(October 25, 2019) American Spectator released my “The South Has Already Paid Reparations” article earlier today. It documents how Southerners, black and white, paid taxes to fund Northern costs of the Civil War for more than a hundred years after the war.
Ignored among current reparations discussions is the fact the South has already paid them — if not for slavery, then for losing the Civil War. For at least 25 years after the war, over half of the federal budget was devoted to three items: interest on federal debt; budget surpluses applied to debt retirements; and Union veterans’ pensions. None benefitted former Confederates even though they had to pay their share of taxes to fund them. If the Confederacy had been an independent defeated foe, such payments would have constituted reparations.
The budget surpluses were used to pay down the federal war debts, which had increased 40-fold from $65 million at the start of the Civil War to $2.7 billion at the end. Southerners did not hold any of the bonds. National banks held some, which bought them for monetary reserves as mandated by the 1863 National Banking Act, but many Northern civilians also owned them.
Bond policies also penalized Southerners (black and white) another way. Specifically, the 1869 Public Credit Act required that the bonds be redeemed in gold even though Northern investors bought them during the war with Greenback paper money, which traded at a fluctuating discount to gold. Less than a year before the war ended, Greenback dollars traded at a 65 percent discount to gold in July 1864. Since the bond redemptions and interest had to be paid in gold, the value of paper money required to make such payments was larger than the face amount of the bonds and their associated interest coupons. The difference was an extra cost to the taxpayer but a bonus to the Northern bondholder.
To learn more about how the South was impacted by the aftermath of the Civil War consider reading:
Southern Reconstruction by Philip Leigh
U. S. Grant’s Failed Presidency by Philip Leigh