7. The Cost and Consequences of the Civil War

There was a sea change in money and banking in the U.S. as a result of the Civil War. Government became the primary regulator. Metal coins gave way to paper. Mistakes of one bank infected others – it was contagion.

Southerners were left bankrupt. Many desired the free minting of silver coins because the gold coins were so dear. The Wizard of Oz spoke to monetary problems in the U.S. The yellow brick road was the gold standard.

Consequences of war reveal the fallacy of broken windows. All wars are disastrous. Resources are used in short-sighted ways without noticing all the long term opportunity lost costs. Prosperity cannot be created through destruction. The Republican agenda was not true laissez-faire. They were mercantilists, using government to grow their businesses and to keep competition away.

Lecture 7 of 8 from Mark Thornton's The Economics of the Civil War, presented to the Auburn University Academy for Lifelong Learners.