Financial History 141 Spring 2022 - Page 13

Collection of Museum of American Finance
Secretary of the Treasury Salmon P . Chase , circa 1862
Library of Congress
Secretary of State William H . Seward , 1861
Collection of Museum of American Finance
General William Tecumseh Sherman
Chase . The regulations obtained practical significance after the Union ’ s victories in the spring , when Yankee troops came in close contact with southern populations . Chase issued permits to carefully selected buyers , who were supposed to trade only with Southerners who pledged an oath of loyalty to the United States .
However , Lincoln and Chase overestimated the degree of loyalty in the occupied South . A mere oath was hardly to be relied upon . Even assuming the best of intentions , once a payment passed into the South , there was no way to prevent it from flowing into the war effort .
The Confederacy had its own problems with enemy trade . Officially , Richmond proscribed “ all trade with the enemy .” Newspapers defended the policy and heaped scorn on those who dared to conspire with Yankee profiteers . However , the South was too dependent on obtaining vital supplies to completely banish commercial relations . Despite the official policy , the Confederate War Department allowed that “ some barter or trading for the supply of [ people ’ s ] necessities is almost inevitable .” President Jefferson Davis himself , while personally incorruptible , conceded that “ as a last resort ” trading with the Yankees might be justified .
On either side , supply and demand pressures often trumped policy . Interruption of normal trade had left the South with a huge surplus of cotton and forced
four out of five northern textile mills to close . Anyone who could get cotton out of the South stood to reap a fortune . The Union had a further and important rationale : relieving the depression in English and French manufacturing districts . Both countries were seeking to develop other sources of supply ; meanwhile , laid-off mill workers were begging for bread . The New York Times reported a quarter of a million unemployed in Lancashire and “ physical symptoms of starvation .”
Secretary of State William H . Seward keenly wanted to ship cotton to Britain to temper the pressure on Britain to intervene in the war . As Edward Bates , Lincoln ’ s attorney general , neatly summarized , “ We want Cotton badly , for both home use and European supply .” Lincoln realized that the policy was problematic , but judged that on balance it helped the Union cause .
General William Tecumseh Sherman , who in late July arrived in Memphis as military governor , vehemently disagreed . Sherman discovered a commercial entrepôt linked northward to Mississippi River towns thirsting for a revival of trade , and southward to the cotton deltas of Arkansas and Mississippi . On the Confederate side , cotton could be procured for as little as ten cents a pound , but any cotton that traversed into Union territory was worth upward of 60 cents . Given the potential for profit , financial inducements outweighed patriotism .
Barely a week after his arrival , Sherman grasped the essential truth : “ We cannot carry on war & trade with a people at the same time .” Chase should have reckoned with this insight . Sherman protested that the flourishing trade in enemy territory was founded on a bald misconception . The war , he heatedly advised the Treasury Secretary , “ has been complicated with the belief … that all on the other [ side ] are not enemies .”
In fact , it was safer to assume that local populations were hostile . Sherman discerned that Memphis and outlying districts were honeycombed with Confederate sympathizers . Many were illicitly supplying vital goods to the Confederacy , smuggling salt , bacon , powder and arms into the South . There were cases of contraband smuggled in a hearse during a funeral procession , and of women sashaying past respectful Union guards with forbidden goods hidden in the folds of their crinoline skirts . Smugglers also supplied the dangerous guerrilla forces that menaced Union troops . According to Sherman , none could venture “ beyond the sight of the flag-staff without being shot or captured .”
Sherman viewed the merchants trading across lines as a fifth column propping up the enemy . He thought the cotton order was “ worse to us than a defeat .” General Ulysses S . Grant , who had briefly passed through Memphis , was similarly seething with frustration over the “ great disloyalty manifested by the citizens of this place .”
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