The Confederacy Monetary collapse

HalfDime

I was looking something up and came across this on Wikipedia:

As the war progressed, the (Confederacy) currency underwent the depreciation and soaring prices characteristic of inflation. For example, when news of the Confederate defeat at Gettysburg reached the public, the Confederate currency depreciated 20%. Confederate President Jefferson Davis asked private citizens to restore the value of the Confederate dollar by mutually agreeing to sell and buy items only at reduced prices. In October 1863, Confederate States Senator Louis Wigfall of Texas said that a Confederate soldier received $11 per month in pay, which was worth the same as $1 had been worth at the beginning of the war. In September 1864, one Confederate dollar was worth the same as three cents of United States currency. People tried to retain their wealth by buying gold to such an extent that, in Richmond, it was impossible to find someone who would sell their gold. On Christmas Day, 1864, the Confederate dollar's worth had decreased to such an extent that a turkey sold for $155 and a ham for $300. By the war's end, a cake of soap could sell for as much as $50, and an ordinary suit of clothes was $2,700.

---

So we have actually had one releated currency go bust in our history, but the important part is the way it happened and how people reacted. Notice that nobody would sell any gold near the bottom to anyone else, and that prices were so inflated nobody could afford them. It also appears that near the end about two digits was added to the lost value of the currency, so one dollar became the same value as a penny. This is not surprising since other countries that devalued their currencies (Mexico and Russia) had to drop three zeros to stabilize things.

The important lesson is that gold was wanted by those who saw their wealth disappearing daily during the crisis.

PerryHall

@HalfDime said:
I was looking something up and came across this on Wikipedia:

As the war progressed, the (Confederacy) currency underwent the depreciation and soaring prices characteristic of inflation. For example, when news of the Confederate defeat at Gettysburg reached the public, the Confederate currency depreciated 20%. Confederate President Jefferson Davis asked private citizens to restore the value of the Confederate dollar by mutually agreeing to sell and buy items only at reduced prices. In October 1863, Confederate States Senator Louis Wigfall of Texas said that a Confederate soldier received $11 per month in pay, which was worth the same as $1 had been worth at the beginning of the war. In September 1864, one Confederate dollar was worth the same as three cents of United States currency. People tried to retain their wealth by buying gold to such an extent that, in Richmond, it was impossible to find someone who would sell their gold. On Christmas Day, 1864, the Confederate dollar's worth had decreased to such an extent that a turkey sold for $155 and a ham for $300. By the war's end, a cake of soap could sell for as much as $50, and an ordinary suit of clothes was $2,700.

---

So we have actually had one releated currency go bust in our history, but the important part is the way it happened and how people reacted. Notice that nobody would sell any gold near the bottom to anyone else, and that prices were so inflated nobody could afford them. It also appears that near the end about two digits was added to the lost value of the currency, so one dollar became the same value as a penny. This is not surprising since other countries that devalued their currencies (Mexico and Russia) had to drop three zeros to stabilize things.

The important lesson is that gold was wanted by those who saw their wealth disappearing daily during the crisis.

Paper money issued by the Continental Congress during and after the Revolutionary War also went bust for similar reasons.

derryb

Unfortunately the crisis exists today. Only it is controlled as such a slow deterioration that the majority don't realize it or they have been conditioned to accept it as normal. A trip to any grocery store confirms this.

2ndCharter

Paper money issued by the Continental Congress during and after the Revolutionary War also went bust for similar reasons.

Very true - and that's where the expression "Not Worth A Continental" came from.

jmski52

Ancient Rome had the same problem, so did Weimar Germany.

In Rome's case, the problem was caused by war spending and expansionism of the empire resulting in a gradual devaluation/removal of silver from the coinage such that as time went on, the army could no longer be supported. As taxes increased and the quality of life declined, the population of Rome dropped from over 1,000,000 to less than 50,000 as people simply moved away and the Western empire collapsed.

In Weimar's case, war reparations and devastation of their industrial base, plus Allied occupation of the Ruhr industrial region and unemployment of the returning war veterans rendered it impossible for Germany to pay enough to satisfy the terms of the Versailles Treaty. So they hyperinflated the currency.

After the Revolutionary War, the army wanted to invade Congress and kill the members because Congress had reneged on payment of their salaries, but George Washington made an impassioned plea on behalf of the country and the army backed down. That may be one of the reasons that the Constitution specifies that only gold and silver be used as money.

If you don't support and promote a sound monetary system, bad things happen. End the Fed, end fiat currency, end fractional reserve banking. Money printing and electronic money creation is a problem.

PerryHall

@2ndCharter said:
Paper money issued by the Continental Congress during and after the Revolutionary War also went bust for similar reasons.

Very true - and that's where the expression "Not Worth A Continental" came from.

Continental currency was also called "shin plasters". Before there were adhesive bandages, people would take wet paper and cover a minor scrape or wound and the paper would adhere to the wound after the paper dried. They were called "plasters" and once they were used, they became worthless.

TwoSides2aCoin

It used to take $20 to buy a twenty dollar gold piece. Or 20 silver dollars that were .775 of an ounce for .9675 of an ounce of gold. Today it takes approximately 100 of those silver dollars for an ounce of gold. If buying that gold from the U.S. mint , it costs about 120 of those silver dollars. Of course there is the same problem. Nobody wants to exchange or transact with anything but paper or plastic. Enter crypto. The kryptonite of the dollar.

JimTyler

@PerryHall said:

@2ndCharter said:
Paper money issued by the Continental Congress during and after the Revolutionary War also went bust for similar reasons.

Very true - and that's where the expression "Not Worth A Continental" came from.

Continental currency was also called "shin plasters". Before there were adhesive bandages, people would take wet paper and cover a minor scrape or wound and the paper would adhere to the wound after the paper dried. They were called "plasters" and once they were used, they became worthless.

They could have used it for toilet paper.

OnlyGoldIsMoney

General Pickett's explanation for the failure of the Confederate charge on the final day at Gettysburg could well be applied to the failure of confederate paper money:

“I've always thought the Yankees had something to do with it.”

asheland

Interesting thread 👍

GoldFinger1969

@HalfDime said:
So we have actually had one releated currency go bust in our history, but the important part is the way it happened >and how people reacted. Notice that nobody would sell any gold near the bottom to anyone else, and that prices >were so inflated nobody could afford them. It also appears that near the end about two digits was added to the lost >value of the currency, so one dollar became the same value as a penny. This is not surprising since other countries >that devalued their currencies (Mexico and Russia) had to drop three zeros to stabilize things.
The important lesson is that gold was wanted by those who saw their wealth disappearing daily during the crisis.

This happens ALL THE TIME with countries that suffer defeats in wars with their economy in shambles. Usually loss of GDP is close to 90%.

So yeah, if you think the U.S. GDP is going down 90%, this analogy makes sense. Of course gold held its value -- so did a turkey, a bowl of soup, and anything else tangible.