How did you pay off the Union debt from the Civil war?

Answer 1

By the end of the Civil War, the Federal Government had a direct debt of almost $7 Billion. This back in 1865 was a huge amount of money.

With that fact aside for the moment, if the Federal government and the Confederacy had not been so hell bent on the issues that separated them, historians now calculate the following:

IF, and it was a world wide practice, if the Government purchased the freedom of the 4 million slaves in the USA around 1861, and granted these experienced slave field workers a forty acre farm to each slave family, the estimated cost would have been approximately $3 Billion.

The remaining $4 Billion could have been used to cover extraordinary payments to former slave holders and used some of it to even pay for back wages to slaves, the economy of the South could have continued growing cotton and tobacco, and slave holders would have enough money to finance their farming.

The idea was simple. The South for economic reasons could not voluntarily just free its slaves or chaos would be everywhere. It's an old saying but true, money talks, nobody walks. Social and cultural problems would have existed but that's what happened after the Civil War anyway. No 1.5 million warcasualties and no 600,000 dead American soldiers.

Be that as it may, The Federal debt was paid off the following way:

A. For a brief time the Federal Government raised money from a progressive income tax.

B.The Federal Government floated huge bond issues to the general public, not to banks. The Treasury Department hired Jay Cooke, a Philadelphia banker, to market $500 Million worth of bonds

C. The Lincoln Administration "printed" $150 million dollars. (Never a good idea to produce Fiat monies but other choices were not there.)

D. It took about 50 years to basically end the debt through all kinds of levies, tariffs, and internal taxation.