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Was watching "The Ascent of Money" on PBS a couple of nights ago. Part of their discussion involved how the south was and was not able to finance the war. The CSA tried issuing unsecured bonds. No one was interested; too risky. Then the CSA backed those bonds with cotton as security. Now everyone was interested. When the CSA imposed a cotton embargo, the value of the bonds continued to climb as cotton became more scarce.

But cotton-as-security was only a good plan as long as the creditors had a reasonable chance of laying hands on the cotton. When New Orleans fell to the USA, the finance markets saw the possibility of doing so go down the drain. The value of the bonds collapsed then. Interesting stuff.

Chaplain Lovejoy wrote:Was watching "The Ascent of Money" on PBS a couple of nights ago. Part of their discussion involved how the south was and was not able to finance the war. The CSA tried issuing unsecured bonds. No one was interested; too risky. Then the CSA backed those bonds with cotton as security. Now everyone was interested. When the CSA imposed a cotton embargo, the value of the bonds continued to climb as cotton became more scarce.

But cotton-as-security was only a good plan as long as the creditors had a reasonable chance of laying hands on the cotton. When New Orleans fell to the USA, the finance markets saw the possibility of doing so go down the drain. The value of the bonds collapsed then. Interesting stuff.

I saw this show floating around on PBS which episode had this in it? So I can DVR it.

Sorry, can't help. I just stumbled across it while channel surfing.

Actually the value of the Cotton Bonds along with other CSA bonds on the European exhanges only really collapsed after the defeat at Gettysburg when it became obvious to even the most optimistic investor that the south was not going to win the war.

As long as the South might win the war then the bonds would keep some value, indeed if Lee had won at Gettysburg who knows what exchange speculators might have done to the value of the bonds.

I would recommend reading Nial Ferguson's 'The Ascent of Money'.

Brochgale wrote:Actually the value of the Cotton Bonds along with other CSA bonds on the European exhanges only really collapsed after the defeat at Gettysburg when it became obvious to even the most optimistic investor that the south was not going to win the war.

As long as the South might win the war then the bonds would keep some value, indeed if Lee had won at Gettysburg who knows what exchange speculators might have done to the value of the bonds.

Hmmm...that means the TV program was wrong in saying the collapse happened as a result of the fall of New Orleans. Faith shattered--I'll never trust TV again!

Brochgale wrote:Actually the value of the Cotton Bonds along with other CSA bonds on the European exhanges only really collapsed after the defeat at Gettysburg when it became obvious to even the most optimistic investor that the south was not going to win the war.

As long as the South might win the war then the bonds would keep some value, indeed if Lee had won at Gettysburg who knows what exchange speculators might have done to the value of the bonds.

The attached link presents the history of the Confederate financing. Figure 5 gives the values of CSA Cotton and Junk Bonds over time during the ACW. You are correct in that the bond price did collapse to £36 after Gettysburg and Vicksburg. However, the drop was only temporary as the price rose to almost £90 by August 1864. It was the loss of Atlanta that knocked the bond market and then only after February 1865.

http://eh.net/encyclopedia/article/weidenmier.finance.confederacy.us

Fascinating source! Worthy of including in the economic model of AACW2.

Le Ricain wrote:The attached link presents the history of the Confederate financing. Figure 5 gives the values of CSA Cotton and Junk Bonds over time during the ACW. You are correct in that the bond price did collapse to £36 after Gettysburg and Vicksburg. However, the drop was only temporary as the price rose to almost £90 by August 1864. It was the loss of Atlanta that knocked the bond market and then only after February 1865.

http://eh.net/encyclopedia/article/weidenmier.finance.confederacy.us

I stand corrected and by an Aberdonian no less I was familiar with that article from previous reading - it had escaped my memory. But Chaplain Lovejoy is correct - dont trust TV.

Also it appears that no account is given to the effects of operation Anaconda on Bond prices as I assume any cotton or other Southern products that beat the blockade would have been traded up front for weapons etc?? Or more than likely luxury products that only the few in the South could afford and thus provide some generous profits for any blockade runners?

I am always suspicious of any Stats produced by ant Economic Historians?

Oh and before I go - whats the forecast for Aberdeen this weekend Ricain - I will be in Aberdeen as it happens this weekend and on Union Terrace on the Sunday to listen to Ally and Phil!

Both you Scottish guys rock! And, believe it or not, my favorite band is The Proclaimers.

Le Ricain wrote:I would recommend reading Nial Ferguson's 'The Ascent of Money'.

Does he talk about the Bond Fluctuations accurately like in the article you linked?