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The Effect Of Inflation On Private Contracts: United States, 1861-1879, John P. Dawson, Frank E. Cooper

Michigan Law Review

The Northern inflation coincided almost exactly in its early stages with the inflation in the South, and was produced by the same basic factor - a budgetary deficit due to war expenditure. The financial mobilization of the North was handicapped at the outset by a deficit inherited from the previous administration and by an impaired national credit. The prompt response of the Northern banks enabled the Treasury to overcome this initial handicap and to finance the greatly increased expenditure through the early months of the war. How long orthodox methods of borrowing would have sufficed has been ever since a …