SEC. 1. INDUSTRIAL DEVELOPMENT DURING THE WAR
Early in the war the blockade of the southern ports became so effective that the southern states were shut off from their usual sources of supply by sea. Trade through the lines between the United States and the Confederate States was forbidden, and Alabama, owing to its central location, suffered more from the blockade than any other state. For three years the Federal lines touched the northern part of the state only, and, as no railroads connected north and south Alabama, contraband trade was difficult in that direction. Mobile, the only port of the state, was closely blockaded by a strong Federal fleet. The railroad communications with other states were poor, and the Confederate government usually kept the railroads busy in the public service. Consequently, the people of Alabama were forced to develop certain industries in order to secure the necessaries of life. But outside these the industrial development was naturally in the direction of the production of materials of war.
Military Industries
During the first two years of the war volunteers were much more plentiful than equipment. The arms seized at Mount Vernon and other a.r.s.enals in Alabama were old flint-locks altered for the use of percussion caps and were almost worthless, being valued at $2 apiece. These were afterwards transferred to the Confederate States, which returned but few of them to arm the Alabama troops.[350] Late in 1860 a few thousand old muskets were purchased by the state from the a.r.s.enal at Baton Rouge, Louisiana, for $2.50 each. A few Mississippi rifles were also secured, and with these the Second Alabama Infantry was armed. These rifles, however, required a special kind of ammunition, and this made them almost worthless. Other arms were found to be useless for the same reason. Both cavalry and infantry regiments went to the front armed with single and double barrelled shot-guns, squirrel rifles, muskets, flint-locks, and old pistols. No ammunition could be supplied for such a miscellaneous collection. Many regiments had to wait for months before arms could be obtained. Before October, 1861, several thousand men had left Alabama unarmed, and several thousand more, also unarmed, were left waiting in the state camps.[351] In 1861 the state legislature bought a thousand pikes and a hundred bowie-knives to arm the Forty-eighth Militia Regiment, which was defending Mobile. The sum of $250,000 was appropriated to lend to those who would manufacture firearms for the government.[352] In 1863 the Confederate Congress authorized the enlistment of companies armed with pikes who should take the places of men armed with firearms when the latter were dead or absent.[353] Private arms--muskets, rifles, pistols, shot-guns, carbines--were called for and purchased from the owners when not donated.[354] An offer was made to advance fifty per cent of the amount necessary to set up machinery for the manufacture of small arms.[355] Old Spanish flint-lock muskets were brought in from Cuba through the blockade, altered, and placed in the hands of the troops.[356]
[Ill.u.s.tration: INDUSTRIAL DEVELOPMENT 1861-1865]
In 1862 a small-arms factory was established at Talla.s.see which employed 150 men and turned out about 150 carbines a week. At the end of 1864 it had produced only 6000.[357] At Montgomery the Alabama Arms Manufacturing Company had the best machinery in the Confederacy for making Enfield rifles. At Selma were the state and Confederate a.r.s.enals, a navy-yard, and naval foundry with machinery of English make, of the newest and most complete pattern. It had been brought through the blockade from Europe and set up at Selma because that seemed to be a place safe from invasion and from the raids of the enemy. Here the vessels for the defence of Mobile were built, heavy ordnance was cast, with shot and sh.e.l.l, and plating for men-of-war. The armored ram _Tennessee_, famous in the fight in Mobile Bay, the gunboats _Morgan_, _Selma_, and _Gaines_ were all built at the Selma navy-yard--guns, armor, and everything being manufactured on the spot. When the _Tennessee_ surrendered, after a terrible battle, its armor had not been penetrated by a single shot or sh.e.l.l. The best cannon in America were cast at the works in Selma. The naval foundry employed 3000 men, the other works as many more. Half the cannon and two-thirds of the fixed ammunition used during the last two years of the war were made at these foundries and factories. The foundry destroyed by Wilson was p.r.o.nounced by experts to be the best in existence. It could turn out at short notice a fifteen-inch Brooks or a mountain howitzer. Swords, rifles, muskets, pistols, caps, were manufactured in great quant.i.ties. There were more than a hundred buildings, which covered fifty acres; and after Wilson"s destructive work, Truman, the war correspondent, said that they presented the greatest ma.s.s of ruins he had ever seen.[358] There was a navy-yard on the Tombigbee, in Clarke County, near the Sunflower Bend.
