Circa1865

As Czar Alexander II ruthlessly crushed a rebellion against his oppression in Poland in 1863, French and English newspapers compared it to Lincoln’s war upon Americans in the South who sought independence from his government. In mid-1863 as war seemed imminent between Russia and the French and English allies, Lincoln welcomed two Russian fleets into New York and San Francisco harbors for eight months to forestall European intervention in his war.  Historical orthodoxy today claims European aversion to the Southern slavery they themselves introduced in America as the cause of non-recognition of the Confederacy, when Lincoln’s Russian intrigues were a far more likely reason.

Bernhard Thuersam, www.Circa1865.com

Pale Corpse of Murdered Liberty in America and Europe

“Russia, the most hated nation in Europe, was even more friendless than Lincoln’s government [and her] Polish policy was threatening to embroil her in another European war. She needed America’s support for nonintervention in the Polish insurrection, as much as Lincoln’s government needed Russian support for nonintervention in the rebellion of the Southern States.

US Minister [William L.] Dayton wrote from Paris on February 23, 1863:

“The Polish revolt, which has been smoldering since 1861, broke into a fierce flame, and has driven American affairs out of view for the moment. A disturbance on the continent . . . is so near at hand and touches so many of the crowned heads of these countries, that distant events fall out if sight until these more immediate troubles are settled.”

Russia was ruthless in crushing the insurrection. Thousands of Poles were slain or incarcerated or deported to Siberia. The estates of numerous nobles were confiscated [and the] last remnants of Polish autonomy were extinguished.

Europe was touched by Poland’s plight. France, England and Austria decided to have recourse to diplomatic intervention . . . But the Czar, emulating Lincoln’s stand in the American rebellion, declared that the Polish rebellion was a purely domestic affair and that foreign intervention was unacceptable.

Years before, as a private citizen back in Springfield, Lincoln had not hesitated to take a leading part in protesting against Russia, “the foreign despot,” who “in violation of the most sacred principles of the laws of nature and of nations” had, through unwarranted armed intervention, overwhelmed Hungary when she was striving to throw off the yoke of Austrian tyranny.

[Lincoln] had subscribed to the principle: “That it is the right of any people, sufficiently numerous for national independence, to throw off, to revolutionize, their existing form of government, and to establish such other in its stead as they may choose.”

Now . . . Lincoln declared [the South’s] claim to the right of secession as unconstitutional and sheer treason. Lincoln’s answer [to the South was]:

“The States have their status in the Union, and they have no other legal status. If they break from this, they can only do so against law and by revolution. By conquest or purchase, the Union gave each of them whatever of independence liberty it has . . . Not any of them ever had a State Constitution independent of the Union.”

[Lincoln’s answer in opposing intervention] expressed confidence that the Polish grievances would be righted by the liberalism, sagacity and magnanimity of Czar Alexander II.

America’s refusal to join Russian’s enemies caused the Missouri Republic to declare that “the pale corpse of Poland’s murdered liberty” would haunt Lincoln in the days to come. French journals likened the American Civil War to the Polish insurrection, and pictured Lincoln placing his hand in the bloody hand of Czar Alexander II.

One French editor asked: “Is it right that fifty million Muscovites should unite to retain ten or twelve million Poles under a detested yoke? Is it right that twenty million Northern Germans and Irishmen should unite to impose on eight million Southerners an association they spurn?”

(Lincoln and the Russians, Albert A. Woldman, World Publishing Company, 1952, excerpts, pp. 157-160)

The Russian diplomat to Washington during the war was Baron Edouard de Stoeckl, who wrote detailed letters of American politics to his government in St. Petersburg.  A born aristocrat, Stoeckl blamed America’s plight and tragedy on its “ultra-democratic system.” He pointed out that “only a handful of demagogues were able to accomplish this work of destruction.” He never ceased deploring the rule of the mob and warned that this tragic result of democracy should be a warning to Europe.  It should be noted that he never overlooked an opportunity to offer his services as a conciliator between North and South.

