Circa1865

When discussing segregation and Jim Crow laws in America one immediately thinks of the South, though it was truly a Northern institution that gradually made its way South. New York did not eliminate slavery officially until the late 1820’s, though the children of slaves remained in bondage until reaching age 21. That State also habitually restricted the black vote through property-holding qualifications that effectively disenfranchised them.  The State of Ohio outright refused black settlers, and the new Republican party of 1856 was not antislavery — it wanted to ban black people from the western territories and restrict slavery to the South.

Bernhard Thuersam, www.Circa1865.com

“Jim Crow” Sections Up North

“One of the strangest things about the career of Jim Crow was that the system was born in the North and reached an advanced age before moving South . . . and one might consider Northern conditions with profit. By 1830 slavery was virtually abolished by one means or another throughout the North, with only about 3500 Negroes remaining in bondage in the nominally free States.

The Northern free Negro [had his or her freedom] circumscribed in many ways . . . the Northern Negro was made painfully aware that he lived in a society dedicated to the doctrine of white supremacy and Negro inferiority. The major political parties, whatever their positions on slavery, vied with each other on this doctrine, and extremely few politicians of importance dared question them.

Their [Northern] constituencies firmly believed that the Negroes were incapable of being assimilated politically, socially, or physically into white society. They made sure in numerous ways that the Negro understood his “place” and that he was severely confined to it. One of these ways was segregation, and with the backing of legal and extra-legal codes, the system permeated all aspects of Negro life in the free States by 1860.

Leon Litwack, in his authoritative account, “North of Slavery,” describes the system in full development. “In virtually every phase of existence,” he writes, “Negroes found themselves systematically separated from whites.

They were either excluded from railway cars, omnibuses, stagecoaches, and steamboats or assigned to special “Jim Crow” sections; they sat, when permitted, in secluded and remote corners of theaters and lecture halls; they could not enter most hotels, restaurants and resorts, except as servants; they prayed in “Negro pews” in the white churches, and if partaking of the sacrament of the Lord’s Supper, they waited until the whites had been served the bread and wine. Moreover, they were often educated in segregated schools, punished in segregated prisons, nursed in segregated hospitals, and buried in segregated cemeteries.”

Whites of South Boston boasted in 1847 that “not a single colored family” lived among them. Boston had her “Nigger Hill” and her “New Guinea,” Cincinnati her “Little Africa,” and New York and Philadelphia their comparable ghettoes – for which Richmond, Charleston, New Orleans, and St. Louis had no counterparts.”

(The Strange Career of Jim Crow, C. Vann Woodward, Oxford University Press, 1966 (original 1955), excerpts, pp. 17-19)

There was only one “flush of patriotic enthusiasm” in the North after the war began, and Gen. Halleck advised Lincoln in early 1862 that enlistments had virtually ceased and few new volunteers were to be had. A new system of procuring troops was needed, and conscription was contemplated. States, cities and counties feared losing local men to the threatened draft, and therefore raised exorbitant amounts to buy substitutes and anyone who would take the money to fill Lincoln’s troop quotas. As the war wore on, higher bounties had to be offered to attract men.

Ohio’s Governor William Dennison reminded his constituents in mid-May 1861 that the federal government “offers a bounty of one hundred dollars to all who may enlist, payable at the close of service, or to the soldier’s family, if he should not survive.” Dennison was a Whig and Republican like Lincoln, with the latter rewarding him with the cabinet post of Postmaster General.

Bernhard Thuersam, www.Circa1865.com

Ohio Bounties Stimulate Enlistments

“An act of May 1, 1861, exempted from execution the property of any soldier in the militia of Ohio mustered into the service of the United States during the time he was in service, and fro two months thereafter. In February, 1862, the general assembly sought to protect citizen-soldiers charged with criminal offenses by providing that judges should postpone their trials until they were discharged. Still later, in March 1864, certain relief was given to debtors in the armed services who might have judgement rendered against them without defense . . .

