by Philip Leigh
On December 17, 1862, as he prepared to launch what would turn out to be an unsuccessful maneuver to attack Vicksburg by an overland route from west Tennessee, Grant issued General Order Number 11, banning Jewish traders from his military district. “The Jews as a class, violating every regulation of trade established by the Treasury Department and also Department Orders, are hereby expelled from the Department.” Earlier he had written, “The Jews seem to be a privileged class that can travel anywhere. They will land at any wood yard or landing on the river and make their way through the country.” The order and remarks were particularly offensive to the many Jewish traders in Memphis and Cincinnati. Within three weeks, General in Chief Halleck telegraphed from Washington, instructing Grant to revoke the order.15
The following month, War Secretary Stanton sent a trusted assistant, Charles Dana, to investigate cotton trade at Memphis. Dana wrote back:
The mania for sudden fortunes made in cotton raging in the vast population…of this town almost [exceeds] the numbers…of residents…and has demoralized the army. Every colonel, captain, or quartermaster is in secret partnership with some operator of cotton…. I had no conception of the extent of the evil until I came and saw for myself.16
Historian Ludwell Johnson wrote that later in the war, an authorized Memphis agent named Ellery explained “how his room was besieged from seven o'clock every morning by mobs of people begging for contracts, mobs that included many ‘persuasive’ women whose blandishments Ellery did not find at all disagreeable.”17 Similarly, historian Merton Coulter wrote:
“Memphis was the center of truly gigantic traffic directly with the Confederacy. A Federal army officer charged that, ‘Memphis has been of more value to the Southern Confederacy since it fell than [the neutral blockade-running concentration port of] Nassau.’…[Michigan] Senator Chandler charged that through July 1864 an estimated $20-$30 million of supplies had gone to the Confederacy through Memphis alone.”18
In spring 1864, a Mississippi resident wrote Confederate secretary of war James Seddon to complain of a demoralizing breakdown in respect for private property. It seemed like nearly everyone was stealing cotton stored in remote locations and selling it to Northern traders. Even the normally most respectable and unlikely citizens were involved:
“Ladies residing in this region, eminent for wealth, respectability, intelligence, and beauty, make nothing of taking government cotton without authority and traveling in the night to the enemy's lines…bribing both [Rebel and Union] pickets, and in return bringing out whisky, calico, and coffee, and [selling] it…at a large profit.”19
After Sherman assumed a field command in November 1862, the new Memphis commander became Major General Stephen Hurlbut, who was a Lincoln friend from Illinois. While Hurlbut was in charge at Memphis, the widow of President James K. Polk wrote Richmond from Nashville in January 1864, asking permission to send her cotton to Memphis, where it could be sold. In April 1864, Major General Cadwallader Washburn replaced Hurlbut. Washburn was known to oppose interbelligerent trade. The following month he wrote Secretary of War Stanton that 95 percent of the trade at Memphis went to disloyal hands. He also accused predecessor Hurlbut of operating a local liquor monopoly. Whiskey purchased at forty cents a gallon in Cincinnati was sold for seven dollars in Memphis.20
Later that year, Lincoln sent Major General Daniel Sickles, who had lost a leg at Gettysburg, to report on trade conditions in the lower Mississippi Valley. Sickles wrote that illicit trade was abundant: “Boats loaded with supplies have had almost unrestricted opportunities for trade on the Mississippi and some of its navigable tributaries, stopping everywhere along the river, and dealing with anybody.” Historian William C. Harris concluded that if similar reports from Generals Banks, Edward R. S. Canby, and Washburn were valid, “the fall of Vicksburg and Port Hudson did not do the irreparable damage to the Confederate cause that historians have assumed.” Harris reasoned that the increased cotton trade partially compensated for the loss of the fortifications by bringing in needed products.21
HELENA
Upon occupying Helena, Arkansas, in mid-July 1862, Union General Samuel Curtis complained that his camp was “infested with Jews, secessionists, and spies.” By issuing orders that restricted trade to a few people he could control under military law as sutlers, Curtis adopted a policy that made him vulnerable to charges of improper monopolization. Shortly, a steady stream of rumored abuses percolated up to Chicago and the department headquarters for Curtis's army at St. Louis. Illinois senator Orville Browning's diary records Chicago rumors that Curtis deposited $150,000 with a Chicago financier less than three months after occupying Helena. Attorney General Edward Bates recorded similar hearsay in his diary, but the amount was $100,000.22 Two months later, Browning met with an officer serving under Curtis who claimed that Curtis could have captured Little Rock and secured Arkansas for the Union but instead went to Helena because there was no cotton in Little Rock. By October 1862, the officer said, Curtis had already seized several million dollars worth of the fiber and “converted it to his own use.”23
Later, Curtis wrote Lincoln directly to explain that the complaints originated out of envy from unsavory characters who were unworthy of trade privileges. Nonetheless, within a few months, the general was transferred to St. Louis to become the new department commander, and rumors of his possible fraud trailed along.
