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Financial Strategies of the Confederacy vs. Union Governments’ Economic Choices Essay

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While explaining the economic reality of the Confederacy in times of the Civil War, some fundamentals on the financial strategies of the Confederate and Union governments must be considered.

One of the major points, which is to be taken into account, is the Confederacy’s inflation financing. Thus, one is to keep in mind that there is a direct interdependence between the economic strategies of the Confederacy and their military failure.

On the other hand, effective financial choices of the Union are mostly associated with the so-called policy of combination. In other words, summing up loans, taxes and notes determined the success of Union governments’ military engagements.

The Thesis Statement

The analysis of the economic policy of the Confederacy in times of the Civil War gives us an opportunity to understand how the government’s ability to secure resources to mobilize military forces influences the success of military engagement.

The Body

Raising Funds As The Government’s Most Important Step To Succeed

As far as Southerners’ economic choices were mostly conditional, one can probably conclude that the major mistake of the Confederacy was that they failed in aggrandizement of federal power, when such opportunity was available.

Taking into account the fact that the Confederate governments were mostly focused on states’ rights and slavery, one can suppose that their financial strategies were not static.

It seems to be obvious that the government’s ability to raise funds, in order to support military strategies development as well as to reinforce administrative capabilities is extremely important for the war effort.

Of course, political incentives cannot be neglected, as they also influence financial choices.

The Economic Choices Of The Confederacy And The Union

The political basis of the Confederacy and the Union concerning war financing gives us an opportunity to trace back the interdependence between economic choices and military outcomes.

One of the most important issues, which cannot be ignored, is that “the key decision-makers on both sides knew each other well from previous experience in Washington; and the military and financial strategies that had been employed throughout the ante-bellum period were common knowledge” (Razaghian 2).

In other words, one can make a conclusion that the economic policies of the both sides had to be somewhat similar. In reality, the assumption, however, does not make any sense.

It is necessary to remember that the success of the Union can be explained by the government’s right decision to adopt long-term financial strategies.

The Confederacy, in their turn, lost time in effortless contemplation. It is a well-known fact that the Confederate government decided to leverage tax power, when such actions were not already necessary.

According to Razaghian, the major mistake of the Confederacy was that “they relied on loans and non-interest bearing notes” (3), while the success of the North can be explained by its government’s decision to collect taxes.

The Importance Of The Key Political Interpretations

Generally, there are many opinions on the reasons of the Confederacy’s failure. For instance, the viewpoint that “the Confederacy lost because of disagreements between Jeffersonian governors and an increasingly centralized regime in Richmond” (Beringer et al. par. 2) is criticized by many historians, as the key political interpretations seems to be omitted.

Lincoln’s Emancipation Proclamation And Its Meaning

Lincoln’s Emancipation Proclamation is also to be highlighted, as it increased the chances of Union military victory.

Thus, one is to keep in mind that the impact of proclamation was mostly positive, as the Union gained the support of the masses, including the African-American population.

Moreover, it should also be pointed out that the inhaitants of both unoccupied and occupied territories provided the North with support.

The Demands Of The War

So, taking into consideration the financial policies of the sides, one can conclude that taxation can be regarded as the most appropriate strategy to succeed. However, there is a need to state that the demands of the war must be controlled.

In other words, as far as the demands can be changed, the government is to react immediately. Thus, new demands require new financial policies to be adopted. For the Confederacy, the understanding that taxes had to be increased came too late.

Thus, one of the members of the Confederate government stated: “We have been compelled to issue a large quantity of Treasury notes, when, perhaps, it would have been more to the true interest of the country to have resorted at first to high taxation” (“Southern Historical Society Papers” 458-459).

The Conclusion

Finally, it is necessary to point out that irrational and short-term economic choices of the Confederacy led to their failure in the Civil War.

Immediate mobilization of military resources and reconsideration of certain economic requirements, however, cannot be regarded to be saving, as the North’s resources were more powerful.

If the Confederate governments relied on taxation in time, the only effect they could achieve is to limit the resources of the North; although military success could not been gained anyway.

It is the interdependence between political incentives and economic choices, which is of primary importance; as the incentives determine military outcomes.

Works Cited

Beringer, Richard, Herman, Hattaway, Archer, Jones and William N. Still, Jr. Why the South Lost the Civil War. Athens: The University of Georgia Press, 1986. Print.

Razaghian, Rose. Financing the Civil War: The Confederacy’s Financial Strategy, 2004.

“Southern Historical Society Papers.” New Number Series, 13 (1958):51. Print.

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