After the first flush of patriotic enthusiasm had passed, one of the strong inducements to enlistment was a financial one – a bounty, and, at a later date, the advance of the first month’s pay. During the Civil War, bounties came from three sources – the federal government, local government units, and private subscription. (In Ohio there was no bounty offered directly from State funds.)

Indeed, as the provost marshal wrote, the federal bounty paled into “comparative insignificance” when compared to “the exorbitant bounties paid in advance by local authorities.” These, he believed, were the most mischievous in encouraging desertion, bounty-jumping and other evils connected with the system.

So great was the stigma of the draft that local authorities were highly competitive in the amounts offered to volunteers. Furthermore, they paid all the sum in advance. The primary objective of these payments, as [Provost Marshal] General [James B.] Fry put it, came to be “to obtain men to fill quotas.”

Localities began by offering moderate bounties. In 1862 the average local bounty in Ohio was estimated at $25; in 1863 in advanced to $100; in 1864 it bounded to $400; and in 1865 the average bounty was $500, although in some localities it was as high as $800.

The Hamilton County Board of Commissioners levied a tax of two mills in 1863 to take care of local bounty payments. The next year (1864), however, the city of Cincinnati began to borrow in order to offer city bounty payments, and during the year 1,811 volunteers were paid bounties of $100 each.

After the war the adjutant general of Ohio estimated that $54,457,575 had been paid in local bounties throughout the State, of which amount cities and counties paid about $14,000,000 and private subscribers, $40,457,575.”

(Relief for Soldiers’ Families in Ohio During the Civil War, Joseph E. Holliday; Ohio History, July 1962, Volume 71, Number 2, James H. Rodabaugh, editor, excerpts, pp. 98-100)

Sherman’s army occupied Savannah in late December, 1864 after Gen. William J. Hardee had evacuated his troops into South Carolina. Offshore and awaiting the occupation of the city by Sherman were US Treasury agents and others anxious to seize bales of cotton and other valuables for government or personal enrichment. In addition, presidential-aspirant Edwin M. Stanton presciently coveted the Negro vote in the South as Grant eventually did, and pretended concern for their future.

Bernhard Thuersam, www.Circa1865.com

Grabbing Pennies Off the Southern Corpse

“In making the rounds of the city [in late December, 1864, Sherman] was irritated to find that an agent of the [US] Treasury had arrived in the city ahead of him and seized a large stock of cotton there, estimated at 25,000 bales, later found to amount to 31,000 bales.

His chief annoyance . . . was from outside meddlers, agents from the North, the forerunners of the pestiferous army of carpetbaggers that swarmed into the South in the next few months and years. Some were sincere and fervent, but narrow-minded, zealots determined to impose salvation as decreed by the abolitionists upon the Negroes; many were greedy and unconscionable rascals bent upon seizing political power and grabbing the pennies off the Southern corpse.

[Sherman] . . . divined the developing purpose of the Radicals in Congress. It became apparent in the attitude suggested in hints let out here and there by the chief of the northern agents who descended upon Savannah while Sherman was there.

This was none other than Secretary of War Stanton, who hurried down by boat at the first opportunity to look the ground over. Stanton was fussy about many things, peeking here and there, prying, asking questions, seemingly deeply concerned about the Negro and his future, but in reality carefully measuring the political potentialities in this Southern tragedy, thus foretelling his action, a few months later, in joining the Radicals openly in their desperate and vicious Reconstruction program.

Sherman was most resentful when Stanton revealed his intention to quiz the Negroes about [Sherman’s] own policies . . . [and] witnesses upheld Sherman also in the firm policy he had adopted against recruiting Negroes for his army by State agents who rushed into Savannah and were trying to enlist Negroes right and left.

[Sherman] did not want to enlist any Negro soldiers, not only because of the bother of handling such unseasoned troops, but also because he had smarted under the taunts of Confederate General [John B.] Hood at Atlanta to the effect that the North had to use the South’s own Negro slaves to defeat the Confederacy.”