An investigating Treasury agent concluded that Helena's trade “diverted soldiers to become agents and brokers of cotton buying [and had] thrown thousands of dollars into the hands of our enemies.” Corruption flourished at Helena, where the army had little to do during twelve months of idle occupation before invading central Arkansas in late summer 1863. Federal soldiers even purchased cotton from slaves with counterfeit Confederate money.24 Nearby Union-loyal plantation owner James Alcorn secretly sold hundreds of bales of cotton, typically at nighttime, from vessels in the Mississippi River. He befriended federal officers in Helena and was rewarded with a pass to enter the town at will.25
Lincoln's military governor of Arkansas complained late in 1862 that the idle troops at Helena were principally engaged in profiting from cotton trade. They raided neighboring plantations to confiscate whatever cotton they could get. As an afterthought, they would often destroy the plantation homestead.26 Helena's steady occupation led to deplorable sanitary conditions, particularly among the freed slaves who fled there. Yankee soldiers informally referred to the place as “Hell-in-Arkansas,” as disease, malnutrition, and lack of clothes and shelter took a toll on the blacks who sought refuge in the town.27
Before the end of 1862, the inland federal navy began to get involved. Initially, Admiral David Dixon Porter sought to break up illegal trade. In time, however, he and his crews became covetous of cotton as a prize of war. Under maritime law, 50 percent of a captured cargo was subject to a reward for the crew of the ship making the capture. Five percent of the applicable half of the cargo was awarded to the crew seizing the prize. The prize fee was distributed among the sailors in amounts proportional to rank, with the captain getting the most. By the end of the war, Porter had become so aggressive at stealing cotton that Confederates gave him the nom de guerre Thief of the Mississippi. His sailors would seize bales and stencil “C.S.A” on them, thereby falsely representing the cotton as property of the Confederate government and therefore subject to prize law.28 Historian Ludwell Johnson explained:
According to an interpretation of…[naval] law…prizes might be taken wherever found. As a result, Federal gunboats in the Mississippi valley…[operated] to…[capture] cotton. ‘Naval wagon trains’…would scour the country 10–15 miles back from the rivers and bring in large amounts of cotton to [divide] as lawful Naval prize. Many officers grew rich. Senator Chandler claimed that more than $100 million was realized…in this manner.29
William Kellogg, a former Illinois congressman and long-time Lincoln friend, tried to use the president's influence in a Helena cotton-trading scheme. When he outline
d his plans to the president in June 1863, Lincoln told him he would have to clear them with Chase. But he gave Kellogg an endorsement to show to Chase, which concluded, “I wish [Kellogg] obliged so far as you can consistently do it.” After quickly reading the note, Chase replied, “It cannot be done, sir.” Ultimately, Kellogg's patronage award took the form of an appointment as chief justice of the Nebraska Territory early in 1865.30
Even after most of the federal army left Helena to capture Little Rock in autumn 1863, trade continued and may have even accelerated. In November, Rebel war clerk John B. Jones noted in his diary, “From [Helena] we have letters stating that all restraint is thrown off, and everybody almost is trading with the enemy. Some 1500 bales of cotton per week [are] taken to the Yankees from that region. They say most of the parties have permits from the government or from commanding generals to trade with the enemy.”31
NEW ORLEANS
Toward the end of 1861, General Butler asked then General in Chief George McClellan that he be given fifteen thousand troops to invade Texas. Butler's aim was to populate the Lone Star State with free immigrants in order to produce cheap cotton for New England's textile mills. Butler was a Massachusetts Democratic politician and part owner of a textile plant. His interest in profiting from cotton trade predates even the first meaningful Union army victory, at Mill Springs, Kentucky, in January 1862.32
Butler raised an army in Massachusetts, but before it was deployed, Admiral Porter submitted a plan to capture New Orleans, which would be led by his foster brother, Admiral David Farragut. If successful, an occupation force would be required. Thus, Butler's army was diverted to the New Orleans venture in spring 1862.
