The Confederate States dollar was first issued just before the outbreak of the American Civil War by the newly formed Confederacy. It was not backed by hard assets, but simply by a promise to pay the bearer after the war, on the prospect of Southern victory and independence. As the Civil War progressed and victory for the South seemed less and less likely, its value declined. After the Confederacy's defeat, its money had no value, and individuals and banks lost large sums.
The first series of Confederate paper money, issued in March 1861, bore interest and had a total circulation of $1,000,000. As the war began to turn against the Confederates, confidence in the currency diminished, and the government inflated the currency by continuing to print unbacked banknotes.