With Lincoln’s approval, former Illinois Congressman William Kellogg advanced a cotton-trading scheme at Northern occupied Helena, Arkansas, which would reap millions for himself and provide slave-produced cotton for hungry Northern mills. Though Secretary of the Treasury Salmon Chase opposed the idea, Kellogg was later appointed chief justice of the Nebraska Territory in early 1865 for his patriotic efforts.
Bernhard Thuersam, www.Circa1865.org
Profiteering in Arkansas
“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. By October 1862, [an] officer said, Curtis had already seized several million dollars worth of [cotton] and “converted it to his own use.”
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 of 1863.
Federal soldiers even purchased cotton from slaves with counterfeit Confederate money.
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.
Helena’s steady occupation led to deplorable sanitary conditions, particularly among the freed slaves . . . [and] disease, malnutrition, and lack of clothes and shelter took a toll on the blacks who sought refuge in the town.
Before the end of 1862, the inland navy began to get involved. [Admiral David Dixon Porter’s] crews became covetous of cotton as a prize of war . . . [and] 50 percent of a captured cargo was subject to a reward for the crew of the ship making the capture. By the end of the war, Porter had become so aggressive at stealing cotton . . . [he was dubbed] “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.”
(Trading With the Enemy: The Covert Economy During the American Civil War, Philip Leigh, Westholme Publishing, 2014, excerpts pp. 65-66)