When a cavalry unit was raised during the Civil War, were the men issued with horses or did they use their personal horse? For example, 1st Arkansas cavalry (Union) was a western unit made up predominantly of farmers.

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My memory of this (I think from watching PBS's The Civil War, back in the day) was that for the Union side the army provided the horses, while for the Confederates, recruits were expected to bring their own.

That's currently roughly what Wikipedia says as well:

Both cavalries originally required recruits or local communities to provide horses, a policy that lasted briefly in the North, while the South maintained it throughout the war even though Richmond leaders recognized its serious drawbacks. While Confederate troopers bore the monetary cost of keeping themselves mounted, Union cavalrymen rode quartermaster issued animals obtained though public contracts (although officers had to reimburse the cost of their mounts to the government).

Sadly, this bit does not appear to be referenced.

I found a lot of references to an extreme rate of attrition in horses during the war (a 5x higher rate than the humans, supposedly), which makes one wonder how the Southern approach could possibly work.

Civilwar.com elaborates on this a bit:

On active campaign, a trooper had to look out for his own animal and care for it. If the horse was disabled, it was easier for a northern soldier to get a new mount from the herd which usually accompanied the army. Southerners brought their own mounts with them into service and woe be to the man whose horse pulled up lame or was injured. It sometimes meant the trooper became a foot soldier until another horse could be obtained.

So for your putative Union cavalry unit, where they got their horses depends a lot on how early in the war the unit was formed. (And possibly whether the officer who formed it did so on his own initiative, or on orders from higher-ups).

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