Chapter 6
General Grenville Dodge was aware of the heavy irony in bringing Thomas Durant in to direct the operation’s financial end. Durant was responsible for the first railroad bridge built across the Mississippi at Rock Island, Illinois. Soon after the bridge was completed, a steamship plowed into it. The owners of the ship sued the M and M Railroad and president Durant for damages as well as a judgment to have the bridge dismantled. Successfully defending Durant and the M and M in court was a young lawyer from Illinois, Abraham Lincoln. Six years later as President, Lincoln appointed Durant’s company, with its operations center in Council Bluffs, to be in charge of establishing the eastern terminus of the Transcontinental Railroad.
Dodge needed Durant’s connections to move the goods seized from Confederates out of warehouses and onto eastern port ships. He needed Durant’s business and banking acumen to market the goods and to turn at least a portion of it into greenbacks so that the people in his northern spy system could get paid. The General wired Durant.
Durant’s response was immediate and enthusiastic. He met Dodge in Corinth a week later.
“General, to get this operation underway quickly, you need fungible commodities to bring European capital into the market. In my ride down here I saw poverty and destitution on one side of the road and on the other I saw incredible wealth rotting in the fields. You get your corn and oats harvested because you need to feed your horses and mules. You don’t harvest cotton or hemp or any other cash crops. What do you do with the cotton you confiscate? What you don’t burn or dump into the river you store in barns and warehouses. Give me that cotton and the authority to move it and I’ll convert it into greenbacks ahead of sale. Give me further license and I’ll bet I can find storehouses full of contraband that you didn’t even know existed.
And looking ahead, let’s get those fields turned over and ready for planting in the spring. It’s not too late to pick the cotton that hasn’t rotted. On the road, I passed thousands of able black men and women who could earn their keep if you gave them work. Let me get them organized. I’ll give them places to live and food to eat, and in the spring we’ll plant. Not just cotton. We can plant short term crops, buy them livestock, and let them feed themselves.”
When the meeting was over, Dodge gave Durant some of the control he wanted and left on the table options for a larger enterprise once the funding project was underway. The General was not so naïve as to believe that Durant could gain control of the existing market in contraband cotton, but there was no harm in letting the man discover that for himself. General Butler controlled the Louisiana market, and General Grant controlled the Tennessee market. Grant was as clean as Butler was corrupt, but Grant’s honesty and dedication to stopping the corruption of the political and military system came at a price—he persecuted anyone in his district who dealt with unauthorized trade in goods. On Dec. 17 he levied General Order No. 11, which in effect expelled all Jews from Kentucky, Mississippi, and Tennessee under the assumption that the “Israelites” were responsible for all the unauthorized trade in his jurisdiction. Lincoln rescinded the Order three weeks later, but the damage was done.
By contrast, Butler by his lack of enforcement encouraged trade in contraband goods in his district. Butler did not invent the practice of seizing military contraband and selling it, but he was the first to apply it to slaves. “Slaves aren’t people,” he argued. “They are military assets and they support the rebels by building and digging and transporting and are therefore subject to seizure.” The opinion, incorporated into Lyman Trumbull’s bill that became the Second Confiscation Act, was signed by President Lincoln in July.
Whereas Grant was directly involved in attempts to stop the trade of illegal goods, Butler had a roster of civilians who contracted to deal in contraband. Butler learned early that if he seized the cotton, all he had was cotton. If he seized it and he sold it, the money realized was traceable, clearly military money. Instead, he allowed the cotton to come to New Orleans, where it was auctioned off for low prices, and had a proxy buy it. General George Shipley, as Military Governor of Louisiana, gave Butler’s contractors the license to transport goods through military lines. The cotton was shipped down to New Orleans to be sold and then back up the Mississippi and put on trains for the eastern ports.
