The federal government (“the North”) and the Confederacy (“the South”) took two very different paths when it came to funding the American Civil War. The Confederacy chose wrong, and lost. The causes and stakes were deep and complex, but principles aside, the outcome of the Civil War boils down to dollars and cents.

The American Civil War was the first Western military conflict of the industrial age, and more sophisticated tools – railroads, telegraphs, fancier weapons – are expensive. So, when shots were fired at Fort Sumter, the North and South had choices to make to bring in some fast cash: tax, borrow, or print.

The North raised taxes and started selling war bonds right away to bring in enough money for a large-scale battle. While the South had over a third of the country’s assets, it had very little liquid wealth. The Confederacy’s resources were almost entirely based on agricultural exports and the value of its land and slaves. It didn’t help that the cotton embargo took away its only source of income. In short, there wasn’t much cash around to tax.

The only thing the Confederacy could do was print more money to buy what they needed. Confederate money was also much easier to fake, and counterfeiters took full advantage. The North printed more money, too, but it diversified and could manage the inflation.

In 1864, the Confederate Congress took action to try and stop the financial bleeding with currency reform, but it was too late. By the end of the war, the Confederate currency suffered over 5,000% inflation, making its money pretty much worthless. When your money is useless, nobody is willing to sell you the food or supplies your soldiers need. When you are starving and out of ammo, there’s little choice left but surrender.

The Confederacy’s losses weren’t just counted in casualties. Because of the unbounded inflation, the cost of living in the South skyrocketed. Food was so expensive that in 1863, Virginians rioted over bread.

After the war ended, the South had another uphill battle to economic stability. The North saw its first big businesses rise up through war manufacturing, and industry pummeled the already devastated farm-based economy of the Southern states.

Ever since mankind started hitting each other with rocks, the technology of warfare has continued to advance by leaps and bounds. But no matter what principles guide each side of the conflict, one thing will never change. War is pricey and, as the Chinese say, “fought with silver bullets.” Money wins wars.