(The Savannah, More Than the Story of a River, Thomas L. Stokes, University of Georgia Press, 1951, excerpt, pp. 285-288)

Longtime-Democrat and early critic of Lincoln, Edwin M. Stanton, was appointed attorney general during the cabinet crisis by President James Buchanan in December 1860, though at the same time hobnobbing with Charles Sumner and other influential radical Republicans. As noted below, Stanton saw Negro emancipation as a weapon of war rather than a humanitarian policy — in truth a copy of British Lord Dunmore’s emancipation proclamation of 1775, and British Vice Admiral Sir Alexander Cochrane’s similar edict in 1814. All were aimed at inciting race war, denying the South its agricultural workers, and attracting black soldiers to be military laborers or cannon fodder.

Bernhard Thuersam, www.Circa1865.com

Impaling the South’s Agricultural Economy

“Crusades, like politics, sometimes make strange bedfellows. Few antislavery Radicals in 1860 would have guessed that a member of Buchanan’s cabinet, an outspoken critic of Lincoln and the Republican Party, would become, by 1862, a valuable and enthusiastic ally. But then, few men ever were ingenious enough to predict the course Edwin M. Stanton might follow from one day to the next. Even today it is difficult to assess the degree of Stanton’s Radical Republicanism.

Although he had been a Democrat since his college days and had served in a Democratic cabinet . . . He was in complete sympathy the Radical’s demands for a vigorous prosecution of the war and for the emancipation and military employment of Negro slaves. Yet, he never committed himself clearly to the economic program of the Republican Party: the high tariff, the Homestead Act, national banking, and a sound currency.

Though he used the considerable power of the War Department to aid Republican candidates in wartime elections, he used it also to benefit War Democrats, many of whom could never quite believe that he had really deserted the old party.

Stanton, then, was a true Union man, a partisan of any politician who believed, as he did, that the Southern Confederacy was a conspiracy of traitors and that total war was necessary to destroy it. In his hands, emancipation and the military use of Negroes became weapons of war.

Seldom did he consider the long-term implications of the war; his concern centered on the immediate task of defeating the Confederacy with every means at hand. But he had the prescience enough to realize that emancipation, though it would eliminate the problem of slavery, would at the same time create the problem of the freed Negroes. Impetuous and forceful, Stanton could not sympathize with Lincoln’s cautious approach to the problem.

[Horace Greely prophetically predicted that under Stanton], “no General or other officer of the army will more than once return a fugitive slave.” [Stanton’s predecessor, Simon Cameron in his final report stated:] “Can we afford to send them forward to their masters to be by them armed against us, or used in producing supplies to sustain the rebellion?”

Stanton recognized in the Radicals the strongest single bloc in Congress, a group to be cultivated and respected [as they had] worked hard to put him in the War Department.

It was [then] easy for the Radicals to demand publicly a war policy which would include emancipation and the military use of freed Negroes. [General David Hunter was rebuked by Lincoln for arming Negroes and Stanton publicly denied any responsibility, but] General Hunter’s subordinates charged later that Stanton had expressly authorized the action and that he had furnished guns and uniforms for the troops.

In spite of the Hunter affair, and without the President’s consent, he had tolerated isolated instances of using Negroes as soldiers . . . and few obstacles impeded the secretary’s policy of enlisting and arming the fugitives. The entire structure of slavery, he believed, could be transformed from a bulwark of the South agricultural economy into a weapon on which to impale its defenders.

“The power of the rebels rests upon their peculiar system of labor,” he insisted, and it was the duty of the Union to strike down that system, to “turn against the rebels the productive power that upholds the insurrection.” Next to the armed might of the Union, he considered the Emancipation Proclamation, with its military implications, the strongest weapon in the Northern arsenal.”