Bernhard Thuersam, www.Circa1865.com

A Foreigner’s Observations of America’s War

“This revolution has undermined the foundation of pure democracy as it existed in the United States. The Constitution is now an empty shell. Step by step the President has assumed more and more discretionary powers. Universal suffrage is practiced here today more or less as it exists in certain parts of Europe. The writ of habeas corpus has been suspended [and] the rights of States have been almost annulled, and military authority is absolute in every part of the country. In Europe the revolutionists, the Utopians and the other restless spirits are agitating to upset the whole order of things and to substitute for them democratic institutions. In America, these same institutions seem to have run their course. The military regime is taking root more and more, not only in governmental affairs, but even in the day to day activities of the American people.”

Regarding Lincoln’s Re-election in 1864, he noted that the election campaign continued in an atmosphere of military excitement.

“In spite of all the efforts which the administration is making to conceal the true state of affairs from the public, these last [Union] defeats have not produced an unfavorable impression about the party in power. However, Mr. Lincoln and his adherents are sure of winning the forthcoming presidential election.”

Democrats denounced the War Department for turning its power into the service of Lincoln’s re-election. They rightly claimed that thousands of Republican soldiers were furloughed to return to doubtful districts and vote, while few Democrats were granted leaves.

This caused the Russian minister to write: “If the vote were free, the chances would certainly be in favor of General [George B.] McClellan, but with the powers which the government possesses, it will find the means of controlling the election. Universal voting is as easily managed here as anywhere else.”

Of Radical Republicans Stoeckl wrote:

“The Republicans demand the subjugation of the South without realizing the obstacles which two years of fighting have demonstrated so clearly. The Democrats contend that a compromise based on the federal compact is today more possible than the conquest of the South. So, the Americans seem to be rushing blindly into a state of anarchy which will be the inevitable consequence of the war if it continues much longer.”

“Peace, no matter what the terms, is the only way of resolving this situation. But leaders in charge of affairs do not want it. Their [radical Republican] slogan is all-out war. Any compromise would endanger their political existence. They are politicians of low caliber — men without conscience, ready to do anything for money, individuals who have achieved rank in the army and others who still have hopes of obtaining high commissions.

They constitute the swarm of speculators, suppliers of material, war profiteers through whose hands pass a large portion of the millions of dollars spent daily by the federal government. Aside from these and some fanatics, practically everybody desires the cessation of hostilities. But unfortunately, few dare to protest, and those who have the courage and patriotism to express their opinions, are too few in number to make their influence felt.”

“The conservatives want peace. They say now that Northern honor is saved, the time is at hand to start negotiations with the Confederates for their re-entry into the Union on an equal footing with Northern States. On the other hand the radical Republicans are demanding that the government should continue the vigorous prosecution of the war and that it should not lay downs arms until the South is completely subjugated. Unfortunately the administration is completely dominated by the radicals.”

(Lincoln and the Russians, Albert A. Woldman, World Publishing Company, 1952, excerpts)
 

From the Russian Embassy at Washington, diplomat Baron Edouard de Stoeckl monitored the Lincoln administration and reported his observations in detail to St. Petersburg. He concluded, as other observers did, that Lincoln’s apparent goal was to maintain the territorial union by force, with slavery intact and confined to the existing geographic limits of the South.

Bernhard Thuersam, www.Circa1865.com

Acts of Oppression Made in the Name of Liberty

“If the reign of the demagogues continues for a long time, General [John] Fremont is destined to play an important role. He is already the standard-bearer of the radical [Republican] party, and he will become the head of the party because of his superiority over the other leaders, among whom are only mediocre men and not a single leader of talent and energy.

Continuing his analysis of the “deplorable situation,” Stoeckl discussed in some detail the efforts of the radicals to gain control of affairs.

