Repudiation! The Crisis of United States Civil War Debt, 1865-1870
Noll Historical Consulting, LLC
December 14, 2012
Government Debt Crises: Politics, Economics and History Conference, Graduate Institute of International and Development Studies, Geneva, December 14-15, 2012
From 1865 to 1870, a crisis atmosphere hovered around the issue of the massive public debt created during the recently concluded Civil War, leading, in part, to the passage of a Constitutional Amendment ensuring the “validity of the public debt.” However, the Civil War debt crisis was not a financial one, but a political one. The Republican and Democratic Parties took concerns over the public debt and magnified them into panics so that they could serve political ends — there was never any real danger that the United States would default on its debt for financial reasons. There were, in fact, three interrelated crises generated during the period: a repudiation crisis (grounded upon fears of the cancellation of the war debt), a repayment crisis (arising from calls to repay the debt in depreciated currency), and a refunding crisis (stemming from a concern of a run on the Treasury). The end of the Civil War debt crisis came only when there was no more political advantage to be gained from exploiting the issue of the public debt.
Number of Pages in PDF File: 31
Keywords: public debt, US Civil War, politics, reconstruction
JEL Classification: H6, H63, N41
Date posted: January 5, 2013
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