by Philip Leigh
Later, Corwin admitted he obtained a fifteen-thousand-bale permit for Parkman. He also acknowledged that he secured a permit for Texas military governor Andrew J. Hamilton, who was previously involved in questionable between-the-lines trading. Finally, Corwin was the attorney for notorious contraband trader George Lane, who patronized General Butler, a virtuoso of interbelligerent trade. Characteristic of patterns established earlier in the war at New Orleans, the general's own brother-in-law was a business partner to Lane.23
Another politician-turned-lobbyist who attempted to profit late in the war was former Illinois senator Orville Browning. He was an old Lincoln friend who had been appointed to fill the seat of Stephen Douglas, who died of illness in summer 1861. Browning failed to keep his seat in the November 1862 general election when a wave of antiwar sentiment swept the states north of the Ohio River. In the last months of the war, Browning schemed to buy sizable quantities of tobacco and cotton in Richmond and Wilmington in partnership with another Illinois politician, James Singleton. Since they proposed to use greenbacks, Lincoln did not object. Unfortunately for Browning and Singleton, the Confederacy collapsed before they could complete their transaction. The Rebel produce that had been inventoried for them behind enemy lines went up in smoke as the Confederate armies evacuated.24
Singleton represented himself as a private peace emissary. He claimed to have met with “Rebel Commissioners” in Canada in November 1864. Singleton told Browning they informed him that Lincoln might be able to negotiate surrender terms that would include extinction of the Confederacy by reunification. Given Browning's introduction, Singleton asked Lincoln for permission to travel to Richmond to learn if such terms were realistically attainable. Singleton claimed to have reached Richmond, where he said that there was a large sentiment for liberal surrender terms but that Davis and other leaders would not agree. He so informed the president on returning, but added that he also contracted to buy large amounts of tobacco with greenbacks.
Singleton claimed Lincoln replied that he “wanted to get out all [the tobacco and cotton] he could, and send in all the greenbacks he could in exchange.” According to Singleton, Lincoln further explained that such trade would benefit impoverished Southerners and encourage them to seek peace with reunion. The president instructed Risley to give Singleton a pass and informed General Grant that he approved of Singleton's enterprise. Upon hearing rumors that Singleton was actually going to supply Lee's army with bacon, Grant seized a tobacco shipment erroneously thought to be Singleton's and asked that the permit be revoked. Bowing to a rising volume of complaints from Grant and others, Lincoln gave Grant authority to unilaterally prohibit between-the-lines trading anywhere east of the Appalachians. Consequently, Singleton was blocked and soon sank into obscurity.25
By January 1865, the US Congress became sufficiently frustrated to launch a joint Senate-House investigation of trade with the Confederacy. The results were reported on March 1, 1865, by Illinois congressman Washburne, who was one of Grant's political proponents from the earliest days of the war. The conclusions of the House report, Trade With the Rebellious States, were condemning. Intersectional trade was described as a “disgraceful scramble for wealth” that prolonged the war and “cost thousands of lives.” Although apparently sanctioned under the letter of the law, much of the trade was “for the use of Rebel armies.” The report recommended more restrictive legislation, which was adopted two days later with only three dissenting votes in the Senate and none in the House. The bill was intended to shut down trade until the end of the war. Given the one-sided favorable votes in the Senate and House, nearly everyone was surprised when Lincoln rejected it by pocket veto.26
As the war approached an end, America's cotton market became a shameful feeding frenzy of greed dominated by abuse of power concentrated in the hands of a comparative few who in the full judgment of history are nearly indistinguishable from thieves. A month before Lee's surrender at Appomattox, Hugh McCulloch was appointed Lincoln's third Treasury secretary. He soon despairingly observed, “I am sure that I sent some honest cotton agents South, but it sometimes seems very doubtful that any of them remained honest very long.”27 The restraints were too weak compared to the rewards, while the temptations were overpowering.
Upon securing an appointment, a dishonest Treasury purchasing agent was practically granted a license to steal. As historian Robert Selph Henry discovered, “an alert, hard-working and reasonably ingenious cotton agent could earn for himself as much as $80,000 a month—[making] the $25,000 which one deputy agent admitting paying for his commission seem like a pretty good speculation.”28
At the end of the war, an estimated five million bales lay inventoried in the South. US Treasury agents sent throughout the South to take possession of “abandoned” property and items owned by the Confederate government seized about three million bales. Although the prime aim was to collect cotton, the agents would grab whatever could be sold. Historian Merton Coulter summed up a number of swindles:
The brazen dishonesties practiced by these agents almost surpass belief…. In Savannah alone, out of $21 million worth of cotton sold, they handed over to the U. S. Treasury only $8 million…. An agent in Texas forced a woman to sell for $75 a bale her 400 bales worth $200 each…. Another agent who had an interest in a steamboat refused to let a planter move his cotton unless he shipped it on the agent's craft.