“General Fremont acted without authorization of [President Lincoln] and even contrary to his instructions, which forbid him to act in regard to the slave States of the west where Unionists are still fairly numerous. So the President was greatly astonished to learn about the [emancipation] proclamation of General Fremont. He regarded is as an act of insubordination.

For awhile there was consideration of dismissal [of Fremont], but after all [Lincoln] did nothing and did not even dare to reprimand him. The radicals, emboldened by this triumph, demand today that the edicts laid down by General Fremont in Missouri shall be applied everywhere. In other words, they demand that the government should convert the present struggle into a war of extermination.

What the radical party fears most is a reaction which would bring its ruin. So it takes advantage of the hold it has on the administration in order to drive it to extreme measures. The government has forbidden postmasters to carry newspapers in the mails which advocate conciliation and compromise. The result has been that the majority of newspapers which were opposed to war have had to suspend publication.

In several towns the extremists have gone even further. They have stirred up the populace, which has smashed the plants of the moderate newspapers. Conditions are such that mere denunciation by a general is sufficient for a person to be arrested and imprisoned. The act of habeas corpus and all the guarantees which the Americans have appeared to prize so much, have vanished and given way to martial law, which . . . is being enforced throughout the North.

We are not far from a reign of terror such as existed during the great French Revolution, and what makes the resemblance more striking is that all these acts of oppression are made in the name of liberty.”

Stoeckl wrote that the people of the North were being misled into believing that these drastic measures would hasten the peaceful restoration of the Union. But he did not believe the deception could persist:

“People will not be duped long by their political leaders. The reaction will necessarily take place. But unfortunately it will come too late to repair the harm that the demagogues have done to the country. It will be necessary finally to revolutionize the political and administrative institutions . . . which have been weakened upon the first rock against which the nation has been hurled.

In the North and in the South they will have to reconstruct the edifice which the founders of the Republic have had so much trouble in building . . . The present war is only the prelude of the political convulsions which this country will have to pass through.”

(Lincoln and the Radicals, Albert A. Woldman, World Publishing Company, 1952, excerpts, pp. 80-83)

The Confederate States held nearly 261,000 Northern soldiers in their prisons of which 22,526 died in captivity; Northern prisons held 200,000 Southerners of which 26,500 died – the higher percentage is the latter. Southern authorities provided food to prisoners equal to the meager rations for soldiers while Northern prisons were surrounded by bountiful fields and harvests.

Bernhard Thuersam, www.Circa1865.com

“This Savage and Cold-Blooded Idea”

“John M. Daniel, from the Richmond Examiner, 25 November 1863:

“The Yankee policy with respect to the exchange of prisoners has been clearly exposed. It is based upon the simple principle that our men are intrinsically worth more than theirs, and that if they continue to hold our prisoners and to allow their own to remain in our hands they will be the gainers. Such, in fact, is the whole scheme of the war. If, by dint of superior numbers and a lavish expenditure of blood, they can inflict such losses upon the South as to render it incapable of further resistance, their point, I think, is gained . . . “

While this savage and cold-blooded idea is at the bottom of their reasoning, they are aware that it is necessary to cloak their purposes under as decent a veil as they can find. It will not do to tell their soldiers, or the classes from which they expect to recruit their armies, that they regard them merely as fighting animals, to be used sparingly, or sacrificed wantonly, according to the varying necessities of the case.

It would be ruinous, frankly, to avow that they are delighted to retain a certain number of Confederates in prison at the expense of an equal or even greater number of their own men. An excuse must be found which will throw the odium of refusing exchange upon the Confederacy. Yankee ingenuity, unhampered by the restraints of an adherence to truth, can easily accomplish this . . .

We have sought to carry out the cartel of exchange in good faith. Let us not allow the Yankees to take advantage of their own wrong, and, while they avoid the odium attaching to the desertion of their own prisoners, retain the advantage of neutralizing thousands of our soldiers.

