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With no revenue from taxation, and with the disastrous effects of the wholesale issue of paper money before it, the Confederate government made every effort to borrow money by the issue of bonds. The initial 15-million loan was soon followed by an issue of one hundred millions in bonds, which it was, however, difficult to place. This was followed by even larger loans. The bonds rapidly fell in value, and were quoted during the war at approximately the value of the paper money, in which medium they were paid for by subscribers. To avoid this circumstance a system of produce loans was devised by which the bonds were subscribed for in cotton, tobacco and food products. This policy was subsequently enlarged, and enabled the government to secure at least a part of the armies’ food supplies. But the bulk of the subscriptions for these bonds was made in cotton, for which the planters were thus enabled to find a market.

It was hoped to keep the currency within bounds by holders of paper money exchanging it for bonds, which the law allowed and encouraged, but as notes and bonds fell in value simultaneously, there was no inducement for holders to make that exchange. On the contrary, a note-holder had an advantage over a bond-holder, in that he could use his currency for speculation or for purchases in general. In the autumn of 1862 the Confederate law attempted to compel note-holders to fund their notes in bonds, in order thereby to reduce the redundancy of the currency and lower prices. Disappointed in the result of this legislation, the Congress, in February 1864, went much farther in the same direction by passing a law requiring note-holders to fund their notes before a certain date, after which notes would be taxed a third or more of their face value. This drastic measure was accepted as meaning a partial repudiation of the Confederate debt, and though it for the time reduced the currency outstanding and lowered prices, it wrecked the government’s credit, and made it impossible for the Treasury to float any more loans. During the last months of the war the Treasury led a most precarious existence, and its actual operations can only be surmised.

During the entire war the notion that the South possessed a most efficient engine of war in its monopoly of cotton buoyed up the hopes of the Southerners. The government strained every effort to secure recognition of the Confederacy as a nation by the great powers of Europe. It also more successfully secured foreigners’ financial recognition of the South by effecting a foreign loan based on cotton. This favourite notion was put into practice in the spring of 1863. The French banking house of Erlanger & Company undertook to float a loan of £3,000,000, redeemable after the war in cotton at the rate of sixpence a pound. As cotton at the time was selling at nearly four times that figure and would presumably be quoted far above sixpence long after the establishment of peace, the bonds offered strong attractions to those speculatively inclined and in sympathy with the Southern cause. The placing of the bonds in Europe was mismanaged by the Confederate agents, but notwithstanding a considerable sum was secured from the public and used for the purchase of naval and military stores. At the close of the war these foreign bonds were ignored by the re-established Federal authorities like all the other bonds of the Confederate government. Compared with the partial success of this financial recognition by Europe, the South conspicuously failed in securing the political recognition of the Confederate government. Early in 1861 W. L. Yancey and others went to Europe to enlist the sympathy of foreign governments in the Southern cause. J. M. Mason and John Slidell followed early in 1862, after a short detention by the Federal government, which had removed them from a British vessel en route to Europe. Though these Confederate commissioners made every effort to induce foreign governments, especially those of Great Britain and France, to recognize the Confederacy, they were foiled in their efforts, largely by the skill and persistence of the Federal minister in London, Charles Francis Adams.

The political history of the Confederate States is the culmination of an inevitable conflict, the beginnings of which are found in the earlier history of the Union. The financial and industrial history of the South during 1861 to 1865 is the story of a struggle with overwhelming odds. The mistakes of the Confederate government’s policy are overshadowed by its desperate efforts to maintain itself against the irresistible attacks of the North. In making that effort the South sacrificed everything, and emerged from the war a financial and industrial wreck.

Bibliography.Confederate Archives in the War Department (Washington, unpublished documents and letters); Journal of the Congress of the C.S.A., 1861–1865 (reprinted by the U.S. Government, 1904); J. C. Schwab, The Confederate States of America (New York, 1901; a financial and industrial history of the South, 1861–1865; contains a full bibliography); Southern newspaper files; John Bigelow, France and the Confederate Navy (New York, 1888); J. D. Bulloch, Secret Service of the Confederate States in Europe (London, 1883; New York, 1884); H. D. Capers, Life of C. G. Memminger (Richmond, 1893); Jefferson Davis, Rise and Fall of the Confederate Government (New York, 1881); De Bow’s Review (New Orleans, 1860–1864); J. L. M. Curry, Civil History of the Government of the Confederate States (Richmond, 1901); Herbert Fielder, Life of Joseph E. Brown (Springfield, Mass., 1883); J. B. Jones, Rebel War Clerk’s Diary (Philadelphia, 1866); E. McPherson, Political History of the United States (4th ed., Washington, 1882; contains many important documents); Official Records: Compilation of the War of the Rebellion (Washington, 3rd series, 1880–1900; contains a great mass of Southern official correspondence); E. A. Pollard, various books on the Civil War; J. F. Rhodes, History of the United States, especially volumes iii.-v. (New York, 1898–1904); Statutes of the Provisional Government of the C.S.A. (Richmond, 1864); Statutes at Large of the C.S.A., First Congress (Richmond, 1862); Public Laws of the C.S.A., 1863–1864 (Richmond, 1864); Statutes at Large of the C.S.A., Second Congress (Richmond, 1864); Documents of the various state governments.  (J. C. Sc.) 

CONFEDERATION (Fr. confédération, Lat. confoederatio, from foedus, a league, foederare, to form a league), primarily any league, or union of people, or bodies of people. The term in modern political use is generally confined to a permanent union of sovereign states, for certain common purposes, e.g. the German Confederation (Bund), established by the congress of Vienna in 1815, and the Confederation of the Rhine (Rheinbund), a league of certain German states under the protection of Napoleon (1806–1813). The alliance of the Great Powers by which Europe was governed after 1815 was sometimes, especially by the emperor Alexander I., called the “Confederation of Europe”; but this expressed rather a pious aspiration than the actual state of affairs. The distinction between Confederation and Federation (see Federal Government), synonymous in their origin, has been developed in the political terminology of the United States. Up to 1789 these were a Confederation; then the word Federation, or Federal Republic, was introduced as implying closer union. This distinction was emphasized during the Civil War between North and South, the seceding states forming a Confederation (Confederate States of America) in opposition to the Federal Union. Confederation thus comes to mean a union of sovereign states in which the stress is laid on the sovereign independence of each constituent body (cf. the German Staatenbund); Federation implies a union of states in which the stress is laid on the supremacy of the common government (Ger. Bundesstaat). The distinction is, however, by no means universally observed.

The variant “Confederacy,” derived through the Anglo-French confederacie, and meaning generally a league or union, whether of states or individuals, was applied in America in the sense of Confederation to the seceding southern states (see above). In its political sense, however, confederacy has generally come to mean rather a temporary league of independent states for certain purposes. As applied to individuals, while “confederation” is used of certain open unions of people for political or other purposes (e.g. the Miners’ Confederation), “confederacy” —from its obsolete legal sense of conspiracy—has come frequently to imply a secret bond, a combination for illicit purposes, or of persons whose identity is not disclosed.

CONFERENCE, a bringing together (Lat. conferre) for the purpose of discussion, particularly a meeting of members of one or more societies, of representatives of legislative or other bodies, or of different states. Such are the meetings between members of the upper and lower chambers of the British parliament, or