One policy of the Confederacy that was partially responsible for its demise, was that of not properly utilizing its tax base . Instead, it relied on loans, both foreign and domestic, and the sale of war bonds which failed to raise the amount of money expected.
The Confederate Government knew the dangers of inflation and did not originally intend unlimited issues of paper money. Further, it was to be backed by cotton. The South in 1860 produced over four million bales of cotton of which three-fourths was exported, over half of which went to England. Planters were asked to contribute a portion of their crop to the government for which bonds were given in return. In foreign affairs, the South had been initially confident of the power and influence of "King Cotton", the crop that accounted for more than half the value of U.S. exports before the war. The Confederacy felt that the importance of cotton would force diplomatic recognition from England and France. Neither the commissioners sent abroad in 1861 nor the envoys who replaced them were able to secure "official" recognition from Great Britain, France, or any other European power. The Confederate government was able, however, to buy many supplies and weapons, in addition to several fast ships that destroyed numerous Union ships. There were a total of 13 issues of Confederate Bonds. All bonds were printed with coupons attached. One coupon was cut off every 6 months and redeemed at the CSA Treasury. All bonds were individually signed.
