Northern Profit and Profiteers: The Cotton Rings of 1864-1865

NORTHERN PROFIT AND PROFITSSRS: The Cotton Rings of 1864-1865 Ludwell H. Johnson By the late spring of 1864 it had become clear that trade with the insurrectionary states, as licensed by the executive branch, was significantly aiding the Confederate cause. Consequently, on July 2, 1864, Congress authorized the appointment of Treasury agents to purchase cotton and other products lying within Union lines, a step designed ostensibly for the purpose of curtailing illicit trade. President Lincoln, however, issued an executive order on September 24, 1864, that greatly facilitated interbelligerent trade, allowing the importation from Confederate territory and the exportation to the Confederacy of goods and supplies not designated contraband of war. At this time there was no clear definition of contraband, and the supplies sent to the South often consisted of food and clothes desperately needed by southern armies. The price of cotton was so high and the South's need for supplies so great that enormous profits could be made by northern speculators and merchants.1 Anyone wanting to trade with the Confederacy first had to send agents into the South, or contact collaborators already there, to arrange for the purchase of cotton from private citizens or from the Confederate government itself. The speculator would then go to a Treasury purchasing agent and claim that he owned or "controlled" cotton in a certain state, or states. If he had sufficient political influ1 For a fuller treatment of Federal policy at this time, see Ludwell H. Johnson , "Contraband Trade during the Last Year of the Civil War," Mississippi Valley Historical Review, XLIX (1963), 635-641. Most members of Congress doubtless believed the July 2 law would stop contraband trade, but at least some knew that section eight would have the opposite effect. See Robert F. Futrell, "Federal Trade with the Confederate States, 1861-1865, A Study of Governmental Policy," (Ph.D. dissertation, Vanderbilt, 1950), p. 382. (As the title indicates, this valuable study is concerned with policy rather than with a systematic examination of the commerce itself.) Another purpose of the law, one which Lincoln used to justify his actions, was the government's need for exportable cotton to sustain the dollar, by reducing the flow of gold to Europe. This matter is dealt with in the article cited above. 101 102civil war history enee or friends in the right places, he would be awarded a contract in which the United States agreed to buy his cotton. He might also receive a highly coveted executive order, signed by Lincoln himself, directing military and naval authorities to provide "proper faculties and passes for the purpose of getting said cotton . . . through the lines." Some traders, who said they had bought their cotton before the July 2 law was passed (or before Treasury regulations pursuant to that law were issued), were allowed to bring their cotton in and sell it on the open market. This was a valuable privilege, for otherwise 25 per cent of the proceeds were supposed to go to the Federal treasury.2 The next problem was to get the cotton to market. This involved sending ships into the Confederacy and trading in supplies that any rational man knew were greatly needed by the enemy. Furthermore, according to the letter of Lincoln's order, no supplies were to be taken in until the cotton had been brought out. That was awkward, for the Confederates refused to allow cotton to be exported until the supplies had been received. Therefore, it was eminently desirable for the speculator to circumvent the regulations by getting his man appointed Treasury agent for the area of his operations. Naturally, persons with influence had a much better chance of securing these privileges than the average merchant. Influence might mean the President's friendship, an accomplice in the Treasury Department or army, or simple bribery. Frequently, the influence stemmed from a close association with a major party faction that used the cotton trade as patronage, as well as a source of private wealth. One such faction was headed by Thurlow Weed, no stranger to profiteering and influence-peddling, even aside from the cotton trade. As for the latter, as early as 1863 he held a trade permit issued...