Gladly would the Yankee Government, in order to deprive us of their services, agree to lodge [our soldiers] at the Fifth Avenue or the Metropolitan, and to feed them upon turtle soup and champagne. It would be a vastly cheaper way of disposing of them than maintaining armies of hirelings to oppose them in the field . . . “

(Empire of the Owls, Reflections on the North’s War Against Southern Secession, H.V. Traywick, Jr., Dementi Milestone Publishing, 2013, pp. 253-254)

James D. Bulloch, born in Savannah and descended from Scottish forbears, was the foremost planner of naval affairs for the new American nation in 1861. His grandfather, Archibald Bulloch (1730-1777), guided Georgia’s Liberty Party in actions against oppressive British colonial measures and later served as a colonel in the Revolution. James remained in England after the war and died there in exile in 1901. It is said that Bulloch was encouraged to write his memoirs by nephew Theodore Roosevelt in the early 1880’s, which inspired Teddy’s later book on the War of 1812. Roosevelt praised his uncle and other Southern patriots for following their duty to fight for independence.

Bernhard Thuersam, www.Circa1865.com

Sacrificing the Substance of Individual Liberty

“In 1861 the disintegrating forces prevailed, and eleven of the Constituent Republics withdrew from the Union on the plea that the original conditions of Union had been broken by the others, and they formed a fresh confederation among themselves. The remaining States or Republics resisted that act of separation, and affirmed that the people of the whole United States were, or should be fused into, one nation, and that the division of the Union into States had, or should hereafter have, no greater political significance than the division of the several States into counties.

The Union of 1787 was dissolved in 1861 by the action of ten of the constituent republics. A new Union was formed in 1865 by the military power of the majority of States, compelling the minority to accept their view of the national compact. The former Union was a confederation of States, and was of course a Federal Republic; the latter Union is founded upon a fusion of the people into one nation, with a supreme centralized executive and administrative Government at Washington, and can no longer be called a Federal Republic; it has become an Imperial Republic.

The latter name gives some promise of greater strength and cohesion of the former, but the duration of the restored Union will depend very much on whether the people of the whole country fully realize, and are really reconciled to, the new dogma that each State is only an aggregate of counties, and that its political functions are only to consist in regulating such purely domestic concerns as the central authority in Washington may leave to its discretion.

If the majority who have effected the change in the conditions of the American Union are content to leave the management of public affairs to the professional politicians, the “caucuses,” and the “wire-pullers,” they will have fought in vain, and will find that to secure the semblance of a strictly national Union they have sacrificed the substance of individual liberty.”

(The Secret Service of the Confederate States in Europe, James D. Bulloch, Sagamore Press, 1959, excerpts, pp. 14-16)

The author below was Mary Ann Loughborough, the New York City-born wife of Colonel James Loughborough, assistant adjutant general to Major General Sterling Price. In mid-April 1863, Mary was visiting Vicksburg just as the enemy fleet had run past the defensive batteries on the Mississippi River and began subjecting the city to intense and indiscriminate bombardment.  For protection from this shelling, civilians dug caves in the clay hills which Vicksburg was built upon.

Bernhard Thuersam, www.Circa1865.com

How Sad This Life in Vicksburg

“Even the very animals seemed to share the general fear of a sudden and frightful death. The dogs would be seen in the midst of the noise to gallop up the street, and then to return, as if fear had maddened them. On hearing the descent of a shell, they would dart aside – then, as it exploded, sit down and howl in the most pitiful manner.

In the midst of other miserable thoughts, it came to my mind one day that these dogs’ hunger might become as much dreaded as wolves. The horses . . . would frequently strain the halter to its full length, rearing high in the air, with a loud snort of terror as a shell would explode near. I could hear them in the night cry out in the midst of the uproar, ending in a low, plaintive whinny of fear.

Sitting in [my] cave one evening, I heard the most heartrending screams and moans. I was told that a mother had taken a child into a cave about a hundred yards from us; and having laid it on its little bed, as the poor woman believed, in safety, she took her seat near the entrance of the cave.