Several small vessels had been completed and several war vessels, probably gunboats, were in process of construction here when the war ended; both vessels and machinery were destroyed by order of the Confederate authorities.[359]
Gunpowder was scarce throughout the war, and nitre or saltpetre, its princ.i.p.al ingredient, was not to be purchased from abroad. A powder mill was established at Cahaba,[360] but the ingredients were lacking. Charcoal for gunpowder was made from willow, dogwood, and similar woods. The nitre on hand was soon exhausted, and it was sought for in the caves of the limestone region of Alabama and Tennessee. In north Alabama there were many of these large caves. The earth in them was dug up and put in hoppers and water poured over it to leach out the nitre. The lye was caught (just as for making soft soap from lye ashes), boiled down, and then dried in the sunshine.[361] The earth in cellars and under old houses was sc.r.a.ped up and leached for the nitre in it. In 1862 a corps of officers under the t.i.tle of the Nitre and Mining Bureau[362] was organized by the War Department to work the nitre caves of north Alabama which lay in the doubtful region between the Union and the Confederate lines, and which were often raided by the enemy. The men were subjected to military discipline and were under the absolute command of the superintendent, who often called them out to repulse Federal raiders. As much as possible in this department, as in the others, exempts and negroes were used for laborers. For clerical work those disabled for active service were appointed, and instructions were issued that employment should be given to needy refugee women.[363] These important nitre works were repeatedly destroyed by the Federals, who killed or captured many of the employees.[364] In the district of upper Alabama, under the command of Captain William Gabbitt, whose headquarters were at Blue Mountain (now Anniston), most of the work was done in the limestone caves of the mountain region.[365] Several hundred men--whites and negroes--were employed in extracting the nitre from the cave earth. To the end of September, 1864, this district had produced 222,665 pounds of nitre at a cost of $237,977.17, war prices.[366]
The supply from the caves proved insufficient, and artificial nitre beds or nitraries were prepared in the cities of south and central Alabama. It was necessary to have them near large towns, in order to obtain a plentiful supply of animal matter and potash, and the necessary labor.
Efforts were also made to induce planters in marl or limestone counties to work plantation earth.[367] Under the supervision of Professor W. H. C.
Price, nitraries were established at Selma, Mobile, Talladega, Tuscaloosa, and Montgomery. Negro labor was used almost entirely, each negro having charge of one small nitre bed. To October, 1864, the nitraries of south Alabama produced 34,716 pounds at a cost of $26,171.14, which was somewhat cheaper than the nitre from the caves. From these nitraries better results were obtained than from the French, Swedish, and Russian nitraries which served as models. The Confederate nitre beds were from sixteen to twenty-seven months old in October, 1864, and hence not at their best producing stage. Yet, allowing for the difference in age, they gave better results, as they produced from 2.57 to 3.3 ounces of nitre per cubic foot, while the average European nitraries at four years of age gave 4 ounces per cubic foot. Earth from under old houses and from cellars produced from 2 to 4 ounces to the cubic foot. Nitre caves produced from 6 to 12 ounces per cubic foot. Most of the nitre thus obtained was made into powder at the mills in Selma. There were some private manufacturers of nitre, and to encourage these the Confederate Congress authorized the advance to makers of fifty per cent of the cost of the necessary machinery.[368]
The state legislature appropriated $30,000 to encourage the manufacture and preparation of powder, saltpetre (nitre), sulphur, and lead. Little of the last article was found in Alabama.[369] Some of the powder works were in operation as early as 1861, and in that year the War Department gave Dr. Ullman of Tallapoosa a contract to supply 1000 to 1500 pounds of sulphur a day.[370]
The Confederate Nitre and Mining Bureau had charge of the production of iron in Alabama for the use of the Confederacy. The mines were princ.i.p.ally in the hilly region south of the Tennessee River, where several furnaces and iron works were already established before the war. Two or three new companies, with capital of $1,000,000 each, had bought mineral lands and had commenced operations when the war broke out. The Confederate government bought the property or gave the companies financial a.s.sistance.
