According to a chart published in the October 5, 2013 issue of The Economist, 80% of the U.S. Treasury workforce was furloughed during the government shutdown in 2013. However, “Money printers/engravers” were kept hard at it. We sure can relate to that here in 1863. The Confederate Treasury is working unceasingly to print nice new paper currency and increase the money supply.
I missed the following editorial, but I thought it was worth reprinting. Even though the Dispatch seems to be dead set against speculators bidding up the price of commodities, the editors understand, from their reading of the history of the French Revolution, that price controls won’t work . The editorial asserts that CSA Treasury Secretary Christopher Gustavus Memminger was adding twelve million dollars per week to the money supply. This together with rent controls would have disastrous consequences for boarding-house keepers:”Memminger is ripping away at the rate of twelve millions a week — his labors in bringing the currency down to the exact value of the very indifferent paper which expresses it are truly Herculean. In a few months he will bring down the dollar in assignats to one-twentieth, and then the boarding-house keeper will get exactly five dollars for feeding a hungry month a whole month. Many of them are respectable ladies, laboring to support large families. No matter. Let them suffer.”
member of Memminger’s millions (CSA “greyback”of $100 note)
From the Richmond Daily Dispatch October 6, 1863:
Proceedings of the Legislature upon the subject of the currency.
–There is no more pithy and beautiful saying than that of Lord Bolingbroke. “History is philosophy teaching by example.” There is none falser or less applicable to the nature of man. No man ever learned anything but by his own experience, and nations are but assemblages of men.
Our Legislature have before their eyes the example of the most stupendous financial failure that the world ever be held. We mean, of course, that of the French Revolution. They are deliberately adopting, one after the other, all the expedients resorted to by the philosophers of the Constituent Assembly, of the National Assembly, and of the Convention — expedients which aggravated to an inconceivable degree the evils they were proposed to remedy. In the first place, they are about to place a maximum upon prices. The Convention tried that. They first put a maximum upon bread and butchers’ meat. The first consequence was to ruin the butchers and bakers, to fill the stalls with carrion and the bakers’ shops with black bread, which the near prospect of starvation alone could induce any man to eat. In a little time even this bread became so scarce that the crowds assembled at the bakers’ shops fought for it as dogs fight for a bone, and, much bloodshed having been the consequence, the wisdom of the Convention could devise no better remedy than to fix a rope to the door of each shop, and to decree that whoever could get hold of it first should be first served, and that nobody should be served who did not have it in his hand. As it cannot be expected of political philosophers and talking legislators that they should be gifted with so vulgar a quality as common sense, they overlooked the very striking probability that men would fight for the rope as frequently and as hard as they had hitherto fought for the first turn at the bread. It so happened, however, and their ingenuity not being sufficient to carry them farther, they disturbed the mob no farther, but suffered them to go on and fight in peace. To improve the quality of the bread, however, and to remedy the deficiency in the supply of that somewhat necessary article, they put a maximum also upon the products of the earth. This had an effect the contrary to that which was anticipated, for the farmers refused to produce, and the scarcity grew into famine. The guillotine, though sufficiently active, could only bring the horse to the water. It could not make him drink. The farmers would not continue their operations, simply because they were ruined by arbitrary requisitions, and could not. So the Convention took matters into their own hands, and themselves undertook to feed 630,000 people — that being the population of Paris. Our legislators propose to adopt this system most vigorously. –If they will only enact a few hundred portable guillotines into existence, and send them around to enforce the maximum, they will, no doubt, bring Richmond into the same condition that Paris was in 1793. It takes time, however, to ruin a country. We doubt whether this can be done before the winter.
The Convention took all the pensions (boarding houses) into their own hands and put a maximum upon them. This example is sedulously followed by our Legislature. They have determined that board shall not exceed a certain sum per month. This is all right, all patriotic, all just. One hundred dollars in the Memminger assignats will bring just ten dollars in specie or sterling bills. It is perfectly fair to allow no boarding-house keeper to receive a larger sum per month. This is an excellent rule, and its beauties become more and more apparent every month. Memminger is ripping away at the rate of twelve millions a week — his labors in bringing the currency down to the exact value of the very indifferent paper which expresses it are truly Herculean. In a few months he will bring down the dollar in assignats to one-twentieth, and then the boarding-house keeper will get exactly five dollars for feeding a hungry month a whole month. Many of them are respectable ladies, laboring to support large families. No matter. Let them suffer.
In the revolutionary war of ’76’82 the Legislature of Virginia abolished all auction sales by a solemn act. In twelve months after it reinstated them. They found that if producers were not allowed to sell by auction they would not produce, or would not sell at all.–But our legislators spurn examples. In France the Convention stopped all auctions, shut up all retail stores, abolished all corporations, stopped all industry, and took the whole business of the country into their own hands. Let our Legislature try the same thing. The result in France was very encouraging.–Famine, pestilence, bloodshed, and every other evil that was let out of the fabled box of Pandora pervaded the land.
Lastly, the Convention broke up all the banks and all the brokers. They guillotined every man who was convicted of selling assignats for less than their nominal value in gold. This example our Legislature could not overlook. They are devising high penalties for selling gold at a higher price than Memminger assignats. Penalties for traffic in gold have heretofore been prescribed by nearly every civilized country under the sun, and they have invariably operated as premia for the exportation of gold.
All this time the “infernal machine” is operating with the most inexorable energy. Our legislators do not reflect at all that the depreciation of the currency is the main cause of the nominal high prices, and that inflation is the cause of the depreciation.
P. S.–The foregoing article was written several days since. Its appearance has been delayed by the heavy pressure upon our limited space. The leader in yesterday’s Enquirer was of similar purport to this; yet neither was written with any knowledge of the existence of the other. The simple facts of history leading to irresistible conclusions, readily explain the coincidence.
According to Wikipedia the war forced Secretary Memminger to change his approach to funding the Confederacy:
When Jefferson Davis formed his first cabinet, Memminger was chosen as Secretary of the Treasury on February 21, 1861. It was a difficult task, in view of the financial challenges facing the Confederacy. Memminger attempted to finance the government initially via bonds and tariffs (and confiscation of gold from the United States Mint in New Orleans), but soon found himself forced to more extreme measures such as income taxation and fiat currency. Memminger had been a supporter of hard currency before the war, but found himself issuing increasingly devalued paper money, which by war’s end was worth less than two percent of its face value in gold.
