11 DEC 2015
Both sides in the American Civil War experienced a degree of parity in all characteristics of the Western way of war. However the Union was able to maximize its system of war finance while the Confederacy was not. This fact of the Federal government’s financial expertise granted the Union an asymmetric advantage over the Confederacy which contributed significantly to the Union’s final victory.
Union and Confederate forces alike employed four aspects of the Western way of war throughout the conflict without either side gaining more than a local advantage over the other. Civil War armies were infantry-centric and the preferred weapon of both sides, ...view middle of the document...
Despite the defensive strategy favored by the Confederate government, Robert E. Lee’s Army of Northern Virginia conducted two invasions of Union territory during the war. The relentless attacks that characterized Grant’s Overland Campaign in Virginia in 1864 are a powerful example of the aggressive military tradition. The efforts of Grant’s Soldiers during that time ultimately forced their opponents into defensive positions but did not destroy them, just as Lee’s invasions of the North failed to produce the decisions that he sought. Neither side could be said to have gained an asymmetric advantage over the other through the aggressive tradition.
Both sides embraced innovation. The battle of the C.S.S. Virginia and the U.S.S. Monitor at Hampton Roads, Virginia in 1862 is the clearest example of how innovative technologies were employed by both combatants, yet failed to yield a decisive advantage to either one. Steam engines, telegraph lines, repeating rifles, Gatling guns and submarines all represent technological innovations used by one or both sides during the war. Innovation produced local advantages, but did not confer a lasting asymmetric advantage to either side.
Both sides took similar steps to finance the war. Only the Union demonstrated a clear, asymmetric advantage through effective and multifaceted techniques of war finance.
Each government attempted to raise money through tariffs and direct taxation. The efforts of the Confederate government were ineffective. Revenue from tariffs was negligible over the course of the war and their direct taxation exempted their most lucrative sources of revenue, land and slaves, until February of 1864. The Federal government increased the lax tariff rates of the previous decade with the Morill Act of 1862. They also introduced the first federal income tax in history in 1861 and followed it with the Internal Revenue Act of 1862. That Act perpetuated the graduated income tax and also introduced taxes on commodities as well as a variety of other taxes and fees.
Both governments issued bonds to finance the war. The Confederate government experienced some success with their initial issue in 1861 largely due to early-war enthusiasm. Bond sales subsequent to that, however, languished due to the less-developed and cash-poor economy of the agrarian South. The Federal government experienced significant success from bond sales. Salmon P. Chase, the Secretary of the Treasury, assigned the task to banker Jay Cooke.
Mr. Cooke succeeded in selling bonds directly to citizens through a network of agents. Ultimately the Federal government succeeded in raising approximately 65% of its total revenue through bond sales.2
Both governments ultimately resorted to fiat money to cover their expenses. The Confederate government, however, failed to make their money compulsory legal tender. Nor did it prevent states, counties and even cities from printing their own notes. The end result was devalued paper...