The iron district was often raided by the Federals, who blew up the furnaces and wrecked the iron works.[371] The Irondale works, near Elyton, were begun in 1862, and made much iron, but they also were destroyed in 1864 by the Federals.[372] Other large iron furnaces, with their forges, foundries, and rolling-mills, were destroyed by Rousseau"s raid in 1864.
The government employed several hundred conscripts and several thousand negroes in the mines and rolling-mills. It also offered fifty per cent of the cost of equipment to encourage the opening of new mines by private owners.[373] There is record of only about 15,000 tons of Alabama iron being mined by the Confederacy, but probably there was much more.[374] The iron was sent to Selma, Montgomery, and other places for manufacture. The ordnance cast in Selma was of Alabama iron; and after the war, when the United States sold the ruins of the a.r.s.enal, the big guns were cut up and sent to Philadelphia. Here the fine quality of the iron attracted the attention of experts and led to the development by northern capital of the iron industry in north Alabama.
The Confederate government encouraged the building and extension of railroads, and paid large sums to them for the transportation of troops, munitions of war, and military supplies.[375] Several lines of road within the state were made military roads, and the government extended their lines, built bridges and cars, and kept the lines in repair.[376] In 1862 $150,000 was advanced to the Alabama and Mississippi Railway Company, to complete the line between Selma and Meridian,[377] and the duty on iron needed for the road was remitted.[378] On June 25 of this year this road was seized by the military authorities in order to finish it,[379] and because of the lack of iron D. H. Kenny was directed (July 21, 1863) to impress the iron and rolling stock belonging to the Alabama and Florida Railway, the Gainesville Branch of the Mobile and Ohio, the Cahaba, Marion, and Greensborough Railroad, and the Uniontown and Newberne Railroad. The Alabama and Mississippi road was a very important line, since it tapped the supply districts of Mississippi and the Black Belt of Alabama. There were many difficulties in the way of the builders. In 1862 the locomotives were wearing out and no iron was to be obtained. In the fall of the same year the planters withdrew their negroes who were working on the road, and left the bridges half finished. But finally, in December, 1862, the road was completed.[380] In the fall of 1862 a road between Blue Mountain, Alabama, and Rome, Georgia, was planned, and $1,122,480.92 was appropriated by the Confederate Congress, a mortgage being taken as security.[381] This road was graded and some bridges built and iron laid, but was not in running order before the end of the war.
Telegraph lines, which had been few before the war, were now placed along each railroad, and several cross-country lines were put up. The first important new line was along the Mobile and Ohio Railroad, from Mobile to Meridian.[382]
Private Manufacturing Enterprises
Both the state and the Confederate government encouraged manufactures by favorable legislation. The Confederate government was always ready to advance half of the cost of the machinery and to take goods in payment. A law of Alabama in 1861 secured the rights of inventors and authors. All patents under the United States laws prior to January 11, 1861, were to hold good under the state laws, and the United States patent and copyright laws were adopted for Alabama.[383] Later, jurisdiction over patents, inventions, and copyrights was transferred to the Confederate government.
A bonus of five and ten cents apiece on all cotton and wool cards made in Alabama was offered by the legislature in December, 1861.[384] All employees in iron mills, in foundries, and in factories supplying the state or Confederate governments with arms, clothing, cloth, and the like were declared by the state exempt from military duty.
