In March, a permanent constitution of the Confederate states was drafted.  It was quickly ratified by the states; elections were held in November; and the government under it went into effect the next year.  This new constitution, in form, was very much like the famous instrument drafted at Philadelphia in 1787.  It provided for a President, a Senate, and a House of Representatives along almost identical lines.  In the powers conferred upon them, however, there were striking differences.  The right to appropriate money for internal improvements was expressly withheld; bounties were not to be granted from the treasury nor import duties so laid as to promote or foster any branch of industry.  The dignity of the state, if any might be bold enough to question it, was safeguarded in the opening line by the declaration that each acted “in its sovereign and independent character” in forming the Southern union.

=Financing the Confederacy.=—­No government ever set out upon its career with more perplexing tasks in front of it.  The North had a monetary system; the South had to create one.  The North had a scheme of taxation that produced large revenues from numerous sources; the South had to formulate and carry out a financial plan.  Like the North, the Confederacy expected to secure a large revenue from customs duties, easily collected and little felt among the masses.  To this expectation the blockade of Southern ports inaugurated by Lincoln in April, 1861, soon put an end.  Following the precedent set by Congress under the Articles of Confederation, the Southern Congress resorted to a direct property tax apportioned among the states, only to meet the failure that might have been foretold.

The Confederacy also sold bonds, the first issue bringing into the treasury nearly all the specie available in the Southern banks.  This specie by unhappy management was early sent abroad to pay for supplies, sapping the foundations of a sound currency system.  Large amounts of bonds were sold overseas, commanding at first better terms than those of the North in the markets of London, Paris, and Amsterdam, many an English lord and statesman buying with enthusiasm and confidence to lament within a few years the proofs of his folly.  The difficulties of bringing through the blockade any supplies purchased by foreign bond issues, however, nullified the effect of foreign credit and forced the Confederacy back upon the device of paper money.  In all approximately one billion dollars streamed from the printing presses, to fall in value at an alarming rate, reaching in January, 1863, the astounding figure of fifty dollars in paper money for one in gold.  Every known device was used to prevent its depreciation, without result.  To the issues of the Confederate Congress were added untold millions poured out by the states and by private banks.