Union Finances:
1. Taxation: The Union imposed various taxes, such as income taxes, excise taxes, and tariffs on imported goods. These taxes helped generate revenue to support the war effort.
2. Borrowing: The Union government also borrowed extensively to finance the war. It issued bonds and notes to raise money from banks, individuals, and foreign investors.
3. Paper Currency: The Union issued paper currency, known as "greenbacks," as a means of financing the war. Greenbacks were not backed by gold or silver but were instead supported by the credit of the U.S. government.
Confederate Finances:
1. Printing Money: The Confederate government primarily relied on printing paper money to finance the war. This led to hyperinflation, as the value of Confederate currency rapidly depreciated.
2. Borrowing: The Confederacy also borrowed money by issuing bonds and notes, but its ability to borrow was limited due to the poor credit rating.
3. Taxation: The Confederate government imposed taxes, but its tax collection system was not well-organized, leading to limited revenue generation.
4. Seizing Resources: The Confederacy seized resources, such as cotton, tobacco, and railroads, to fund the war effort. It also relied on the "impressment" of goods and services, taking supplies from citizens without compensation.
In summary, the Union financed the Civil War through taxation, borrowing, and the issuance of paper currency. The Confederacy primarily relied on printing money and seizing resources, but its financial system was ultimately unsustainable due to inflation and a lack of international support.