…[T]wo of the greatest cotton thieves were Simon Draper, general cotton agent for the Atlantic and Gulf states, with headquarters in New York City, and William P. Mellen, agent for the interior with offices in Cincinnati. They seized cotton indiscriminately and then allowed the owner to recover part for a quitclaim on the remainder…Draper, who had been bankrupt when he received his appointment, became a millionaire after a few years…. William Chandler, Assistant Secretary of the Treasury, in charge of cotton seizures, entered upon his work poor, but emerged worth hundreds of thousands of dollars. Many got rich, few were punished.29
During the final months of the war, desperate conditions in the South also led humanitarian instincts to authorize trade that might otherwise have been denied. In one instance, Lincoln was approached directly by a Baptist minister, Rev. Thomas Teasdale, who was a representative of the Mississippi State Orphans Home. Before the war, Teasdale had served temporarily at a church in Lincoln's hometown and was warmly recognized by the president.
Teasdale asked permission to ship cotton purchased with Confederate money through the lines to New York, where it could be sold to purchase supplies for the orphanage. The pastor formalized his request by presenting a petition by the orphanage board describing the impoverished conditions and endorsed on the back by President Jefferson Davis. Evidently offended by the Davis endorsement, Lincoln responded by explaining that economic shortages were intentionally employed to motivate Southerners “to give up this wicked rebellion.” Teasdale replied that “the hapless little ones” were not perpetrators of the war but merely victims of it. Lincoln softened, replying, “That is true and I must do something for you.”30
Lincoln wrote a note to General Canby in New Orleans, authorizing—but not ordering—the general to accommodate Teasdale. The president then endorsed the back of the orphanage petition, encouraging the secretaries of war and the Treasury to meet with Teasdale regarding his “praiseworthy effort.” Lincoln wrote his endorsement below that of Davis, thereby transforming the document into perhaps the only one to have the signatures of both Davis and Lincoln in their capacities as presidents.31
On May 22, 1865, thirty-seven days after taking office following Lincoln's assassination, President Andrew Johnson announced that all Southern ports, except a few in Texas, would no longer be blockaded and instead be freely open to commerce on July 1. Europe was eager to buy cotton, and Southerners badly needed the potential revenues from their once-mighty cash crop. But it was not to be. Instead of a flow of money in and cotton out, the hopeful scenario vanished owing to ravenously greedy politicians, corrupted Treasu
ry employees, and dishonorable military commanders.
Under an act of May 9, 1865, lawful sales of cotton were burdened with extra fees. For example, there was a 25 percent fee for cotton that had been raised by slaves, in addition to a revenue and transportation tax. Even if the cotton were raised by free labor, there was still a revenue tax of 2.5 cents per pound and a transportation fee of 4 cents per pound. The tax and fee were paid by the producer merely for the privilege of moving his cotton to market. Cotton inventories owned by the Confederate government, or due to the Rebel government under taxes-in-kind or tithes previously applicable in the Confederacy, were forfeited to the US Treasury.
Identification of bales into the proper categories was subject to various frauds. For example, whether the cotton was “Confederate” or “private” was often questionable. “Debates” were often decided against private owners unless they paid a bribe to a Treasury agent. But the method could be expensive because a number of agents and military commanders took such bribes sequentially in the same regions. A second abuser may choose to deny the validity of the certificate issued by the first, thereby leaving the owner with little choice but to pay a second bribe with no ability to obtain a refund for the first one. Sometimes legitimate owners had to find a local rogue who had been recognized as loyal to the Union during the war to officially swear that he was the true owner of the cotton while secretly demanding a split in the proceeds when the cotton was sold.32
Another deceitful method was to “pluck” cotton under shipment. A toll was taken on bales sent to market by removing cotton from each bale while misleadingly delivering the specified number of bales. For example, a five-hundred-pound bale leaving the gin might only weigh three hundred pounds at its destination, but would still be falsely represented as a full bale upon delivery. Under this scenario, the loser was the Treasury, which received undersized cotton bales. A variation of the technique was to assign only bales of the poorest quality cotton to the federal government while reserving the best quality bales for buyers willing to pay a bribe or make some similar arrangement to share profits with a Treasury agent.33
A culture of abuse became acceptable for those with power and influence. Tennessee journalist Harvey Watterson wrote to President Johnson, “So many parties, official and unofficial, were engaged in stealing cotton” that it was impossible to know how much was stolen. The more famous Whitelaw Reid of the New York Tribune, who toured the South at the close of the war wrote “the practice [is to regard] everything left in the [defeated South] as the legitimate prize of the first officer who discovers it…. In general, our people seem to go upon the theory that, having conquered the country, they are entitled to the best it has, and [are] duty bound to use as much of it as possible.” 34
Cotton previously owned by the Confederate government was supposed to be sent only to designated agents in New York and Cincinnati, where it was to be sold and the proceeds deposited in the Treasury. It is estimated that as many as three million bales were seized from the South up to the middle of 1866. Given prices prevailing at the time, the value of such a quantity should have been about $400 million to $500 million. Instead, the Treasury realized only about $30 million from the fraction of about one hundred fifteen thousand bales that survived the twisted ordeal of bribery, corruption, fraud, and theft.35
CONCLUSION
THE LENGTH AND SCALE OF THE CIVIL WAR RADICALLY TRANS-formed the American economy. As Table 3 indicates (overleaf), total federal government spending in the last year of the war was over sixteen times as great as in the first year. From 1860 to 1865, the gross national product increased from $4.3 billion to $9.9 billion, which translates to an 18 percent compounded annual growth rate. Furthermore, since the economy in the South was shrinking, the growth rate applicable to the Northern states was probably well above 20 percent annually. Despite the abundance of death and sacrifice among the soldiers, it was a time of unprecedented prosperity in the North. As a result, after the war, the North was far less economically reliant on the South than previously. Of course, nobody knew that would be the result when the war started.
