Perhaps more important, despite London’s rocky relationship with Washington, D.C., war threats from Lincoln kept the British at bay, especially after the resounding Union victory at the Battle of Antietam (see Major Battles, p. 38). As a result, the Laird rams were eventually scrapped, and Richmond lost all hope for help from the outside.
Collapse of the Southern Economy
Unable to break through the Union blockade—and thus unable to buy goods or sell cotton—the Confederacy experienced a massive economic collapse in 1862 and never recovered. Individual states and private banks printed more cheap paper money to counter the depression, but these measures only worsened the situation by causing inflation.
This inflation spiraled into a situation of hyperinflation, in which the value of the Confederate dollar dropped rapidly, sometimes even from hour to hour. Meanwhile, because of drought conditions, food became scarce in some areas. In 1863, things got so bad that a group of Virginians, many of them women, looted the Confederate capital in the Richmond Bread Riots, searching for food and taking out their frustration on their government.