large amounts of bonds and notes. The latter contributed to the redundancy of the currency, but met a popular demand for more currency in view of the rising scale of prices. Private corporations and individuals, especially railways, manufacturers and large dealers, also met this demand with large issues of notes that circulated widely. Futile efforts were made to prevent their circulation, and also to check the prevalence of counterfeits, the circulation of which was favoured by the poor workmanship of the government notes. The financial history of the Confederate States hinges on the wholesale issue of paper-money and the consequent derangement of prices, which destroyed legitimate business, encouraged wild speculation, and, by undermining the industrial structure of the South, contributed in no small degree to the final downfall. As note issue followed note issue, the paper-money fell rapidly in value. Gold was first quoted at a premium in paper in May, 1861 ; it rose to 20 per cent, by the end of the year. By the end of 1862 a gold dollar was exchanged for three in paper; a year later, for 20; in December, 1864, for nearly 40; and during the closing months of the war, for an ever-increasing amount, the final quotation being perhaps 1000. This gold premium in its upward movement followed in general the increased issues of government notes. Its fluctuations from month to month, however, reflected more accurately the popular feeling in the South as to the probability of a successful issue to the war. The complementary movements of the gold premium in the North offer a similar means of estimating popular sentiment in that quarter. CH. XIX.