A mortar shell came rushing through the air and fell with much force, entering the earth above the sleeping child – cutting through into the cave – oh! Most horrible sight to the mother – crushing in the upper part of the little sleeping head, and taking away the young innocent life without a look or word of passing love to be treasured in the mother’s heart.

I sat near the square of moonlight, silent and sorrowful, hearing the sobs and cries – hearing the moans of a mother for her dead child – the child that a few moments since lived to caress and love – speaking the tender words that endear so much the tie of mother and child.

How very sad this life in Vicksburg! – how little security we can feel, with so many around us seeing the morning light that will never more see the night! How blightingly the hand of warfare lay upon the town!

The moans of pain came slowly and more indistinct, until all was silent; and the bereaved mother slept, I hope – slept to find, on waking, a dull pressure of pain at her heart, and in the first collection of faculties will wonder what it is. Then her care for her child will return, and the new sorrow will again come to her – gone, forever gone!”

(My Cave Life in Vicksburg, By a Lady, Broadfoot Publishing Company, 1989 (original D. Appleton & Company, 1864), excerpts, pp. 71-75)

The bombardment of Vicksburg, Mississippi by Grant in mid-1863 took an enormous toll on the civilians in the city. From the book “My Cave Life in Vicksburg” (D. Appleton & Company, 1864), the author writes: “I was told a Negro woman, in walking through the yard, had been struck by a fragment of a shell, and instantly killed. The screams of the women of Vicksburg were the saddest I have ever heard. I cannot attempt to describe the thrill of pity, mingled with fear that pierced my soul, as suddenly vibrating through the air would come these shrieks – these pitiful moans! – sometimes almost simultaneously with the explosion of a shell.”

Bernhard Thuersam, www.Circa1865.com

Grant Opens the Northwest to Cheaper Water Freight

“It was the twenty-fifth of May, three days after the assault on Vicksburg. Federal dead between the lines were “swelling to the stature of giants” and were making the air so unbearable that Confederates had sent out the request [to the enemy] that they be buried.

Under a white flag soldiers threw dirt on late comrades, while in the midst Sherman and a Confederate officer sat on a log. To all appearance, Sherman was callous toward death.

The spectacle of Vicksburg’s bombardment delighted Sherman’s artistic eye. On clear nights he saw pickets sitting on their rifle-pit embankments, staring at the grandest pyrotechnics they had ever beheld – thin red trails of light, sparkling like comets’ tails, soaring into the sky to halt, then curve downward to vanish among the housetops of the dark city. After a pause, a jarring concussion would come on the wind.

From land and river Union siege guns and navy mortars were throwing shells with burning fuses. Privates of the Twelfth Wisconsin said that their Negro cooks lay so flat during a bombardment that soldiers mistook them for rubber blankets and carried them to camp over their shoulders at the day’s end.

Surrender came on July 4 [1863], Grant paroling 31,600 wasted Confederates in the knowledge that the great majority, sick of the war, would go home never to shoulder arms again. Up North, men were declaring that they had always had faith in Grant, the Northwest was happy because the Wall Street railroaders were now due to get their com-uppance – the cheap water freights could soon be resumed.”

(Sherman, Fighting Prophet, Lloyd Lewis, Harcourt, Brace and Company, 1932, excerpts pp. 284-287; 291)

The months between Lincoln’s election and his inauguration are seen as the most critical in American history as the historical record shows that he revealed little in those four months that might have averted war. Many people journeyed to Springfield, Illinois to better understand his positions though he “wished neither to articulate unrealistic solutions nor hinder ongoing negotiations,” and his Republican allies in Congress convinced him to follow a strategy of silence. His later claims that he wanted to avert war are difficult to explain, and the Founders would not have understood how a mere president could decide whether a State legislature could convene.

Lincoln’s friend Duff Green (1791-1875) was a Kentucky-born politician and businessman who had served under General William H. Harrison in the War of 1812. He later practiced law in Missouri where he also served in the legislature and served as a diplomat under Presidents John Tyler and Zachary Taylor. During the war he manufactured iron for the South and operated the Dalton Arms Factory.