In antebellum America, the economies of the North and South were much more interdependent. Lincoln correctly observed in his first inaugural address that commerce between the two sections could not abruptly end.
Since its economy depended primarily on cash crops such as cotton and tobacco, the South relied on the states northwest of the Ohio River for provender and customarily purchased much of its manufactured goods from states in the Northeast. Similarly, the economy in the North depended on the South for cotton and its massive exports that supported important Northern commercial sectors such as shipping, finance, insurance, warehousing, and other services connected with cotton finance and maritime trade. Centered in New England, cotton textiles was the country's biggest manufacturing industry and obtained almost all its raw materials from the South. About 80 percent of the nation's exports originated in the South, and cotton alone accounted for two-thirds of it. Without Southern exports, America would have been required to reduce imports in order to avoid an unfavorable trade balance. Such a reduction would have cut customs duties, which were the chief source of federal tax revenue. In 1860, total federal taxes were $65 million, of which $53 million (82 percent) were from tariffs.1
Consequently, the monetary volume of intersectional trade that continued while the two sides were fighting the four-year Civil War remained important. Owing to the widespread bribery, fraud, smuggling, and theft characteristic of the shadowy commerce, it is difficult to know how much cotton the North obtained from the South during the war. However, despite the higher profile in our public memory for blockade-runners like the fictional Rhett Butler, economist Stanley Lebergott concluded the amount of cotton exported to Europe through the blockade was only about half as much as what was traded through enemy lines to the Northern states, which he estimated at nine hundred thousand bales.2
Lebergott's estimate is probably low, however. The ports of Boston and New York alone imported nine hundred thousand bales during the war. Of that amount, only one hundred sixty thousand came from Great Britain and little arrived from Brazil and the West Indies.3 Thus, about seven hundred forty thousand bales must have come from occupied Southern ports such as New Orleans, or blockade-running centers like Nassau and Bermuda. At a minimum, it is necessary to increase the seven hundred forty thousand by adding the number of bales shipped north from the hinterlands from depots such as Memphis. Lebergott estimated hinterland trade at over six hundred thousand bales. So the two components (600,000 + 740,000) total more than 1.3 million bales.4
Other sources point to similar estimates. For example, in Federal Trade with the Confederate States, Robert Futrell estimated that almost nine hundred thousand bales went North during the three years from 1862 to 1864. On March 1, 1865, a House Committee investigation concluded that “not less” than two million bales had been contracted for, although not necessarily yet delivered, under Treasury regulations adopted less than a year earlier, in July 1864.5 Finally, cotton smuggled into the North without permits was unreported, thereby implying that reported statistics necessarily understate the total volume.
Considering all factors, it seems likely that at least 1.25 million bales of cotton were shipped from the South to the North during the war. Assuming the ultimate buyer paid seventy-five cents per pound, the total value was over $465 million, which equates to about $7.1 billion in 2013 dollars.6 Based on the 1860 US population of 31.4 million, the $7.1 billion is equivalent to about $225 per person. By comparison, an economic sector averaging $225 per capita for the 2010 census population of 309 million would total $69 billion, which is nearly twice the size of the $38 billion in auto sales by all US dealers in 2012.7
Most of the value for the wartime intersectional trade was due to inflated cotton prices resulting from shortages. For example, the seventy-five cents-per-pound price assumed in the $465 million figure noted above compares to a prewar price of thirteen cents,
as indicated in Table 2 in chapter 1. Similarly, only about two million bales departed the Confederacy through a combination of exports and interbelligerent trade during the war, whereas antebellum peacetime production implies that a normal four-year period would have totaled about 18 million bales. Thus, the drop in physical volume during the war was probably over 85 percent.
There can be little doubt that interbelligerent trade was of greater benefit to the South than to the North and that it prolonged the war. In 1864, Senator John Ten Eyck of New Jersey stated, “Under the permission to trade, supplies have not only gone in, but bullets and powder, instruments of death, which our heroic soldiers have been compelled to face…upon almost every field…in which they have been engaged in the South.”8 As noted, the 1865 congressional investigating committee determined that trade with the Confederacy “is believed to have led to the prolongation of the War and cost the country thousands of lives and millions upon millions of treasure.”9 Historian Sellew Roberts estimated it lengthened the war by a year.10 Historian James Ford Rhodes concluded:
If accurate statistics could be obtained it would surprise [no one] that the North received more cotton from the internal commerce than did Great Britain from the blockade-runners; the greater portion of this staple came from a region under control of the…Confederacy…. This trade was a greater advantage to the South than to the North…. [T]he South obtained salt, quinine, powder, and arms, absolute necessaries for carrying on the War.11