What were the 3 ways both north and south planned on paying for the war?

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mkoren | Middle School Teacher | (Level 3) Senior Educator

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The North and the South spent a lot of money fighting the Civil War.  Both sides levied new taxes, borrowed money, and printed paper money to pay for the war.  To borrow money, both sides issued bonds.  The North borrowed over two billion dollars while the South borrowed more than 700 million dollars.  Borrowing was an important method to pay for the war.  It was during the Civil War that the concept of an income tax was introduced.  This tax on people's incomes raised money to pay for the war effort.  Finally, both the North and South printed paper money to pay for the war.  In the North, the Legal Tender Act was passed in 1862 which allowed the government to print paper money.  In the North, this money was called Greenbacks.  Because both sides just printed paper money, inflation was a big issue.  It was a much bigger issue for the South which experienced 9000 percent inflation by the end of the war compared to 80 percent inflation in the North.  Both sides developed ways to pay for the cost of the Civil War.

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