After secession, the new Confederate States of America drafted a Constitution and elected Jefferson Davis of Mississippi President. The new country needed its own currency, and it needed a postal system.

Faced with paying for the war, the Confederacy turned to printing paper money. Some 1.7 billion dollars in southern "bluebacks" were issued, and rapidly dropped in value. Worth 95 cents on the dollar when first issued, Confederate currency dropped to 33 cents by 1863, and 1.6 cents by Appromattox (April 9, 1865). Currency was also issued by state and local governments, banks, merchants, and railroads, often in fractional denominations, to make up for the lack of coins.

The Confederate Post Office was instituted on February 21, 1861, and assumed reponsibility for postal service in the seceded states on June 1, 1861. Despite the tremendous problems it faced, the Post Office was the only government agency to pay for itself.