Bernhard Thuersam, www.Circa1865.com

Power and Politics over Country

“Green and Lincoln did meet one more time. On April 5, 1865, Lincoln was stationed off the Virginia shore on the USS Malvern trying to decide whether to allow a Virginia legislature to convene since that State had no other government. As it happened, Duff Green was in Richmond at the same time . . . [and] asked for and was granted an audience with the president. The two old friends enjoyed an amiable discussion . . . Green recalled that Lincoln received him “with great kindness.”

The two men discussed the terms of peace and reconstruction. Lincoln said that all the Southern States had to do was “acknowledge the authority of the United States.”

Lincoln remembered their Springfield meeting four years earlier. The president told Green that he went to Washington “resolved to carry out in good faith” those same pledges that he gave when they met in Illinois. Lincoln insisted that he had been willing to sign a constitutional amendment prohibiting Congress from interfering with slavery in the States, a policy similar to what he communicated to Green in Springfield.

Green later contended that if Lincoln “had come to Washington in December, 1860, as I urged him to do, and had then exerted the like influence in favor of Mr. Crittenden’s resolution, extending the Missouri compromise line to the Pacific . . . who can doubt his influence . . . would have prevented the war?

Green believed Lincoln had wanted to avert a war. He alleged, however, that Lincoln’s conciliatory attitude “was carefully kept from the knowledge of the Southern people.” Green stated that if “any pains had been taken” to explain Lincoln’s position to the South, the hostilities may have ended. He blamed the Radical Republicans for deceiving both Lincoln and the Southern public. He believed the president sought peace but was overwhelmed by his party who initiated war in order to control the patronage and powers of the federal government.”

(Lincoln, Green and the Trumbull Letters, David E. Woodard; Civil War History, the Journal of the Middle Period, John T. Hubbell, editor, Kent State University, Vol. XLII, No. 3, September 1996, excerpts pp. -219)

Crucial to the immigrant vote for Lincoln in the 1860 election was Republican Party support for a Homestead bill, the transcontinental railroad, and not allowing black people into western lands — thus reserving those lands for white immigrants. The foreign-born who had already filled up Middle West States were eager for western lands to settle where government property was still available, which also meant clearing those lands of Indians. Future Republican administrations would accomplish that task. With a bare 39% percent of the popular vote, a lower foreign-born vote could have put Stephen Douglas in the White House and avoided war.

Bernhard Thuersam, www.Circa1865.com

Foreign-Born Tip the 1860 Election

“Scholars, particularly those interested in the impact of ethnic groups on key national elections, have long been intrigued by Abraham Lincoln’s victory in 1860. Ever since Professor William E. Dodd’s classic article [The Fight for the Northwest, 1860, American Historical Review, XVI, (1910), 786)] it has been axiomatic in the works of historians that the foreign-born of the Old Northwest, voting in solid blocs according to the dictates of their leaders, cast the decisive ballots.

Lincoln could not have won the presidency, Dodd suggested, “but for the loyal support of the Germans and other foreign citizens led by Carl Shurz, Gustav Keorner, and the editors of the Staatzeitung of Chicago.”

A decade later . . . Donnal V. Smith scrutinized the immigrant vote in 1860 and confidently declared that “without the vote of the foreign-born, Lincoln could not have carried the Northwest, and without the Northwest . . . he would have been defeated.”

Smith’s statistics also confirmed the premise that the social solidarity characteristic of ethnic groups invariably translated itself into political solidarity, and that because of the language barrier the immigrants needed leaders to formulate the political issues for them.

“The leaders who were so trusted,” Smith maintained, “were in a splendid to control the political strength of the foreign-born.” And in the election of 1860, he continued, even to the “casual observer” the ethnic leaders of the Middle West were solidly Republican . . . [and] except for isolated, insignificant minorities, the foreign-born of the Old Northwest voted Republican.

