What were some problems that the confederate paper notes had?

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dbello eNotes educator| Certified Educator

The issues of Confederate paper money took place between 1861 and 1865 and although the the value in 1861 was about 90 cents on the dollar, it fell to just over 1 penny on the dollar in 1865.  This economic disaster was combined with a seriously inflated economy. Inflation is defined as a general rise in prices and between 1861 and 1865 the value of confederate money decreased as the cost of goods and services increased. In addition, the individual Confederate states began printing their own currency which in turn further devalued confederate paper notes. The oversupply of these paper notes led to excessive price increases, 'too much paper following too little goods'. Lastly, the Confederate government tried to slow inflation by calling for holders of Confederate treasury notes to exchange them for Confederate bonds. Unfortunately, those who held Confederate treasury notes thought they were strengthening the southern economy. This was the ultimate blow to the southern economy because it turned southern creditors (owners of whatever value was left to the currency) into southern debtors thus destroying the last vestige of value in Confederate currency.