Factories were soon in operation all over the state, especially in central Alabama. In all places where there were government factories there also were found factories conducted by private individuals. In 1861 there were factories at Talla.s.see, Autaugaville, and Prattville, with 23,000 spindles and 800 employees, which could make 5000 yards of good tent cloth a day.[385] And other cotton mills were established in north Alabama as early as 1861.[386] The Federals burned these buildings and destroyed the machinery in 1862 and 1863. There was the most "unsparing hostility displayed by the northern armies to this branch of industry. They destroyed instantly every cotton factory within their reach."[387]
At Tuscaloosa were cotton and shoe factories, tanneries, and an iron foundry. A large cotton factory was established in Bibb County, and at Gainesville there were workshops and machine-shops. In addition to the government works, Selma had machine-shops, car shops, iron mills, and foundries, cotton, wool, and harness factories, conducted by private individuals. There were cotton and woollen factories at Prattville and Autaugaville, and at Montgomery were car shops, harness shops, iron mills, foundries, and machine-shops. The best tent cloth and uniform cloth was made at the factories of Talla.s.see. The state itself began the manufacture of shoes, salt, clothing, whiskey, alcohol, army supplies, and supplies for the dest.i.tute.[388] Extensive manufacturing establishments of various kinds in Madison, Lauderdale, Tusc.u.mbia, Bibb, Autauga, Coosa, and Tallapoosa counties were destroyed during the war by the Federals. There were iron works in Bibb, Shelby, Calhoun, and Jefferson counties, and in 1864 there were a dozen large furnaces with rolling-mills and foundries in the state.[389] However, in that year the governor complained that though Alabama had immense quant.i.ties of iron ore, even the planters in the iron country were unable to get sufficient iron to make and mend agricultural implements, since all iron that was mined was used for purposes of the Confederacy.[390] The best and strongest cast iron used by the Confederacy was made at Selma and at Briarfield. The cotton factories and tanneries in the Tennessee valley were destroyed in 1862 by the Federal troops.[391]
Salt Making
Salt was one of the first necessaries of life which became scarce on account of the blockade. The Adjutant and Inspector-General of Alabama stated, March 20, 1862, that the Confederacy needed 6,000,000 bushels of salt, and that only an enormous price would force the people to make it.
In Montgomery salt was then very scarce, bringing $20 per sack, and speculators were using every trick and fraud in order to control the supply.[392] The poor people especially soon felt the want of it, and in November, 1861, the legislature pa.s.sed an act to encourage the manufacture of salt at the state reservation in Clarke County.[393] The state government even began to make salt at these salt springs. At the Upper Works, near Old St. Stephens, 600 men and 120 teams were employed at 30 furnaces, which were kept going all the time, the production amounting to 600 bushels a day. These works were in operation from 1862 to 1865. The Lower Works, near Sunflower Bend on the Tombigbee River, for four years employed 400 men with 80 teams at 20 furnaces. The production here was about 400 bushels a day. The Central Works, near Salt Mountain, were under private management, and, it is said, were much more successful than the works under state management.[394] The price of salt at the works ranged from $2.50 to $7 a bushel in gold, or from $3 to $40 in currency. From 1861 to 1865, 500,000 bushels of good salt were produced each year.
To obtain the salt water, wells were bored to depths ranging from 60 to 100 feet,--one well, however, was 600 feet deep,--while in the bottom or swamp lands brine was sometimes found at a depth of 8 feet. The water at first rose to the surface and overflowed about 30 gallons a minute in some wells, but as more wells were sunk the brine ceased to flow out and had to be pumped about 16 feet by steam or horse power. It was boiled in large iron kettles like those then used in syrup making and which are still seen in remote districts in the South. Seven or eight kettles of water would make one kettle of salt. This was about the same percentage that was obtained at the Onondaga (New York) salt springs. About the same boiling was required as in making syrup from sugar-cane juice. The wells were scattered for miles over the country and thousands of men were employed.
For three years more than 6000 men, white and black, were employed at the salt works of Clarke County, from 2000 to 3000 working at the Upper Works alone. All were not at work at the furnaces, but hundreds were engaged in cutting and hauling wood for fuel, and in sacking and barrelling salt. It is said that in the woods the blows of no single axe nor the sound of any single falling tree could be distinguished; the sound was simply continuous. Nine or ten square miles of pine timber were cleared for fuel.
The salt was sent down the Tombigbee to Mobile or conveyed in wagons into the interior of Alabama, Mississippi, and Georgia. These wagons were so numerous that for miles from the various works it was difficult to cross the road. The whole place had the appearance of a manufacturing city.
These works had been in operation to some extent since 1809. The wells were exhausted from 1865 to 1870, when they began flowing again.
Besides the smaller works and large private works there were hundreds of smaller establishments. When salt was needed on a plantation in the Black Belt, the overseer would take hands, with pots and kettles, and go to the salt wells, camp out for several weeks, and make enough salt for the year"s supply. All private makers had to give a certain amount to the state.[395] People from the interior of the state and from southeast Alabama went to the Florida coast and made salt by boiling the sea water.
