Moments of Despair: Suicide, Divorce, and Debt in Civil War Era North Carolina

8. Out of Debt before I Die: The Credit Crisis of the Civil War

Chapter eight Out of Debt before I Die The Credit Crisis of the Civil War T he experience of white North Carolinians during the Civil War fundamentally transformed their conception of debt. Their faith in the sanctity of the debtor-creditor relationship rapidly eroded as wartime economic conditions made predictable credit relations almost impossible. Instead of returning to antebellum practices at the war’s end, white North Carolinians struggled to construct a new conception of debt after 1865, reflecting postbellum economic and social conditions. Black North Carolinians experienced an equally radical reevaluation of the meaning of debt. Emancipation at the war’s conclusion created the potential for many black North Carolinians to participate in white credit networks and to create credit networks and institutions of their own. Although a variety of factors contributed to economic dislocation during the Civil War, unprecedented levels of inflation did more than anything else to undermine white credit networks in North Carolina. Especially after 1863, the proliferation of Confederate paper money, coupled with myriad state currencies and widespread counterfeiting, and shortages of both consumer and agricultural goods resulted in hyperinflation in excess of 9,000 percent.1 By 1865, prices had risen so much that shoes in Wilmington sold for more than $600 and wool overcoats for $1,500. Even in comparatively self-sufficient western counties, prices for foodstuffs increased dramatically , such that over the course of the war, the price of eggs increased 1,666 percent, flour 2,777 percent, and corn more than 3,000 percent.2 Catherine Ann Devereux Edmondston described inflation’s disastrous consequences in her plantation diary.Thirty-eight years old when the Civil War began, Edmondston lived on nearly two thousand acres in Halifax County with her husband, children, and eighty-eight slaves. Her financial credit and debt 160 position insulated her somewhat from the immediate effects of Confederate inflation. By the midpoint of the war, however, even women of Edmondston ’s status could not overlook inflated prices that were well above prewar levels. In April 1863, she remarked that “prices too are ruinous. I do not see how salaried men can live . . . so much has our currency depreciated.” In March 1864, she complained that the price of sugar had reached “$12.50; flour, $300 to 325 per bll; . . . Corn & Meal, $10 per bu; Peas & Beans, $25 to 30 do.” One month later she claimed that Confederate currency had become “now little but waste paper.”3 Much of the inflationary pressure can be attributed to the Confederate government’s excessive printing of treasury notes and other forms of paper currency to finance the war effort. By July 1861, more than one million dollars in Confederate treasury notes circulated. Five months later, the figure had reached thirty million dollars. By the fall of 1862, the Confederate treasury had printed nearly half a billion dollars and by February 1864 nearly one billion dollars.4 Although the Confederate treasury generated the vast majority of inflated currency, state and local governments also contributed to the glut of paper money. North Carolina issued at least $8.5 million in state treasury notes.5 At least a dozen counties and towns in North Carolina also issued notes that served as mediums of exchange.6 To keep pace with the rapid devaluation of treasury notes, North Carolina banks also increased their circulation of bank notes from approximately $5.2 million in 1860 to more than $7.1 million in 1865.7 At its height in 1864, the Confederate monetary expansion totaled more than a billion dollars, some twentytwo times its 1861 level.8 Although the Confederate government attempted at various times to contract its runawaycurrency, particularly in 1864, these measures were largely ineffectual and may have actually increased the velocity of money (and therefore inflation) as note holders attempted to liquidate their holdings.9 Taken together, these myriad currency issues flooded the market, diluting the currencies’ value, and spreading financial uncertainty . This proliferation of paper currency had an immediate inflationary effect on prices. In November 1862, the Newbern Progress reported that “party after party began to issue this trash, until our community has become flooded. . . . Unless some speedly [sic] and summary measures are taken, we soon shall have a brilliant array of worthless currency. . . . As for ourselves, we refuse this kind of stuff.”10 Several months later, the same newspaper noted that “the locusts which persecuted Pharaoh were scarcely The Credit Crisis of the Civil War...