Inflation In The South "$100 For A Barrel Of Flour"
Economic inflation was a problem in the North, but it was even worse in the South, where the Confederate government attempted to finance the war through bonds and treasury notes. Devaluation of Confederate treasury notes was disastrous. In May 1861, $1.00 in gold cost $1.10 in Richmond; by June 1863, it had risen to $7; by the beginning of 1864, it was up to $20.
Most of the Confederacy's capital was tied up in the nonliquid form of land and slaves. Although the Southern states possessed 30 percent of the nation's wealth, they had only 12 percent of the banking assets. Furthermore, the cotton embargo prevented the South from cashing in on its principal asset. Most Southern planters were in debt. Those Southerners with available cash to invest had to dig deeply to buy Confederate bonds at 8 percent when the rate of inflation had already reached 12 percent a month by the end of 1861.
As the war continued, the Southern government printed treasury notes in ever increasing volumes. In 1862, Confederate Treasury Secretary Christopher G. Memminger warned that the printing of notes was "the most dangerous of all methods of raising money... The large quantity of money in circulation today must produce depreciation and final disaster."
Shortages of supplies forced the inflation rate even higher. In January 1863, a Richmond newspaper printed a schedule showing that the weekly cost to feed a small family had risen from $6.55 in 1860 to $68.25 in 1863. Unfortunately, workers' wages had not kept pace. By March 1863, flour was selling for $100 a barrel, beef was $2 a pound, apples were $25 a bushel, boots cost $50 per pair, and wood was $30 a cord. Because too much Confederate currency was in circulation, any shortage of goods was enough to send prices soaring.
Fascinating Fact: On April 2, 1863, hundreds of women and men participated in the Richmond bread riot, the largest and most famous of a series of protests against shortages and rising prices. It took the participation of Confederate troops and the presence of President Davis himself to quell it.
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