 Early on in the war, the Confederacy relied mostly on tariffs on imports and taxes on exports. However, with the imposition of a voluntary self-embargo in 1861 (intended to "starve" Europe of cotton and force diplomatic recognition of the Confederacy), as well as the blockade of Southern ports enforced by the Union Navy, the revenue from taxes on international trade became smaller and smaller. Likewise, the financing obtained through early voluntary donations of coins and bullion from private individuals in support of the Confederate cause, which early on were quite substantial, dried up by the end of 1861. As a result, the Confederate government was forced to resort to other means of financing its military operations. A "war-tax" was enacted but proved difficult to collect. Likewise, the appropriation of Union property in the South and the forced repudiation of debts owned by Southerners to Northerners failed to raise substantial revenue. The subsequent issuance of government debt and substantial printing of the Confederate dollars contributed to high inflation which plagued the Confederacy until the end of the war, although the military setbacks in the field also played a role by causing loss of confidence and fueling inflationary expectations.
