Final answer:
The South financed the Civil War through the sale of cotton to foreign nations, a strategy known as 'King Cotton' diplomacy. When the Union blockade limited this, they turned to war bonds, loans, and the printing of money.
Step-by-step explanation:
The South mainly relied on the sale of cotton to foreign nations, particularly with the British and French textile industries, to finance the war. This economic strategy was known as 'King Cotton' diplomacy.
However, as the war continued, the Union blockade severely reduced the South's ability to export cotton, diminishing their primary source of funds. To cope, the South also employed war bonds, loans, and the printing of money, further destabilizing their economy due to rapid inflation.
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