(Blueprint for Radical Reconstruction, John G. Sproat, Journal of Southern History, Volume XXIII, Number 1, February 1957, excerpts, pp. 25-29, 31-33)

As the Northern armies spread across the Confederacy, newspaper reporters following them sent observations and stories northward. The result was predictable as they wrote of an evil land and emphasized any unfavorable aspects of Southern civilization. In the last year of war, the United States government refused prisoner exchanges while Jefferson Davis and Robert E. Lee pleaded in vain for the starving men in blue held in Southern prisoner of war camps to be saved by their own leaders.

Bernhard Thuersam, www.Circa1865.com

Shaping Northern Opinion Against the South

“[The] years from 1865 to 1880 were dreary years in which there was no peace. The war had only ended on the battlefield. In the minds of men it still persisted. Memories of the past and issues living in the present combined to perpetuate and perhaps enlarge the antagonism that victory and defeat created. One observer made the comment that “it was useless to preach forgiveness and good will to men still burning with the memory of their wrongs.”

Deeply [engraved] on the Northern heart was the conviction that the Confederacy had deliberately mistreated the prisoners of war captured by its armies. The Southern prisons . . . were at best what one Confederate surgeon described as a “gigantic mass of human misery.”

A war-crazed [Northern] public could not dissociate this suffering from deliberate intent of the enemy. Rather it fitted the purposes of propaganda to attribute the barest motives to the Confederates [that] “there was a fixed determination on the part of the rebels to kill the Union soldiers who fell into their hands.” The great non-governmental agencies of relief and propaganda contributed to the spread of similar impressions.

Northern opinion was thus rigidly shaped in the belief that “tens of thousands of national soldiers . . . were deliberately shot to death, as at Fort Pillow, or frozen to death as at Belle Island, or starved to death as at Andersonville, or sickened to death by swamp malaria, as in South Carolina.”

Horror passed into fury and fury into a demand for revenge. And the arch-fiend of iniquity, for so the North regarded him, Major Henry Wirz, was hanged as a murderer [in November 1865] . . . he was the scapegoat upon whom centered the full force of Northern wrath.

Meanwhile the South had no effective way of meeting these charges of brutality [though] it is not difficult to find, however, material in these years that the South received the Northern charge with sullen hatred.

Typical is an article contributed to the Southern Review in January 1867:

“The impartial times to come will hardly understand how a nation, which not only permitted but encouraged its government to declare medicines and surgical instruments contraband of war, and to destroy by fire and sword the habitations and food of noncombatants, as well as the fruits of the earth and the implements of tillage, should afterwards have clamored for the blood of captive enemies, because they did not feed their prisoners out of their own starvation and heal them in their succorless hospitals.

And when a final and accurate development shall have been made of the facts connected with the exchange of prisoners between the belligerents, and it shall have been demonstrated . . . that all the nameless horrors [of both sides] were the result of a deliberate and inexorable policy of non-exchange on the part of the United States, founded on an equally deliberate calculation of their ability to furnish a greater mass of humanity than the Confederacy could afford for starvation and the shambles, men will wonder how it was that a people, passing for civilized and Christian, should have consigned Jefferson Davis to a cell, while they tolerated Edwin M. Stanton as a cabinet minister.”

(The Road to Reunion, 1865-1900, Paul H. Buck, Little, Brown and Company, 1937, excerpts, pp. 45-48)

Prior to federal intervention into State domestic affairs, governors saw their people as mostly self-reliant and able to carry themselves through hard times. Governor Max Gardner of North Carolina used State agencies and church charities to help his citizens through an economic depression and discourage dependency on government subsidies.

Bernhard Thuersam, www.Circa1865.com

State Government Solutions to Hard Times

“The cries of these suffering people reached the highest government offices in Raleigh, and State leaders planned how to aid them. Governor Gardner and other leaders did not believe that State government should provide relief. They believed that relief was the responsibility of private agencies and local governments because they were closest to the people. Also, State leaders believed that able-bodied people should work for what relief they received. They thought that a dole would destroy character and turn people into beggars.

