The Confederacy suffered uncontrolled, runaway inflation that exceeded 9,000 percent. The fundamental causes of this profound economic malady were structural and national in scope. To the extent that individuals were responsible, the members of the Confederate Congress deserved the most blame. Ignoring the recommendations of the secretary of the treasury, Christopher G. Memminger, congressmen refused in 1861 to levy taxes to meet the government's expenses. Later legislation did little to fix the situation, and the Confederacy ultimately raised only a few percentage points of its revenue through taxation. This was a public policy that guaranteed ruinous inflation. In addition, the South had never been economically independent, and in war the increasing Union blockade of the Atlantic coast and, eventually, the Mississippi River, produced painful shortages of many goods. Such shortages contributed to the increase in prices, as did the physical destruction brought by the war.
As the Examiner's language shows, anti-Semitism and other prejudices increased the negative impact of discussions about "speculation." As people struggled economically, they turned on each other and nourished hostile suspicions. "No man will stand by and see his children cry for bread while his neighbor's garner is full," observed a Staunton editor. He could have added that such a man would denounce his neighbor.
Accusations of selfishness and lack of patriotism flourished. One of the largest public outcries in Virginia occurred in 1864. The commissioners of impressment, bowing to pressure from large farmers, "arbitrarily multiplied by six" the prices to be paid by the government for several important crops. Public protests quickly occurred throughout the state, with a Lynchburg paper blasting this decision as "The Road to Ruin" and others denouncing its effects on "the non producers, and middle classes." Eventually this increase was rescinded. Going beyond protest and verbal denunciations, arsonists in Lynchburg set fire to several businesses that they believed were profiting from speculation.
The suffering caused by runaway inflation led to widespread demands for action. Many ordinary Virginians, who valued help more than states' rights theories, urged the government to step in and set prices. In February 1862 the Confederate War Department seized corn from distillers in Richmond, and Congressman Fayette McMullen reported to Virginia governor John Letcher that the public reaction was overwhelmingly enthusiastic. Confederate general John Winder's attempts to regulate prices in Richmond through martial law proved unsuccessful, but large segments of the public approved and applauded his effort, calling for more actions of the same type.
Neither the Confederate government nor the Virginia state government took vigorous action against inflation, speculation, or extortion. Given the fundamental causes of inflation, any laws almost surely would have had limited effect. But Virginians continued to denounce perceived speculators throughout the war, and their expressed resentments were one of the most visible signs of suffering and struggle in daily economic life.
Cite This Entry
- APA Citation:
Escott, P. Speculation during the Civil War. (2018, February 22). In Encyclopedia Virginia. Retrieved from http://www.EncyclopediaVirginia.org/Speculation_During_the_Civil_War.
- MLA Citation:
Escott, Paul. "Speculation during the Civil War." Encyclopedia Virginia. Virginia Humanities, 22 Feb. 2018. Web. READ_DATE.
First published: May 14, 2009 | Last modified: February 22, 2018
Contributed by Paul Escott, Reynolds Professor of History at Wake Forest University. His books include After Secession (1978) and Military Necessity (2006).