How did the government raise money for the war?
Most of the money that was used to fund the war was derived from taxes that constituted the progressive income tax of the United States. Another portion of the money was raised through public borrowing in form of bonds (Bartlett, 2017). The government also resorted to printing more money to cater to the financial needs of the war.
American civil war broke up at a critical moment when the country was in an economic crisis and had been operating in the red through borrowed loans for close to four years (Belew, 2019). The amount of money that was in the treasury wasn’t even enough to pay all the congressmen, hence making funding of the great war almost impossible unless other sources of funding were sort (Belew, 2019). Just before the beginning of the war, congress gave President Wilson control of most of the economy including fixing 0of prices and controlling war-related industries. The country, therefore, used part of the tax that it had been collecting over the years to fund the war (Bartlett, 2017). Since the financial needs of the war rose rapidly, the government resorted to public borrowing through bonds to raise more money to fund the war. After one month into the war, the war financial needs rose to $1,500,000, hence compelling the government to resort to paper printing of more money to meet all those financial obligations (Bartlett, 2017). Even though printing more money was associated with different limitations like acute inflation, the government proceeded and printed about $ 447,000,000 that were released to circulate to help cater for financial needs that cane along with the war.
Bartlett, J. C. (2017). ”Raise Money, Raise Hell, or Leave": Contesting DIY Urbanism in the Black Outer City (Doctoral dissertation, Northwestern University).
Belew, K. (2019). Bring the war home: The white power movement and paramilitary America. Harvard University Press.