Foreign language newspapers generally carried the Lincoln-Hamlin banner of their mastheads; prominent immigrants campaigned actively for Old Abe and played key roles at the Chicago convention.”

(The Ethnic Voter and the First Lincoln Election, Robert P. Swierenga, Civil War History, Volume 11, No. 1, March 1965, excerpts, pp. 27-28)

As Lincoln was unable to finance his war with the traditional tax and customs revenue sources, he turned to paper fiat money to be printed as needed, though the Constitution permits only gold and silver as legal tender. The predictable speculation in the value of greenbacks versus gold prices caused murky markets to emerge. In New York’s “Gold Room,” decisions were guided not so much by patriotic motives as the desire for profit. It was said that “Sectional feeling often entered largely into bull and bear contests in the Gold Room, and Union men and rebel sympathizers fought their battles sometimes, as much to gratify this as to make money.”

Bernhard Thuersam, www.Circa1865.com

Financing the War with Inflation

“To help finance the Civil War, the federal government began issuing “demand notes” in July 1861. These government obligations were not a legal tender currency and were freely convertible into gold upon presentation to a federal depository. During the course of 1861, the Union’s financial condition deteriorated, and in December the Treasury issues a very bleak report on the budgetary situation.

In the face of such news, bankers concluded that investors would lose confidence in the demand notes and the banks would soon experience a massive outflow of gold. On December 30, the banks suspended specie payments of gold [for greenbacks]. The government followed suit almost immediately.

Soon thereafter, in February 1862, Congress passed the first of the Legal Tender Acts. These acts authorized the government to issue “greenbacks” – a currency that was to be legal tender for both public and private debts. Of course, since demand notes were no longer convertible into gold, neither were greenbacks . . . [though] all available evidence indicates that the public believed that at some future date convertibility would be reinstated and all greenbacks would be redeemed in gold.

[Because Lincoln] was unable to finance the war with the available tax revenues . . . Greenbacks were a way of using inflation to pay for the war. Speculators knew that the degree to which the Union would have to rely on future greenback issues depended on just how much the war would ultimately cost. A long, expensive war would require more greenback issues and make it less likely that greenbacks would ever be exchanged for gold dollars on a one-for-one basis.

Not surprisingly, a formal market for buyers and sellers to trade gold came into existence within two weeks of the suspension of convertibility. The first organized dealings took place at the New York Stock Exchange on January 13, 1862. At about the same time a second market formed . . . in New York City . . . known as the Gold Room.

An important question for our purposes is how the gold market used the [political and war] information coming to it. Did the financial market react quickly to news that was available, or did it take several days to digest it? A closely related question is whether news of battles . . . reached all participants at the same time.

In a report on the burning of Chambersburg, Pennsylvania, on July 31, 1864, the New York Herald explicitly noted that the government frequently withheld information from the public to minimize alarm and protect intelligence and sources.

The daily registry of the Gold Room was a quicker messenger of successes and defeats than the tardier telegrams of the Associated Press. A private secretary of a high official, with no capital at all to save his position, which gave him authentic information of every shaping of the chess game of war a full twenty hours in advance of the public, simply flashed to the words “sell, buy” across the wires, and trusted the honor of his broker for the rest.

If there was a sufficiently large number of “insiders” competing with each other, then the market would quickly transform war news into changes in the price of greenbacks, despite the fact that the news was not coming through published sources.

The observation of [New York Herald writer] Kinahan Cornwallis are consistent with this notion: “Almost every individual speculator in the Gold Room, whose transactions were large enough to make it of consequence, had a correspondent in the national capital, who sent him a telegraphic dispatch as occasion required . . .”

(Greenback Prices as Commentary on the Union Prospects, Guinnane, Rosen and Willard, Civil War History, The Journal of the Middle Period, Kent State University Press, December 1995, Volume XLI, No. 4, excerpts, pp. 315-318)