Governor Gardner did believe that the State should encourage people to help themselves. His first concern was for farmers because the prices of cotton and tobacco dropped sharply in 1929, greatly reducing farmers’ income. In December 1929, Gardner proposed his Live-at-Home program to help the farmers.

This program encouraged farmers to grow part of the $150 million of feed and foodstuffs that they normally imported from out of State for consumption on the farm. Gardner expected the program to improve the State economy and to make the farmers self-sufficient in home food production so that they could ward of starvation.

To start the program, Governor Gardner used existing State agencies. He persuaded President Eugene Clyde Brooks of NC State College to send demonstration agents among farm families to encourage gardens, canning and growing livestock feed. The governor also prevailed upon the State Department of Public Instruction to publicize Live-at-Home among schoolchildren.

For one week each year students learned about the importance of nutrition, of the cow, of the poultry, of the hog, and of the garden. Some 800,000 schoolchildren participated in a Live-at-Home essay contest. The governor presented silver loving cups to the winners, Ophelia Holley, a black girl from Bertie County, and Leroy Sossamon, a white boy from Cabarrus County. Supporting the State efforts, some eastern bankers and merchants refused credit to farmers who would not grow less cotton and tobacco, and more food.

To help establish [county] relief committees, Governor Gardner appointed a Council on Unemployment Relief in November 1930. The council created a separate relief organization for blacks. Lt. Lawrence A. Oxley, a pioneer black social worker in North Carolina provided the leadership to help blacks organize county committees, and a Statewide committee for advising the governor.

The raising of relief funds and dispensing of aid thus fell on public and private local agencies, which cooperated in their work. The most important private organization was the Community Chest, which raised money and distributed it to charitable agencies. The associated charities gave needy families food, clothing, fuel, and medical care.

The Salvation Army mainly gave vagrants hot meals and free lodging in exchange for a few chores, but it also aided needy families. The Baptist Hospital in Winston-Salem treated 2650 patients in 1930, 1500 of them as charity cases. In 1932, the new Duke University Hospital reserved 250 of its 406 beds for the needy.”

(Hard Times, Beginnings of the Great Depression in North Carolina, 1929-1933, John L. Bell, NC Dept. of Cultural Resources, 1982, excerpts, pp. 43-45)

New England, and Massachusetts in particular, was supplying the French as General James Wolfe was enroute to the Plains of Abraham in 1759. In 1814 and the United States at war with the British, New England’s Federalist Party refused troops to repel the enemy, contemplated a separate peace with England, and came near secession from the Union in the December, 1814 Hartford Convention.

Bernhard Thuersam, www.Circa1865.com

Jefferson Reflects Upon Massachusetts

“Oh Massachusetts! How I have lamented the degradation of your apostasy!

Massachusetts, with whom I went with pride in 1776, whose vote was my vote on every public question, and whose principles were then the standard of whatever was free or fearless. But she was then under the counsels of the two Adams’; while Strong, her present leader, was promoting petitions for submission to British power and British usurpation.

But should the State, once more, buckle on her republican harness, we shall receive her again as a sister, and recollect her wanderings among the crimes only of the parricide [Federal] party, which would have basely sold what their fathers so bravely won from the same enemy. Let us look forward, then, to the act of repentance, which, by dismissing her venal traitors, shall be the signal of return to the bosom, and to the principles of her brethren; and, if her late humiliation can just give her modesty enough to suppose that her Southern brethren are somewhat on par with her in wisdom, in patriotism, in bravery, and even in honesty, although not in psalm-singing, she will more justly estimate her own relative momentum in the Union.

With her ancient principles, she would really be great, if she did not think herself the whole.”