After running past the downstream forts of St. Philip and Jackson as well as a modest Rebel flotilla, Farragut forced the surrender of New Orleans on April 25, 1862. Six days later, Butler occupied the Confederacy's largest city, where he would remain in command for about seven months. During that period he earned one of the most unsavory reputations of any Civil War general for self-serving economic activities that aided the enemy and damaged the military effort of his own side.
As a clever lawyer, Butler became increasingly skilled at covering his tracks. But instances early in the war when he was less cautious point to a corrupting pattern. For example, when Lincoln authorized him to raise an army of New Englanders, the methods used to recruit, supply, and transport his troops during the 1861–1862 winter provide an initial indication of the general's instincts to leverage his military status for personal profit. He began by populating his headquarters staff with family members and friends. Among them was older brother Andrew, unemployed brother-in-law Henry Read, and Richard Fay, who was treasurer of Middlesex Mills, where Butler was the chief shareholder. Fisher Hildreth was another brother-in-law lurking around who later became involved in numerous shady deals.33
In one early instance, a New York clothing supplier named Whipple met with Butler and Hildreth, offering to supply hats for fifteen dollars a dozen. Butler responded by asking, “can you let us have six thousand at your price, giving my quartermaster ten per cent to divide around?” Whipple declined, explaining that the general had “mistaken his man.” A few months later, in January 1862, Whipple told Montgomery Meigs, who was quartermaster general for all Union armies, of the incident. Meigs asked that Whipple write a notarized accusation for him to present to Secretary of War Stanton. Whipple complied, and Meigs followed up with Stanton. Nothing further was done.34
Transporting Butler's soldiers to New Orleans provided another profitable opportunity. Twenty ships were chartered. Circumstances involving at least three are disturbing.
In December 1861, two Northerners in the shipping business had a revealing conversation. A shipping clerk named Reed and a ship owner named White were meeting when Reed remarked that he had heard some of the ships Butler chartered were engaged under questionable terms. White, who owned one of the ships, wrote on a piece of paper “$4,000 a month” and underneath it wrote “$2,500 a month.” He explained by pointing to the two numbers in sequence, “there [$4,000] is the way the charter party [i.e., contract] reads…; there [$2,500] is what we get.” Historian Ludwell Johnson concluded that such corrupted terms were standard Butler procedure. Participating ship owners were required to kickback a substantial portion of the monthly fee. When White was eventually called before an investigating committee of the US House, Johnson surmised that White was “remarkably forgetful, exceedingly evasive, and wholly disingenuous.”35
In time, Butler's behavior earned him more powerful accusers. Among them was Massachusetts governor John Andrews, who complained repeatedly to Washington. Eventually the governor wrote the state's two senators, Charles Sumner and Henry Wilson, “I am compelled to…declare that the whole course of proceedings under Major General Butler in this Commonwealth seems to have been designed and adapted simply to afford means to persons of bad character to make money unscrupulously, and to encourage men whose unfitness had excluded them from any appointment by me.”36
Butler arrived in New Orleans in May 1862 with personal capital of $150,000. Six years later his net worth was $3 million. The twentyfold increase could not have been achieved through salaries, dividends, and legal fees. Undoubtedly, the prime source was interbelligerent trade and other corrupt practices during the war, chiefly at New Orleans, where brother Andrew was an accomplice.37 Also involved was George Shepley, who was the military governor of Louisiana and later a collaborator with Butler in Norfolk, Virginia.38 Author Chester Hearn wrote, “If anybody in the Treasury Department had paused to investigate the numerous transactions floating through the Lowell [Massachusetts] accounts of Fisher Hildreth and the Boston accounts of Richard S. Fay, Jr., they would have found the Butler brothers deeply immersed in transactions involving huge sums of money—but nobody did.”39
Of the three captured Mississippi River trading centers, New Orleans held the most potential for intersectional commerce but was handicapped partly because General Butler alienated the local population. He hanged one citizen for slighting the American flag and threatened to arrest women who insulted Union soldiers in a disgusting manner.40 More importantly, he gave his elder brother privileged controls, which were abused by bribery demands.41 Consequently, trade volumes only grew slowly at first because many who were asked to pay bribes initially refused.
