How the North Financed the Civil War

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  • How the North Finance the Civil War
    • Already had an established treasury and gold reserves
    • System nearly collapsed over winter of 1861-1862
    • Chase raised loans and issued bonds
      • 1 million Northerners bought shares in national debt
    • 2/3 war funding came from loans and bonds, 1/5 from taxes
    • 1861 - first income tax of 3% on wages over $800
    • Internal Revenue Act (taxed everything) raised 10x more than income tax
    • Congress approved inflationary monetary policy and printed $150 million in bonds (Legal Tender Act)
      • Act provided treasury with a way to repay bills, restoring investor confidence and selling 500 million more bonds
    • 'Greenback' notes worth $431 million issued
    • 1863 and 1864 National banking acts pumped paper money into systems
      • 10% tax on this ensured North was not overrun with paper money
    • Inflation over the was was 80%


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