(Letter to General Henry Dearborn, March 1815; The Jeffersonian Cyclopedia, Funk & Wagnall’s Company, 1900, pg. 5)

To Jefferson, the Revolution meant “not merely independence from British rule but also escape from the British system of government into republicanism.” He also abhorred political parties, or what he called sects,” and saw that all Americans as “federalists” – i.e., supporters of the Constitution and virtually all republicans, i.e., “believers in a republic rather than a monarchy.” And the States were the line of defense against government tendencies to consolidate power around itself.

Bernhard Thuersam, www.Circa1865.com

Consolidation Generates Monarchy

“On the eclipse of federalism, although not its extinction, [New England] leaders got up the Missouri question, under the false front of lessening the measure of slavery, but with the real view of producing geographical division of parties, which might ensure them the next President.

The people of the north went blindfolded into the snare, followed their leaders for awhile with a zeal truly moral and laudable, until they became sensible that they were injuring instead of aiding the real interests of the slaves, that they had been used merely as tools for electioneering purposes; and that trick of hypocrisy then fell as quickly as it had been got up.

To that has now succeeded a distinction, which, like that of republican and federal, or Whig and Tory, being equally intermixed through every State, threatens none of those geographical schisms, which immediately go to a separation.

The line of division now is the preservation of State rights as reserved in the Constitution, or by strained constructions of that instrument, to merge all into consolidated government. The Tories are for strengthening the Executive and General Government; the Whigs cherish the representative branch, and the rights reserved by the States, as the bulwark against consolidation, which must immediately generate monarchy.

Although this division excites, it is well understood, and will be a principle of voting at the ensuing election, with the reflecting men of both parties.”

(Thomas Jefferson, to Marquis Lafayette, November 1823, Jeffersonian Cyclopedia, John P. Foley, editor, Funk & Wagnalls Company, 1900, excerpt, pp. 760)

It did not take long after Fort Sumter for Northern war expenditures to reach staggering proportions. James Randall in his “Civil War and Reconstruction” (1937, DC Heath) wrote: “With the treasury nearly empty, financial markets shaken, foreign bankers unsympathetic, taxation inadequate, and loans unmarketable except at a discount, the door of escape by way of paper money seemed most tempting.” Lincoln resorted to the printing press to create money.

Bernhard Thuersam, www.Circa1865.com

Lincoln’s Inflationary Finances

“The classic study of Union inflation was Wesley Clair Mitchell century-old “History of the Greenbacks.” Initially the war was to be financed with the use of government bonds, tax revenues would be used to pay the normal expenditures of government, and the gold standard would be retained. However, this system quickly collapsed in late 1861 and the first of three legal tender acts was passed in February 1862 with a total of $450 million in greenbacks authorized for issue.

When an economy has two types of money, such as gold and paper, and they are both defined in the same units, such as dollars, Gresham’s Law states that bad money will drive good money out of circulation. And in accordance with Gresham’s Law, greenback dollars quickly displaced gold dollars as the circulating medium of exchange.

The value of greenbacks quickly depreciated in terms of gold and fell to a low point of only 35 cents worth of gold on July 11, 1864. Amazingly, the Union currency had depreciated as much in three short years as the dollar has in the thirty years since the United States went off the gold standard. The prices of goods appreciated in terms of greenbacks from an index value of 100 in 1860 to a maximum of 216.8 in 1865.

Citizens tended to blame higher prices on business, speculators, and foreigners. Some government officials believed that speculators in the gold market were somehow causing the value of greenbacks to fall, but the real culprit for inflation was the government itself.

In addition to an ever-increasing supply of greenbacks, Mitchell showed that the value of greenbacks in terms of gold would change on the basis of expectations that in turn were based on peoples’ estimated probability that the greenbacks would be redeemed for gold after the war. Battlefield losses were associated with declines in value while victories meant higher values for the greenback.

Higher prices also meant that the Union government would have to issue more greenbacks in order to purchase war supplies and pay its soldiers [and pay enlistment bounties]. Because the Union government would eventually have to pay its war debts and redeem the greenbacks in gold, Mitchell . . . calculated that greenbacks had increased the real cost of the war to the government itself by $528 million. Of course, the politicians who borrowed and spent the money during the war were not necessarily the same ones who had to pay off the debt and redeem the greenbacks after the war.