Nonetheless, within a few months, trading across enemy lines flourished in the Crescent City. Butler promised that planters who delivered bales into the city would not have them confiscated even if the owner were a high-ranking Confederate official.42 When one British trader suggested that Butler permit cotton to be shipped to New Orleans from Confederate-controlled Mobile, Butler wrote the Rebel commander in Mobile offering to exchange salt for cotton. During the Civil War, salt was essential as a meat preservative.43
Because of a tightening cotton shortage in Britain and France, Secretary of State Seward sent a message to European diplomats in Washington four days after the occupation to notify them that the blockade at New Orleans would soon be lifted. He was implying that large quantities of cotton would quickly reach the market. Like Seward, Lincoln wanted to avoid a European cotton famine in order to minimize the chances that Britain and France might intervene in the war on the side of the Confederacy. Consequently, he was persuaded that Southern planters should be allowed to take their cotton into New Orleans, where it could be sold and not confiscated. In order to motivate Southerners to supply cotton, Butler went so far as to announce that produce (i.e., cotton, sugar, etc.) could be sold for specie.
Butler immediately began attempts to participate in the lucrative trade. He used a federal warship to send $60,000 in sugar to Boston, where he expected to sell it for $160,000. However, his use of the government ship was reported. Instead of his earning a profit, military authorities only permitted him to recover his $60,000 plus expenses. Thereafter, his brother Andrew officially represented the family in such transactions. Everyone in New Orleans believed that A
ndrew accumulated a profit of $1 million to $2 million while in Louisiana. On inquiry from Treasury Secretary Chase in October 1862, the general responded that his brother actually cleared less than $200,000.44
An example of the corrupting influence of intersectional wartime trade is the story of young George Denison, who was assigned to keep an eye on the Butler brothers. After New Orleans was captured, Secretary Chase appointed Denison, a twenty-nine-year-old relative of his, as the new customs collector to replace the one previously reporting to the Confederate government. Denison was a graduate of the University of Vermont and an abolitionist. A few years earlier, Denison had married a Southern girl who later died in childbirth. When the war started, he was in Texas managing her estate, which ironically included about seventy slaves.
Denison arrived in New Orleans in July 1862 and promptly began writing Chase weekly, reporting suspicious commerce involving General Butler's friends and his brother Andrew. As noted, Louisiana's military governor, George Shepley, was among the friends. When Denison discovered illegal shipments of salt to Confederates across Lake Pontchartrain, he seized one of the vessels. General Butler had the ship released because it had a permit. Denison learned that Shepley issued such passes on demand for Butler, although he suspected that requests normally originated with the general's brother.45
Shamefully, less than six months after arriving in New Orleans, Denison himself was taking bribes. He met with General Nathaniel Banks when he replaced Butler in December 1862 to tell the newcomer that as special agent for the Treasury Department, Denison held exclusive authority in all matters of trade within the region. During the preceding months, businessmen often found it perplexingly difficult to secure legally entitled permits of various types until they learned to present Denison with a cash gift. It was a classic case of power inducing corruption. Although Denison was soon replaced, he was never punished. At the end of the war, he was a member of a partnership leasing three cotton plantations. He died of illness before the end of 1865, on a voyage back to the Northeast.46