-1865] The currency and speculation. 619 the paper-money of the North gained a foothold. Legislation and popular appeals were helpless against the invasion of the enemies'* currency, which circulated freely and became more and more acceptable as the Confederate currency declined in value. Even the government found it advantageous to handle it, and was not above speculating in it, though the law strictly forbade individuals from dealing in United States currency. The utter collapse of the Confederate currency is further evidenced by the general return to barter, with a view to escaping the hopeless confusion due to the paper medium of exchange, just as the produce loans and taxes in kind had similarly aimed at avoiding the difficulty. Towards the end of the war people generally cut themselves loose from the paper-money system, and bought and sold in kind, just as they had been paying their taxes and subscribing to government loans in produce. The deficiencies of transport and communication produced local differences in the prices of Southern commodities. Moreover, the varying fortunes of the Confederacy and the sinking of its credit pro- duced great fluctuations in those prices as expressed in the paper currency, with a general and rapid upward tendency. On the basis of these violent price movements was developed a form of wild speculation, as uncharacteristic of the non -commercial traditions of the South as it was typical of all periods of deranged currency, such as the years previous to 1873 in the United States, or the period of the French Revolution, or the later experience of Austria and Italy. As a result of the constantly rising prices of goods, it was greatly to the disadvantage of the noteholder to keep his notes. He was forced to buy goods with them in order to avoid loss. Everybody became a speculator. It seemed impossible to lose on the rising market. The rising scale of prices made speculation inevitable; it was not primarily the speculators who made prices rise. However, they were constantly reproached for enhancing prices. It was claimed that they were depressing the value of the currency by their operations, that they were draining specie from the country, and that they were spreading disaffection and discrediting the government. Legis- lation, especially in the individual States, was aimed at curbing specula- tion, but with no results. Speculation in specie was particularly odious to the legislatures ; and futile attempts were made in the South, as in the North, to prevent what was a necessary outcome of the deranged currency. In fact, the government itself was irresistibly driven to speculating in gold. Army and Treasury officers who held public funds in paper-money were easily tempted to take advantage of the fluctuating gold premium and try to enlarge their holdings. The prices of cotton and tobacco were least affected by the re- dundancy of the currency. After the middle of 1861 the price of cotton, reduced to specie value, never rose above the 1860 level, but fell far below it. At the same time the price of cotton in the North and in CH. XIX.