Mitchell also found that the switch from gold to paper . . . [created] an illusory increase in property values, an increase in extravagance and the purchase of luxury goods, a crippling of economic efficiency, and a decrease in real wages for farmers, laborers, professionals, teachers and soldiers. As expected, the Union’s inflationary finances created an illusion of general prosperity that greatly upset the ability of entrepreneurs, workers, consumers, and bureaucrats to make accurate economic calculations.”

(Tariffs, Blockades and Inflation: The Economics of the Civil War; Mark Thornton and Robert Ekelund, Jr., Scholarly Resources Books, excerpts, pp. 68-69)

At the height of Southern success in September 1862, French banker Emile Erlanger suggested a $25 million loan to the Confederacy through John Slidell, Confederate commissioner in Paris. Erlanger would raise the money in gold, in exchange for Confederate bonds at eight percent interest. For every dollar received the Confederate government would pledge its only source of wealth – cotton. Erlanger and his investors envisioned themselves upon Confederate victory the owners of $10 million worth of cotton, acquired for only one-fifth that amount.

Bernhard Thuersam, Circa1865.com

French Bankers Fleece the Confederacy

“Cotton on Southern plantations or in Southern warehouses hardly possessed the value that inhered in the same material deposited in Europe – that fact was recognized; yet the proffered security was very real and, at a sufficiently low price, might tempt adventurous foreigners. On this basis arose the so-called cotton bonds.

The plan was simply one to borrow money, giving as mortgage cotton lying un-transported in Southern States, owned by the Confederate Government. The plan met with indifferent success. Still, this distant cotton, — distant, that is, in European eyes, — even though it found little favor with conservative investors, presently made a strong appeal to the speculator.

A combination of events in the fall and winter of 1862-1863 gave zest to this gambling instinct. The first of these was the high price of cotton in Europe and the comparatively low price in the Confederacy. Textile areas in in Lancashire and in the northern region of France had reached an appalling depth of unemployment and misery, and millions of English workers were . . . in a state of impending or actual starvation.

The “famine” had forced cotton up to fifty cents a pound, or $200 a bale in the European market. Yet in the Southern States this same product was offered at ten or twelve cents a pound. Such possible profits would obviously justify great risks.

One preeminent fact, in the winter of 1862-1863 . . . Europe confidently believed that the war was approaching its end. The military events of 1862 . . . soon turned the balance in favor of the South. The collapse of McClellan’s Peninsular campaign, the second battle of [Manassas], and the tragedy of Fredericksburg indicated to the average Englishman and Frenchman a quick Confederate victory.

Lord Palmerston openly joked about the discomfiture of the Yankees; Gladstone made his famous speech, declaring Jefferson Davis had “created a nation”; and now, for the first and, as it proved, the only time, Great Britain seemed to be planning to recognize the Davis Government.

At this crisis – 1862 and the early part of 1863 – the Confederacy stood at its peak. If money was to be made in cotton speculation, the time to act had come. If the Union, as English observers said, was as dead as the Anglo-Saxon Heptarchy, its end would bring to the lucky holders of cotton a great increase in wealth. The eyes of European speculators dazzled at the prospect.

Out of this combination of circumstances – Federal defeats, the impending recognition of the Confederacy by Great Britain and France, the anticipated early end to the war, the low price of cotton in the South, and its extremely high price in Europe – came into being the celebrated Erlander loan. For the important fact to be kept in mind is that this was not a loan, as such governmental transactions are usually understood, but a huge speculation in cotton.”

(French Bankers Fleece the Confederacy; Statesmen of the Lost Cause: Jefferson Davis and His Cabinet, Burton J. Hendrick, Literary Guild of America, Inc., 1939, excerpts, pp. 217-219)