For starters their internal squabbles, the war was supposedly fought for states rights, the rights that Davies trampled with gusto during wartime and there are no indications he would relinquish his powers, so it would be interesting times.
Money wise Confederacy was heavily in debt, economy was in shambles and cotton was not the money maker it used to be (competition from British empire). Also, post war issues of central banking will be fun to resolve.
Army will have to be demobilized, whatever standing army will remain will have to be split between watching USA and fighting Indians, so Mexican adventures would have to be left to filibusters.
The whole State's Rights issue is a Lost Causer invention rather than any real basis in the contemporary struggle itself. To quote from
Modernizing a Slave Economy: The Economic Vision of the Confederate Nation by John Majewski, Chapter
ECONOMIC NATIONALISM AND THE GROWTH OF THE CONFEDERATE STATE
Confederate railroad policy, in fact, provides a microcosm for understanding how secessionists crossed the thin line separating antebellum state activism and a powerful, dynamic Confederate state. On the face of it, most Confederate leaders seemingly opposed national railroads. During the Confederate constitutional convention, South Carolina’s Robert Barnwell Rhett and other secessionists sought to prohibit the central government from funding internal improvements. The Confederacy, they argued, should never allow internal improvements (at least on the national level) to generate the evils of logrolling, budget deficits, and higher taxes. Rhett won an important victory when the Confederate constitution specifically prohibited Congress from appropriating ‘‘money for any internal improvement intended to facilitate commerce.’’ The constitution allowed the Confederate Congress to appropriate money to aid coastal navigation, improve harbors, or clear rivers, but only if it taxed the commerce that benefited from such improvements. ‘‘Internal improvements, by appropriations from the treasury of the Confederate States,’’ Rhett’s Charleston Mercury cheered, ‘‘is therefore rooted out of the system of Government the Constitution establishes.’’
States’ rights ideology, though, eventually lost to a more expansive vision of the Confederate central state. As Table 6 shows, the Confederate government chartered and subsidized four important lines to improve the movement of troops and supplies. Loans and appropriations for these lines amounted to almost $3.5 million, a significant sum given that a severe shortage of iron and other supplies necessarily limited southern railroad building. Jefferson Davis, who strongly backed these national projects, argued that military necessity rather than commercial ambition motivated national investment in these lines. The constitutional prohibition of funding internal improvements ‘‘for commercial purposes’’ was thus irrelevant. That Davis took this position during the Civil War followed naturally from his position on national railroads in the antebellum era. Like Wigfall, he believed that military necessity justified national railroad investment. As a U.S. senator, Davis told his colleagues in 1859 that a Pacific railroad ‘‘is to be absolutely necessary in time of war, and hence within the Constitutional power of the General Government.’’ Davis was more right than he realized. When the Republican-controlled Congress heavily subsidized the nation’s first transcontinental railroad in 1862, military considerations constituted a key justification. Even after the Civil War, the military considered the transcontinental railroad as an essential tool for subjugating the Sioux and other Native Americans resisting western settlement.
When the Confederate Congress endorsed Davis’s position on railroads, outraged supporters of states’ rights strongly objected. Their petition against national railroads—inserted into the official record of the Confederate Congress—argued that the railroads in question might well have military value, ‘‘but the same may be said of any other road within our limits, great or small.’’ The constitutional prohibition against national internal improvements, the petition recognized, was essentially worthless if the ‘‘military value’’ argument carried the day. Essentially giving the Confederate government a means of avoiding almost any constitutional restrictions, the ‘‘military value’’ doctrine threatened to become the Confederacy’s version of the ‘‘general welfare’’ clause that had done so much to justify the growth of government in the old Union. The elastic nature of ‘‘military value,’’ however, hardly bothered the vast majority of representatives in the Confederate Congress. The bills for the railroad lines passed overwhelmingly in 1862 and 1863. As political scientist Richard Franklin Bensel has argued, the constitutional limitations on the Confederate central government ‘‘turned out to be little more than cosmetic adornments.’’
Like Louis Wigfall’s rambling interview with William Howard Russell, the ‘‘cosmetic adornments’’ in the Confederate constitution allowed secessionists to articulate republican principles without actually having to follow them. If Confederate delegates in Montgomery really wanted to stop all national improvements, they could have simply prohibited the Confederate Congress from appropriating ‘‘money for any internal improvements’’ rather than insert the qualifying phrase ‘‘intended to facilitate commerce.’’ It is hard to believe that the inclusion of the ‘‘commerce’’ qualification was accidental. Having spent much of their careers debating the old federal Constitution, the delegates at Montgomery carefully considered the implications of every phrase they wrote.∞∂ The delegates surely knew that men such as Wigfall and Davis had used the national defense argument to justify federal spending on internal improvements. As it was, the delegates ritualistically invoked states’ rights without having to worry about the consequences. Historian Don E. Fehrenbacher has argued that the Confederate constitution was written ‘‘by men committed to the principle of states’ rights but addicted, in many instances, to the exercise of national power.’'Perhaps it would be more accurate to say that Confederates were committed to the language of states’ rights in a way that rarely prevented the growth of national power.
