The American Civil War provides ample material for studying the legal consequences of currency depreciation. The sudden demands of war on government budgets made it necessary in both North and South to issue a large volume of paper money, which produced a general rise in prices, a premium on gold, and all the other indices of major monetary inflation. American history had already illustrated the dangers in the use of unstable monetary standards and in too rapid an expansion of the monetary supply. The period of the Civil War is of peculiar interest to lawyers, however, because the record of private litigation is more abundant and because of the different course that inflation took in the two main areas. In the North the depreciation was arrested when the purchasing power of money had been cut to approximately one-half of its pre-war ratio. In the South continued issues of paper money brought progressive depreciation of the currency until its final complete collapse. We have therefore for comparison two great communities, governed by essentially the same legal system, projected side by side through varying degrees of monetary convulsion. From a study of the legal devices employed to meet these emergencies it is possible to derive some conclusions as to the resources of American law in the face of inflation. The limitations on the effectiveness of such devices may also suggest the hazards that face any system of private contract in periods of monetary disturbance.
John P. Dawson & Frank E. Cooper,
THE EFFECT OF INFLATION ON PRIVATE CONTRACTS: UNITED STATES, 1861-1879,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol33/iss5/4