Result of Speculation

Speculation, which involved driving up prices on desperately needed consumer goods, was both rampant and roundly condemned in the Confederacy during the American Civil War (1861–1865). Along with conscription, the so-called Twenty Slave Law, and impressment, speculation helped to undermine support for the war among the less wealthy, in particular. Appalled at soaring prices, Virginians looked for explanations. The Union blockade of the Atlantic coast was partly to blame, and so was the Confederate Congress. Beholden to a states' rights philosophy and suspicious of a strong federal government, lawmakers refused to levy the taxes necessary to finance the war, thus guaranteeing high inflation. The victims of that inflation, however, preferred to point fingers at greedy speculators, or "extortioners." Such individuals certainly existed, but government attempts to regulate or punish them were either not forthcoming or proved to be ineffective. Accusations of speculation, meanwhile, were sometimes accompanied by anti-Semitism, challenges of patriotism, and, in one instance, arson.

The Confederacy suffered uncontrolled, runaway inflation that exceeded 9,000 percent. The fundamental causes of this profound economic malady were structural and national in scope. To the extent that individuals were responsible, the members of the Confederate Congress deserved the most blame. Ignoring the recommendations of the secretary of the treasury, Christopher G. Memminger, congressmen refused in 1861 to levy taxes to meet the government's expenses. Later legislation did little to fix the situation, and the Confederacy ultimately raised only a few percentage points of its revenue through taxation. This was a public policy that guaranteed ruinous inflation. In addition, the South had never been economically independent, and in war the increasing Union blockade of the Atlantic coast and, eventually, the Mississippi River, produced painful shortages of many goods. Such shortages contributed to the increase in prices, as did the physical destruction brought by the war. There were, to be sure, numerous instances of individuals who tried to take advantage of the economic situation. The Richmond Enquirer reported on one man who bought and hoarded 700 barrels of flour, and the paper criticized another planter who had accumulated supplies until "the lawn and paths looked like a wharf covered with a ship's loads." In Augusta County, a community leader named John Marshall McCue criticized "infernal cormorants" such as one shady operator who had become prosperous as a Confederate purchasing agent, "buying horses, cattles & swindling the government." Some Virginians made large profits speculating in tobacco, and powerful planters looked out for their own interests whenever government became involved in regulating prices. Such examples of individual greed contributed to the problem of inflation, but they were not its fundamental cause.

The suffering due to inflation produced abundant protests and a rich vocabulary of denunciation. "This disposition to speculate upon the yeomanry of the country," declared the Richmond Examiner, "is the most mortifying feature of the war." The editor of the Lynchburg Virginian charged that prosperous farmers "were grinding the faces of the poor, and destroying the cause of their country." A former army officer observed the speculation and fortunes that were being made in tobacco and wrote, "Lynchburg has gone mad—running stark mad—men, women & children— … all tobacco—tobacco—from morning till night from night till morning." Public meetings in Amherst, Buckingham, and Nelson counties denounced speculation and urged that the state legislature ban the growing of tobacco.

Virginia governor William Smith, in his inaugural address in January 1864, called for a legal ceiling on prices. Even Confederate president Jefferson Davis, who knew that inflation occurs "where the amount to be sold is too small for the number of consumers" and who urged a "radical reform of the currency," joined in the chorus against speculators. He lamented that "love of lucre" had "eaten like a gangrene into the very heart of the land." The Richmond Examiner asserted that "the whole South stinks with the lust of extortion" and charged that "native Southern merchants have outdone Yankees and Jews." As the Examiner's language shows, anti-Semitism and other prejudices increased the negative impact of discussions about "speculation." As people struggled economically, they turned on each other and nourished hostile suspicions. "No man will stand by and see his children cry for bread while his neighbor's garner is full," observed a Staunton editor. He could have added that such a man would denounce his neighbor.

Accusations of selfishness and lack of patriotism flourished. One of the largest public outcries in Virginia occurred in 1864. The commissioners of impressment, bowing to pressure from large farmers, "arbitrarily multiplied by six" the prices to be paid by the government for several important crops. Public protests quickly occurred throughout the state, with a Lynchburg paper blasting this decision as "The Road to Ruin" and others denouncing its effects on "the non producers, and middle classes." Eventually this increase was rescinded. Going beyond protest and verbal denunciations, arsonists in Lynchburg set fire to several businesses that they believed were profiting from speculation.

The suffering caused by runaway inflation led to widespread demands for action. Many ordinary Virginians, who valued help more than states' rights theories, urged the government to step in and set prices. In February 1862 the Confederate War Department seized corn from distillers in Richmond, and Congressman Fayette McMullen reported to Virginia governor John Letcher that the public reaction was overwhelmingly enthusiastic. Confederate general John Winder's attempts to regulate prices in Richmond through martial law proved unsuccessful, but large segments of the public approved and applauded his effort, calling for more actions of the same type.

By December 1862 the Richmond Examiner came out in support of the idea of a Confederate law against speculation. In the fall of 1863, mechanics and working men in Richmond held a series of public meetings to demand regulated prices, and George W. Randolph—Thomas Jefferson's grandson, a former Confederate secretary of war, and now a state senator—agreed to put his constituents' idea before the Virginia General Assembly. In additional meetings speakers called for deliverance from "the iron grasp of the extortioner and the money changer." But most newspapers opposed the proposed bill, and they were joined by prominent legislators and planters. The Anti-Extortion Bill failed to win passage.

Neither the Confederate government nor the Virginia state government took vigorous action against inflation, speculation, or extortion. Given the fundamental causes of inflation, any laws almost surely would have had limited effect. But Virginians continued to denounce perceived speculators throughout the war, and their expressed resentments were one of the most visible signs of suffering and struggle in daily economic life.