- - Monday, July 7, 2014

TRADING WITH THE ENEMY: THE COVERT ECONOMY DURING THE CIVIL WAR
By Philip Leigh
Westholme Publishing, $26, 182 pages

One of the seldom-discussed scandals of the American Civil War was the rapacity of Northern businessmen, who imported millions of bales of cotton from the Confederacy, then used the proceeds to buy arms. The result: prolongation of the struggle for perhaps two years.

That the Confederacy managed to smuggle huge amounts of cotton to European markets, thereby earning enough cash to survive the first years of the war, has been recounted by such historians as Amanda Foreman, whose book, “A World On Fire,” is the best I have encountered on the subject.

Now comes historian Philip Leigh, with an eye-opening story of cotton-smuggling schemes that, in my view, bordered on treason. His story is all the more shocking because of the persons involved. One primary villain was U.S. Sen. William Sprague, of Rhode Island, a mill owner and the son-in-law of Treasury Secretary Salmon P. Chase.

With a shady partner named Harris Hoyt, Sprague purchased several vessels, which he sailed to the Caribbean and acquired a British registry. In a typical deal, a vessel then proceeded to Matamoros, Mexico, with a cargo of rifles, cartridges, gunpowder and other contraband for the Rebels that was swapped for cotton.

An investigation resulted in Sprague and others being charged with treason. Murky postwar politics kept him out of court, and his wife, Salmon’s daughter Kate, left him for another senator.

Steady supplies of cotton were important both to owners of textile mills in the Northern states and industrialized nations of Europe. Northern mills, chiefly in New England, made cotton America’s largest industry, producing goods valued at $115 million in 1860. In Great Britain, 20 percent to 25 percent of the population depended on textiles. Cotton was the sole Southern crop of economic significance, responsible for two-thirds of American exports in 1860.

Cotton was also vital to the big shipping houses in such Yankee ports as New York and Boston, which supplied the European market. Indeed, in December 1860, as war loomed, business leaders in New York railed against abolition to show support for the South. New York Mayor Fernando Wood even urged that Manhattan secede from the union and become an independent city-state similar to the “free cities” of northern Germany.

Nothing came of Wood’s demand, but his attitude was tantamount to a “seal of approval” for Yankee businessmen determined to continue using Southern cotton, even after the Confederate Congress forbade its export to the North. However, a total blockade of cotton shipments to Europe could cause economic havoc and prompt British and French intervention on the side of the South.

The result was a menage of regulations that sought to balance “economic necessity” with a desire to avoid outright “trading with the enemy.” Loopholes abounded, and the artful subterfuges outlined by Mr. Leigh make for interesting reading, even if confusing at times. Briefly, Union officers were permitted to issue permits for the purchase of Southern cotton, but with warrants rather than cash, and only from “loyal growers.”

Several prominent Union generals could not resist the chance to stuff their pockets with tainted gold. When Gen. Benjamin Butler occupied New Orleans in May 1862, he had a net worth of $150,000. Six years later, writes Mr. Leigh, “it was $3 million. Although the lawyer-general was too shrewd to incriminate himself, there is little doubt the gain was primarily achieved by trade with the enemy.” Butler was even bold enough to use U.S. Navy vessels to carry cotton and sugar that he owned to Boston for resale at substantial profits. He also confiscated and sold Southern cotton for his own profit.

More discerning generals realized that smuggling enabled the South to convert cotton into arms. Gen. William T. Sherman complained to his brother, Ohio Sen. John Sherman, that illicit trade through Cincinnati “has done more to prolong the war than the state of South Carolina.”

Gen. Ulysses S. Grant was disgusted with cotton speculators in his command. Mr. Leigh somehow missed a telling anecdote about Grant’s integrity, recounted in detail in Bruce Catton’s biography. Grant’s father appeared in camp with three brothers (Henry, Harmon and Simon Mack) and asked for permits to buy and ship cotton, offering him a cut of the profits. Grant realized that his “own authority was being put up for sale,” and he ordered the group home.

The angry Grant also issued an infamous order which, Mr. Catton notes, put an “enduring stain on his own name” — an edict expelling Jews from his department (the Mack brothers were Jewish). Mr. Catton suggests that Grant used the word Jews “much as superheated Southerners” used the term Yankee. Nonetheless, Grant also referred to Jews in supplemental orders.

The Confederacy, meanwhile, instituted controls that defy brief summary. A “Cotton Bureau” could buy half a crop at a fixed price and permit the grower to sell the remainder at whatever free-market price he could find. Cotton-rich Texas, whose crops had not been affected by the war, countered with its own system. (I was interested to learn that in the last months of the war, a “Confederate Treasury Agency” set up shop in my hometown of Marshall, Texas.)

Story Continues →