The decision to subsidize railroads, while ideologically important, was only a small part of the overall growth of the Confederate state. Other elements of Confederate state building, in fact, proved less controversial. When a shortage of pig iron threatened ordnance production, Davis told Congress in early 1862 that the ‘‘exigency is believed to be such as to require the aid of the Government.’ In April 1862 the Confederate Congress passed legislation that offered no-interest loans to iron masters who expanded their forges. The loans would only pay half the cost of the additional investment, but the Confederate government also covered to make advances up to one-third the value of contracts. To help forges secure additional raw materials, the Confederate Congress set up the Niter Bureau in 1862, which quickly became involved in exploration for new sources of iron. The Confederacy sometimes used private firms to produce ordnance—the famous Tredegar Iron Works is a good example— but the Confederacy’s Ordnance Bureau also built and operated its own arsenals, mills, and factories throughout the South. The arsenal at Selma, Alabama, for example, employed 3,000 civilians, while the Ordnance Bureau’s powder factory in Augusta, Georgia, was the second largest in the world. Whereas the North tended to rely on government contracts with private firms to meet the needs of wartime production, the Confederacy, with surprisingly little opposition, produced much of the military supplies consumed by its armies.
The story of the Quartermaster Department is similar to the Ordnance Bureau. Historian Harold S. Wilson describes Confederate e√orts to outfit soldiers with uniforms, shoes, blankets, and tents as the ‘‘brink of military socialism.’’ The Quartermaster Department of the Confederacy operated its own factories and workshops, employing some 50,000 workers (many of them seamstresses). To obtain cloth for these factories and workshops, the Quartermaster Department exerted immense control over privately owned textile mills. Mills that refused to submit to Confederate controls on prices and profits faced the prospect of having their workers conscripted into the Confederate army. When wool supplies ran short—largely because Union forces captured most of the major woolproducing areas early in the war—the Confederate Congress authorized quartermasters to impress whatever supplies they could find. The Confederate Congress also allowed the Quartermaster Department (under the auspices of the Bureau of Foreign Supplies) to regulate and control most blockade runners. In early 1864 the Confederate government prohibited private shipments of cotton, tobacco, and other staple crops; required that private blockade runners devote half of all cargo space to the war department; and prohibited luxuries from entering the South. The Confederacy had essentially nationalized much of its foreign commerce.
Also from Majewski, but this time the Chapter
REDEFINING FREE TRADE TO MODERNIZE THE SOUTH:
The Confederacy, of course, never really had a chance to collect its tariff. If the seceding states had been allowed to leave without war, however, the Confederate tariff would have had a significant fiscal impact. According to economist Thomas F. Huertas, the South imported $200 million worth of northern goods in 1860 (see Table 5). With an independent Confederacy, northern goods would have been transformed into dutiable foreign trade. Under Confederate tariff schedules passed in May 1861, imported manufactured goods from the North and Europe would have yielded the Confederate treasury almost $34 million. The percentage of collected duties to the value of total imports would have been 14.3 percent, which was only slightly lower than the ratio of 16 percent for the entire United States in 1860. In per capita terms, every free person in the Confederacy would have paid $6.07 in duties. By way of comparison, the entire United States (both North and South) collected duties worth $53 million, or $1.94 per free resident in 1860. If the North had allowed the South to peaceably leave the Union, the Confederacy would still have increased the tax burden on its own citizens—an ironic result for a nation supposedly committed to free trade and limited government.
The high rate of per capita taxation suggests the complex relationship between trade and Confederate nationalism. In some respects, the traditional southern commitment to free trade remained strong. In 1861, for example, South Carolinian G. N. Reynolds wrote in a letter to William Porcher Miles (a South Carolina delegate to the Confederate constitutional convention) that Switzerland was a model of free trade: ‘‘The result is that capital and industry flow solely in the most productive channels. So let it be with us.’’ Other secessionists thought in nationalistic terms and conceptualized trade not as a free-flowing river but as a weapon for punishing enemies. Referring to the North, Texas senator and former South Carolinian Louis Wigfall boasted, ‘‘Not one pound of cotton shall ever go from the South to their accursed cities; not one ounce of their steel or their manufactures shall ever cross our border.’’ A moderate revenue tariff that lowered duties on European goods while raising duties on northern goods synthesized these two potentially contradictory messages of free trade and Confederate nationalism. In the minds of many secessionists, free trade offered the Confederacy a means of escaping northern economic domination and solidifying international alliances. At the same time, secessionists could tout the ability of their government to penalize northern goods and protect southern manufacturers.
In fusing free trade and protectionist impulses, secessionists spoke and wrote in a Hamiltonian idiom of economic modernization and economic nationalism. Just as Hamilton had imagined the United States becoming a world economic power, secessionists envisioned the Confederacy as a vehicle for promoting economic modernization. Confederate duties closely resembled (and sometimes exceeded) the 10 to 15 percent tariff rate proposed by Hamilton in his famous Report on Manufacturers (1791). The similarity in rates reflected shared goals of simultaneously promoting nation building and economic development. Hamilton wanted to make his new nation economically independent while simultaneously encouraging enough international trade to pay for his ambitious fiscal plans. His moderate tariff encouraged domestic manufacturing while generating enough revenue to finance the Revolutionary War debt. Confederates wanted tariffs high enough to penalize northern goods—thus encouraging economic independence—but still low enough to allow for a vibrant trade with Europe.
The idea that Cotton fortunes for the Confederacy had/would decline is also without merit:
Rather than being displaced, they remained relatively steady in terms of percentages of British consumption. Cotton actually remained the main U.S. export until 1937 and
the value of said export increased from $227 Million in 1870 to $1.136 Billion in 1920; that's a 5x increase in value despite the export percentage decreasing from 60% of the crop to just 14%. They were getting much more for less, given that exports in 1920 were only three times larger than that in 1870.
Finally, for the debt issue, all but the Erlanger loan of 1863 was denominated in Confederate Dollars; it would thus be extremely easy to fix and the Confederate export tax on cotton alone would allow for it to be paid off no later than 1870.