The state had salt works at Saltville, Virginia, but found it difficult to get transportation for the product. Salt was given to the poor people by the state, or sold to them at a moderate price. The legislature authorized the governor to take possession of all salt when necessary for public use, paying the owners a just compensation; $150,000 was appropriated for this purpose in 1861, and in 1862 it was made a penal offence to send salt out of the state.[396] A Salt Commission was appointed to look after the salt works owned by the state in Louisiana. A private salt maker in Clarke County made a contract to deliver two-fifths of his product to the state at the cost of manufacture, and the state purchased some salt from the Louisiana saltbeds.[397] As salt became scarcer the people took the brine in old pork and beef barrels and boiled it down. The soil under old smoke-houses was dug up, put in hoppers, and bleached like ashes, and the brine boiled down and dried in the sunshine.[398]
At Bon Secour Bay, near Mobile, there were salt works consisting of fifteen houses, capable of making seventy-five bushels per day from the sea-water. In 1864 these were burned by the Federals, who often destroyed the salt works along the Florida coast.[399] At Saltmarsh, ten miles west of Selma, there were works which furnished much of the salt used in Mississippi, central Alabama, and east Georgia during the years 1862, 1863, and 1864. Wells were dug to the depth of twelve or fifteen feet, when salt water was struck. The wells were then curbed, furnaces of lime rock were built, and upon them large kettles were placed. The water was pumped from the wells and run into the kettles through troughs, then boiled down, and the moisture evaporated by the sun. The fires were kept up day and night. A large number of blacks and whites were employed at these wells, and, as salt makers were exempt from military duty, the work was quite popular.[400]
Besides the industries above mentioned there were many minor enterprises.
Household manufactures were universal. The more important companies were chartered by the legislature. The acts of the war period show that in 1861 there were incorporated six insurance companies and the charters of others were amended to suit the changed conditions; three railroad companies were incorporated, and aid was granted to others for building purposes. Roads carrying troops and munitions free were exempted from taxation. Two mining and manufacturing companies were incorporated, four iron and coal companies, one ore foundry, an express company,[401] a salt manufacturing company, a chemical manufacturing company, a coal and leather company, and a wine and fruit company. In 1862 the legislature incorporated four iron and foundry companies, a railroad company, the Southern Express Company, a gas-light company, six coal and iron companies, a rolling-mill, and an oil company, and amended the charters of four railroad companies and two insurance companies. In 1864 two railroad companies were given permission to manufacture alcohol and lubricating oil, and the Citronelle Wine, Fruit, and Nursery Company was incorporated. Various other manufacturing companies--of drugs, barrels, and pottery--were established.
Besides salt the state made alcohol and whiskey for the poor. Every man who had a more than usual regard for his comfort and wanted to keep out of the army had a tannery in his back yard, and made a few shoes or some harness for the Confederacy, thus securing exemption.
Governor Moore, in his message to the legislature on October 28, 1861, said: "Mechanical arts and industrial pursuits, hitherto practically unknown to our people, are already in operation. The clink of the hammer and the busy hum of the workshop are beginning to be heard throughout our land. Our manufactories are rapidly increasing and the inconvenience which would result from the continuance of the war and the closing of our ports for years would be more than compensated by forcing us to the development of our abundant resources, and the tone and the temper it would give to our national character. Under such circ.u.mstances the return of peace would find us a self-reliant and truly independent people."[402] And had the war ended early in 1864, the state would have been well provided with manufactures.
