With loss of cotton exports, the South was in big trouble. It had lost its banking system and held no gold or silver reserves. There were different forms of paper money printed by the states or even private banks but overall people did not trust paper money. Without gold and banks the confederacy did the only thing they could do, and printed money.

The southern economy

It could not do much to collect taxes in order to support the printing effort. States collected little money and the confederacy was nearly left broke. The confederate government then decided to levy taxes in 1864.