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It went unpaid. The war debt involved not only indebtedness of the Confederate national government, but indebtedness incurred by various southern states as well. Patriotic southerners liquidated other investments and used the money to buy Confederate and state bonds to support the war effort. At the end of the war people who had done so were financially ruined.

Some states may have had an inclination to repay their state obligations after the war was over, but this was prohibited during Reconstruction. As part of the price for "readmission" to the Union - after a four year war during which the principal Union claim was that they had never left - the states had to repudiate their Confederate-related debt. Ostensibly this was to prevent ex-slaves from having to pay taxes to retire this debt, but northern vindictiveness also relished seeing the "proud" planter class humbled, along with anyone else who had bought the bonds. This helped to ensure that what had always been the richest portion of the United States became and remained the poorest for the next century.

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Q: What happened to the Confederate war debt?
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