UNIT IV ASSESSMENT (HS 2000).docx - 1 The South was not in...

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1. The South was not in an economic position to wage a successful war. Thoroughly explain why they were not, and judge if you think this had an impact on the overall course of the war. Your answer should include a comparison of the economic situations and motivations of the Northern and Southern armies, and it should describe the South's ability to benefit from a defensive position. One of the reasons the southern states were not economically ready for war is because it did not have a strong banking system, nor did they have banking experts. Not only was their banking system weak, but they also did not have tangible wealth, meaning that their land, slaves, and other things held monetary value, but they could not easily convert their valuables into liquid capital. Although, the South had a weak banking system they still attempted to sale bonds, however it was not very successful due to the limited amount of banks; and the decrease in support for the war as the southerners lost confidence in their ability to win. Bonds were only able to produce roughly 33% of the Confederacy’s income. Additionally, the South did not have a strong tax system. The Confederacy was not in favor of taxing heavily, however most of the taxes they levied were on the lower classes (Rivera, n.d.). Their taxation covered only 5% of their income. The Southern states weren’t having much success with producing income through taxation or the sale of bonds, so they asked for financial assistance from some of the European countries they did trade with; however countries were reluctant to give loans to the Confederacy because of doubts about their survivability. Because the Confederacy was having difficulty financially supporting the war their Secretary of Treasury Christopher Memminger authorized the production of more than 1.5 billion in paper money. This 1.5 billion only covered about two thirds of the wartime

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