Durant learned that if money were to be made in the cotton trade, it would not be in contraband seized under Grant or Butler’s jurisdictions. But money was to be made, he said, “in the cracks of the system.” He went to George Johnston, George Shipley’s subordinate, and made a deal. First, he said, he wanted “permission” to get control of Texas cotton. Since it was not under Butler’s jurisdiction, it was only a question of courtesy, but Durant wanted official approval. He got the nod from Butler’s man and went to Washington and got official permission from Secretary Stanton. Durant told Stanton that the cotton would not be sold in the U.S. but would be traded for arms in Cuba or Mexico. That satisfied Stanton, because Grant was complaining about the illegal cotton trade. It also satisfied Butler because it kept Texas cotton off the market that he was selling to.
Durant next addressed the inefficiency of the cotton confiscation system. He put it this way to Butler’s man Johnston. “Everybody thought this war would be over in a matter of months. That’s what they all think when they start a war. But we’ve got to be in this for the long haul. Don’t kill the goose that lays the golden eggs. Seizing cotton takes away the motivation to plant another crop. If you want a crop to harvest in the fall, you have to motivate the planters.”
Durant convinced Johnston to give an unwritten promise to plantation owners that their slaves would not be freed by troops under Butler’s control and that their cotton would not be seized, but would be allowed to be shipped to New Orleans to be sold by the plantation owners—at low prices, granted, but for a profit, nonetheless. That was the carrot. The stick was for Butler to administer a census in his district as a way to send a message to those planters who were not willing to play along. Butler sent squads of soldiers to the 4,000 plantations in the Louisiana District asking for a pledge of loyalty to the Union. Refusal to sign the pledge meant that the owners were banished from their plantations and property seized, under the Second Confiscation Act. Durant suggested a taunt: “We’ll take the plantations and turn them into freedman farms. Wouldn’t that be a shame?”
With the promise of a new cotton crop, Durant went north to arrange for financing, essentially selling futures in the fall crop that was not yet in the ground.
Immediate capital was provided by speculators from the North who were eager to lease plantations that were seized by Butler and worked by contraband slaves that were also “freed” from the slavery of their masters. To prove the viability of betting on the future production of cotton, Durant published bulletins in newspapers in the south and the border states: “Any FMC or FWC willing to work will be clothed and in every way provided for out of their earnings. Payment will be, depending on quality of the work, $12.5 cents per pound of cotton, and productivity other than field work will be paid on a contract basis.”
As easily as he found investors, Durant found managers, although they were not cut from the same cloth. He sent letters and telegrams to the relief societies asking for money and volunteers. The overwhelming response brought people, money, and goods, as well as promises to help build the freedman villages that would help run the plantations. What Durant could not get from donations or the army he bought on credit. To Dodge’s relief, contrabands from the camp in Corinth began to relocate to the villages and their plantations.
Even General Grant sent congratulations on the success of the enterprise and remarked on the relief it gave his troops. “Our officers no longer feel the need to feed and clothe the refugees and considerable peace is brought to the ranks because of it,” he wrote. Dodge knew of what his superior spoke. Not all Union soldiers were abolitionists, and even those who were sympathetic resented the trailing mobs of freed slaves that followed them, hoping for a li
ttle food to go along with their freedom.
Once Durant found buyers for the cotton futures as well as the cotton in the bale, he was one step away from going to the Confederate cotton merchants and offering a way around the blockade. By the first of the year he was offering to pay, at a discount, to take the cotton they had in their warehouses off their hands. His most effective argument: sell it to me now, or have it seized later.
And if there were any question about that inevitability, Durant referred them to General Yancey, who welcomed Durant’s initiative to the degree that he accepted Durant’s offers to draft and deliver letters above his signature as Adjutant-General.
HDQRS. DIST. OF TEXAS, NEW MEXICO, AND ARIZONA, Las Animas
Dec. 23, 1862
Brigadier General H. P. BEE,
Commanding at Brownsville:
SIR: I am instructed by the Major-General commanding to direct you to send with Captain Da Ponte to Havana a reliable and competent business man, Mr. Thomas Durant, for the purpose of purchasing arms, ammunition, &c., in accordance with instructions. Captain Da Ponte is perfectly familiar with the Spanish language, but has little experience in business, and the general thinks it will be necessary to send someone capable to assist him.
