1. Bonds: The Confederate government issued bonds to raise funds. These bonds were sold to individuals, banks, and businesses in the Confederacy. The bonds were backed by the promise of future repayment, often using cotton or other agricultural products as collateral.
2. Currency Issuance: The Confederate government also resorted to printing money (currency notes) to fund its war efforts. However, due to the lack of a stable financial system and the diminishing value of the Confederate dollar, this method led to inflation and decreased the purchasing power of the currency.
3. Taxes: Taxes were imposed on the citizens of the Confederacy, including income tax, property tax, and a tax on luxury items. However, tax collection was challenging due to the decentralized nature of the Confederate government and resistance from some states and individuals.
4. Cotton Diplomacy: The Confederacy attempted to secure foreign loans and support through "cotton diplomacy." Cotton was the South's primary export commodity, and the Confederate government hoped that European powers, particularly Britain and France, would support the Confederacy in exchange for exclusive access to Southern cotton. However, this strategy was not as effective as anticipated due to the Union's naval blockade and the reluctance of European powers to directly intervene in the conflict.
5. Seized Property: The Confederate government seized property and resources from Union citizens living in the South. This included confiscated cotton, real estate, and other assets, which were then sold or used to support the war effort.
6. Blockade Running: To bypass the Union's naval blockade, the Confederacy engaged in blockade running. Fast ships were used to smuggle goods and supplies across the blockade and exchange them for much-needed war materiel. Blockade running was a risky endeavor, as Union warships patrolled the coasts, leading to frequent captures.
7. Foreign Loans and Support: Although limited, the Confederacy received some financial assistance from foreign supporters, particularly individuals and businesses sympathetic to the Southern cause. These foreign loans and donations provided some additional funding, but on a small scale compared to the overall financial needs of the Confederacy.
Overall, the Confederate government struggled to finance the Civil War due to limited resources, an overreliance on credit and paper money, and the impact of the Union blockade. The financial challenges contributed to the eventual defeat of the Confederacy.