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The Union naval blockade, which prevented them from exporting their plentiful cotton in exchange for war supplies.

Lincoln's Emancipation Proclamation (effective from January 1863), which made it impossible for Britain and France to aid the South withut looking pro-slavery themselves.

The Confederate dollar, which was not based on real assets, but only on the promise of future victory and Southern independence.

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Q: What problem did the south have in funding the war?
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