These arms will be paid for with Government cotton, if there be any in Brownsville at the time of their arrival at that place, and if there is none, you are directed to seize any cotton in the place for the purpose of paying for them. As soon as these arms arrive, you will cause them to be sent without delay to Houston, and for this purpose you will seize such a number of teams, no matter to whom they may belong, as may be necessary, if there is not sufficient Government transportation.
These arrangements are not intended to affect in any manner your own movements in pushing forward without delay to the eastern part of the State, which you will do in accordance with previous instructions.
I am, sir, very respectfully, your obedient servant,
STEPHEN D. YANCEY,
Acting Assistant Adjutant-General
The cotton for arms agreements were in place. By January, Durant was shipping cotton to Havana in exchange for arms and ammunition, which was then shipped back to the Union troops.
When Dodge over-ran Van Dorn and captured 100 bales of cotton, the financing of the operation was guaranteed. Cotton was nearly $2.00 a pound. At 500 pounds per bale there was a fortune in contraband.
Durant sent a cable to Dodge:
Please advise regarding shipment and warehousing of seized contraband. Will use military transport. Will use discretion regarding total amount of material. Releasing ten percent immediately to market.
Grenville Dodge shook his head when he read the telegram. Durant knew it should have gone by courier, but the man was impatient. His ‘use discretion’ comment was a flag to anyone downstream. It said, ‘Pay attention. This is important.’ The General knew Durant would release the seized cotton in small lots to keep the price up. No matter. Let it go.
Dodge wrote his response and sent it via courier.
When Durant showed up a week later asking for a meeting, Dodge knew he was in for a ride.
“General, I need your advice. I don’t have enough information to deal with this properly, and maybe you can’t help me, but I can’t just sit on this.
I have been very successful in dealing with putting the negroes to work to generate revenue, and marketing contraband is going well up until now. I could sell the cotton and hemp and the price was going through the roof. General Yancey has been very cooperative in directly trading the cotton for guns.
But Yancey wasn’t at all pleased when he found that somebody was driving up the price of guns. There’s only two possible bidders in this war. First we argued price with the Cubans, and then their agent said it was also a question of supply. Yancey got word there were guns to be had in Mexico, and I went to Matamoros and no one wanted to deal with me. There were guns to be had, but nobody wanted to deal. They were just sittin’ on them. Why won’t the Mexicans sell us their guns?”
“Doc, what is it you want from me? Have you talked to Stanton?”
“I don’t want to go to him about this. You’ve got a whole list of people who can find out what’s going on. What do they know? What can they find out? Yancey wants the guns and I don’t like to be beat, General. That’s the truth. I want to know who my competition is, at least.”
“I appreciate what you are telling me. I will put the word out, and I’ll also write to Stanton. For now, I am asking you to redefine your mission, to reset your priorities. The operational funds are there. Don’t worry. We can always use the weapons, but right now I want you to scale back your attempts to trade cotton for guns. Focus on getting and holding the cotton, not necessarily on marketing it. Warehouse it, if you have to. Keep it out of the hands of anybody who can use it. Let me know if you need people and transport. Keep me posted on your progress. I appreciate your coming to me with this, and I will deal with Stanton.”
Dodge did not want to challenge the man who had financed his northern operation. The General had maintained his very limited southern system of scouts and spies under the auspices of General Grant, and their reports clearly reflected that there were more than two sides in this war. To win the war for the cause of the Union involved placing strategy ahead of tactics. It involved losing battles in order to gain position. It involved getting information and perhaps holding onto it instead of acting on it. Durant should know better. These were men Durant had dealt with all his life, the profiteers who traded in everything--people, goods, and currency. Like jayhawks, they held no allegiance and preyed on everyone, even each other.
Dodge forwarded Durant’s complaint to Secretary Stanton. He wanted no part of any of this, but the genie was out of the bottle.
Quinn's War Page 6