The raids through the state in 1864 and 1865 destroyed most of the manufacturing establishments. The rest, whether owned by the government or private persons, were seized by the Federal troops at the surrender and were dismantled.[403]
SEC. 2. CONFEDERATE FINANCE IN ALABAMA
Banks and Banking
In a circular letter dated December 4, 1860, and addressed to the banks, Governor Moore announced that should the state secede from the Union, as seemed probable, $1,000,000 in specie, or its equivalent, would be needed by the administration. The state bonds could not be sold in the North nor in Europe, except at a ruinous discount, and a tax on the people at this time would be inexpedient. Therefore he recommended that the banks hold their specie. Otherwise there would be a run on the banks, and should an extra session of the legislature be called to authorize the banks to suspend specie payments, such action would produce a run and thus defeat the object. He requested the banks to suspend specie payments, trusting to the convention to legalize this action.[404] The governor then issued an address to the people stating his reasons for such a step. It was done, he said, at the request and by the advice of many citizens whose opinions were ent.i.tled to respect and consideration. Such a course, they thought, would relieve the banks from a run during the cotton season, would enable them to aid the state, would do away with the expense of a special session of the legislature, would prevent the sale of state bonds at a great sacrifice, and would prevent extra taxation of the people in time of financial crisis.[405]
Three banks--the Central, Eastern, and Commercial--suspended at the governor"s request and made a loan to the state of $200,000 in coin. Their suspension was legalized later by an ordinance of the convention. The Bank of Mobile, the Northern Bank, and the Southern Bank refused to suspend, though they announced that the state should have their full support. The legislature pa.s.sed an act in February, 1861, authorizing the suspension on condition that the banks subscribe for ten year state bonds at their par value. The bonds were to stand as capital, and the bills issued by the banks upon these bonds were to be receivable in payment of taxes. The amount which each bank was to pay into the treasury for the bonds was fixed, and no interest was to be paid by the state on these bonds until specie payments were resumed. All the banks suspended under these acts, and thus the government secured most of the coin in the state.[406] In October, 1861, before all the banks had suspended, state bonds at par to the amount of $975,066.68 had been sold--all but $28,500 to the banks. By early acts specie payments were to be resumed in May, 1862, but in December, 1861, the suspension was continued until one year after the conclusion of peace with the United States. By this law the banks were to receive at par the Confederate treasury notes in payment of debts, their notes being good for public dues. The banks were further required to make a loan to the state of $200,000 to pay its quota of the Confederate war tax of August 16, 1861. So the privilege of suspension was worth paying for.[407]
The banking law was revised by the convention so that a bank might deposit with the state comptroller stocks of the Confederate States or of Alabama, receiving in return notes countersigned by the comptroller amounting to twice the market value of the bonds deposited. If a bank had in deposit with the comptroller under the old law any stocks of the United States, they could be withdrawn upon the deposit of an equal amount of Confederate stocks or bonds of the state. The same ordinance provided that none except citizens of Alabama and members of state corporations might engage in the banking business under this law. But no rights under the old law were to be affected. It was further provided that subsequent legislation might require any "free" bank to reduce its circulation to an amount not exceeding the market value of the bonds deposited with the comptroller.
The notes thus retired were to be cancelled by the comptroller.[408] The suspension of specie payments was followed by an increase of banking business; note issues were enlarged; eleven new banks were chartered,[409]
and none wound up affairs. They paid dividends regularly of from 6 to 10 per cent in coin, in Confederate notes, or in both. Speculation in government funds was quite profitable to the banks.
Issues of Bonds and Notes
The convention authorized the general a.s.sembly of the state to issue bonds to such amounts and in such sums as seemed best, thus giving the a.s.sembly practically unlimited discretion. But it was provided that money must not be borrowed except for purposes of military defence, unless by a two-thirds vote of the members elected to each house; and the faith and credit of the state was pledged for the punctual payment of the princ.i.p.al and interest.[410]
The legislature hastened to avail itself of this permission. In 1861 a bond issue of $2,000,000 for defence, and not liable to taxation, was authorized at one time; at another, $385,000 for defence, besides an issue of $1,000,000 in treasury notes receivable for taxes. Of the first issue authorized, only $1,759,500 were ever issued. Opposition to taxation caused the state to take up the war tax of $2,000,000 (August 19, 1861), and for this purpose $1,700,000 in bonds was issued, the banks supplying the remainder. There was a relaxation in taxation during the war; paper money was easily printed, and the people were opposed to heavy taxes.[411]
