Provost marshal and price controls

[atlantis]

There was a limited attempt at price controls by provost marshal for Richmond but why wasn't this done confederacy wide to counter inflation?

 

[gary]

Try enforcing it. Black Market kicks in as it always does.

 

[gary]

On Sullivan Island after its capture by Union forces Lt. M. J. Higgins of the Third Rhode Island Heavy Artillery took command of the island. He reports, "One woman told me that her husband, a short time before the surrender, having secured a bag of coffee, sold it in Charleston for $3,000, and then paid the $3,000 for a bushel of meal." This kept her family alive until Higgins distributed rations to the starving civilians. p 300 of Denison.

 

[RedRover]

There was a limited attempt at price controls by provost marshal for Richmond but why wasn't this done confederacy wide to counter inflation?

Such was done in some other Confederate cities apparently, according to some accounts...

Arthur G. Peterson, in his study of Virginia economics (1929) suggested the Richmond price control was not necessarily popular with the producers of goods...

Ultimately though, Price controls may not have been Confederacy wide; but producer controls were.

The Confederacy purchased food, cloth, metal, etc. based on fixed price schedule. Since the Confederate money devalued quickly, inflating prices a great deal, and rapidly, the selling at those prices for Confederate money may not have been seen as advantageous. So the Confederacy offered the producers of agricultural and industrial products necessary for the Confederacy exemption from Conscription in return for the goods. Richard D. Goff in "Confederate Supply" (1969) observed...

The exemption from the front line was extended to one white man per fifteen slaves, for farms which sold to the Confederacy for the fixed Government prices.

There were also military impressments of slaves, and free black men for Government labor, etc.

In the mean time, the administration press encouraged the vigilance committees in each district of the Confederacy to investigate and punish what it called "speculation" via high prices. From Merton Coulter's history of the Confederacy...

James Marten's "Texas Divided" (2021) notes the actions of the county committees in Texas which acted to punish "economic treason" by raising prices with the inflation...

Similar, more or less, across the Confederacy.

By such means the Confederacy could in a manner pay what it wanted, per it's fixed price schedule for commodities, for whatever it wanted within the south, with as much money as it preferred to print.

But without the possibility of a profit, alot of the public got off the bandwagon by means of barter, etc.

As a result the "tax in kind" on agricultural products was initiated, where the farmers paid in goods.

In early 1864 there was some Confederate effort at reducing inflation by reducing the amount of paper money in circulation. I've seen it noted by some that reducing the amount in circulation by ca. 1/3, reduced inflation of prices to a degree. But during the large territorial losses of the Confederacy in the next year, the Confederate paper was increasingly concentrated into a smaller circuit of confederate authority, spiking the inflation again. Ultimately...

 

[gary]

Karl Denninger's Leverage talks about how unfettered printing causes inflation. Same thing happened in the Colonies when the Continental Dollar became worthless. The saying, "Not worth a Continental" was coined back then (no pun intended). Like the Continental Government before it, the Confederacy resorted to unfettered printing to meet its needs, creating inflation and destroying their currerncy. All fiat currencies return to their intrinsic value - zed/zero/nada/zilch/zip. Another good read is Adam Ferguson's When Money Dies.

J. B. Jones's Rebel War Clerk's Dairy has numerous accounts of how the Confederate dollar devalued over time.

It's not about economics but about monetary policy. Rule 1: Increasing the currency supply without a corresponding increase in goods/servicese devalues the currency in existence. Rule 2: Cantillion Effect - those closest to the currency spigot are better off because they can take advantage of the newly created currency before the plebes/commoners/average man does and spend the freshly created currency before the effects of inflation are felt. It's one of the reasons why the rich get richer.

I also remember Berry Benson mentioning that he spent over $100 for a breakfast and a very poor one at that in Richmond.

Price control never works. It results in scarcity as goods are diverted to the black market where the real price is discovered. We had price control during the Great Depression and milk farmers poured the milk into gutters.