In 1862 bonds to the amount of $2,000,000 were issued for the benefit of the indigent. The governor was given unlimited authority to issue bonds and notes, receivable for taxes, to "repair the treasury," and $2,085,000 in bonds were issued under this permit. These bonds drew interest at 6 per cent, ran for twenty years, and sold at a premium of from 50 per cent to 100 per cent. Bonds were used both for civil and for military purposes, but chiefly for the support of the dest.i.tute. Treasury notes to the amount of $3,500,000 were issued, drawing interest at 5 per cent, and receivable for taxes. The Confederate Congress came to the aid of Alabama with a grant of $1,200,000 for the defence of Mobile.[412] In 1863 notes and bonds for $4,000,000 were issued for the benefit of indigent families of soldiers, and $1,500,000 for defence; $90,000 in bonds was paid for the steamer _Florida_, which was later turned over to the Confederate government.[413] In 1864 $7,000,000 was appropriated for the support of indigent families of soldiers, and an unlimited issue of bonds and notes was authorized.[414] In 1862 the Alabama legislature proposed that each state should guarantee the debt of the Confederate States in proportion to its representation in Congress. This measure was opposed by the other states and failed.[415] A year later a resolution of the legislature declared that the people of Alabama would cheerfully submit to any tax, not too oppressive in amount or unequal in operation, laid by the Confederate government for the purpose of reducing the volume of currency and appreciating its value. The a.s.sembly also signified its disapproval of the scheme put forth at the bankers" meeting at Augusta, Georgia--to issue Confederate bonds with interest payable in coin and to levy a heavy tax of $60,000,000 to be paid in coin or in coupons of the proposed new issue.[416]
The Alabama treasury had many Confederate notes received for taxes. Before April 1, 1864 (when such notes were to be taxed one-third of their face value), these could be exchanged at par for twenty-year, 6 per cent Confederate bonds. After that date the Confederate notes were fundable at 33-1/3 per cent of their face value only.[417] After June 14, 1864, the state treasury could exchange Confederate notes for 4 per cent non-taxable Confederate bonds, or one-half for 6 per cent bonds and one-half for new notes. The Alabama legislature of 1864 arranged for funding the notes according to the latter method.[418] The Alabama legislature of 1861 had made it lawful for debts contracted after that year to be payable in Confederate notes.[419] Later a meeting of the citizens of Mobile proposed to ostracize those who refused to accept Confederate notes. Cheap money caused a clamor for more, and the heads of the people were filled with _fiat_ money notions. The rise in prices stimulated more issues of notes.
On February 9, 1861, $1,000,000 in state treasury notes was issued, and in 1862 there was a similar issue of $2,000,000 more. These state notes were at a premium in Confederate notes, which were discredited by the Confederate Funding Act of February 17, 1864. Confederate notes were eagerly offered for state notes, but the state stopped the exchange.[420]
December 13, 1864, a law was pa.s.sed providing for an unlimited issue of state notes redeemable in Confederate notes and receivable for taxes.
Private individuals often issued notes on their own account, and an enormous number was put into circulation. The legislature, by a law of December 9, 1862, prohibited the issue of "shinplaster" or other private money under penalty of $20 to $500 fine, and any person circulating such money was to be deemed the maker. It was not successful, however, in reducing the flood of private tokens; the credit of individuals was better than the credit of the government.
Executors, administrators, guardians, and trustees were authorized to make loans to the Confederacy and to purchase and receive for debts due them bonds and treasury notes of the Confederacy and of Alabama and the interest coupons of the same. One-tenth of the Confederate $15,000,000 loan of February 28, 1861, was subscribed in Alabama.[421] In December, 1863, the legislature laid a tax of 37-1/2 per cent on bonds of the state and of the Confederacy unless the bonds had been bought directly from the Confederate government or from the state.[422] This was to punish speculators. After October 7, 1864, the state treasury was directed to refuse Confederate notes issued before February 17, 1864 (the date of the Funding Act) in payment of taxes except at a discount of 33-1/3 per cent.
Later, Confederate notes were taken for taxes at their full market value.[423]
Gold was shipped through the blockade at Mobile to pay the interest on the state bonded debt held in London. It has been charged that this money was borrowed from the Central, Commercial, and Eastern banks and was never repaid, recovery being denied on the ground that the state could not be sued.[424] But the banks received state and Confederate bonds under the new banking law in return for their coin. The exchange was willingly made, for otherwise the banks would have had to continue specie payments or forfeit their charters. And to continue specie payments meant immediate bankruptcy.[425] After the war, the state was forbidden to pay any debt incurred in aid of the war, nor could the bonds issued in aid of the war be redeemed. The banks suffered just as all others suffered, and it is difficult to see why the state should make good the losses of the banks in Confederate bonds and not make good the losses of private individuals. To do either would be contrary to the Fourteenth Amendment.