“Trading with The Enemy” – Interview

As you may observe from the “About Me” sidebar, my first Civil War book was released by Westholme Publishing in May 2013. It is an annotated and illustrated version of Confederate Private Sam Watkins’s memoir entitled Co. Aytch, which is rebel vernacular for “Company H”.

One reader became a fan and interviewed me about my next book to be released next spring entitled “Trading with The Enemy“. It is about intersectional trade during the Civil War and will also be released by Westholme who distributes through the University of Chicago Press.  The interview is provided below:

***

Q: What prompted you to write a book about intersectional trade during the Civil War?

A: I was reading a book about Confederate high seas commerce raiders that included a chapter on Lieutenant Charles Read who converted one of the vessels captured by the C.S.S. Florida into a disguised miniature raider. Read released one of the first U.S. flagged ships he stopped because it was loaded with a cargo of military supplies bound for Matamoras, Mexico out of New York.  Matamoras is directly across the Rio Grande River from Brownsville, Texas. Despite originating in the United States it was obvious the contraband shipment was destined for Texas Confederates.

That aroused my curiosity.

Q: What key points did you learn by satisfying that curiosity?

A: First, despite its greater prominence in historical memory, blockade running was a smaller business than inter-belligerent trade. It is estimated that almost twice as much Southern cotton was sent to the Northern states as was exported through the blockade to Europe.

Second, it was scandalous.

Third, while the protection of slavery was the chief reason for the first seven of the eleven Confederate states to seceded the continued intersectional commerce during wartime demonstrates that the North’s desire to preserve the union was at least partly an economic motivation.

Q:  Why was inter-belligerent trade greater than blockade running?

A: One reason is that the New-England-centered textile industries of the North were the World’s second largest consumers of raw cotton. On the eve of the War cotton textiles were the single largest manufacturing sector in the United States. The Southern states were the dominant source of feedstock.

Additionally cotton prices spiked as a result of wartime scarcity. From less than $0.15 a pound at the start of the War the staple jumped to a peak of $1.90 during the summer of the third year. Thus, even though shipment tonnage plummeted, dollar volumes remained high. As a result of a combination of the elevated values and the near necessity of hungry Southerners to sell even at bargain prices, the profits available to politically well-connected cotton speculators were irresistible.

Q: What were some of the scandals?

A: Once when President Lincoln refused to grant a trading permit to an old Illinois friend he explained the demoralizing effects of the growing trade by commenting, “The officers of the Army in numerous instances are believed to connive and share in the profits.”

When Union General Benjamin Butler arrived in New Orleans at the head of an occupation army in May 1862 his wealth was estimated at about $0.15 million. Six years later he was worth $3.0 million. He avoided prosecution for graft owing to a combination of luck, political popularity, and the use of intermediaries such as his older brother Andrew who unsuccessfully tried to bribe the general’s New Orleans successor. After New Orleans, Butler moved to Norfolk, Virginia where a similar pattern of trading rapidly emerged.

Finally, for much of the War federal cotton permits were officially issued by the Treasury Department under Secretary Salmon P. Chase. His son-in-law was William Sprague who was a Senator from Rhode Island and one of the nation’s largest textile mill owners. Sprague was also a member of a partnership that exchanged weapons for Confederate cotton.

Q: How did wartime intersectional trade demonstrate an economic motivation for the North to preserve the Union?

A: Much like the chief states right that Confederates wanted to protect was slavery, the prime reason Northerners wanted to preserve the union was to avoid the economic consequences of disunion. Prior to the War both the North and South were economically co-dependent. As Lincoln explained in his first inaugural, “Physically speaking we cannot separate…[The states] must remain face-to-face and intercourse…must continue between them.”

If the Confederacy remained a separate country, its lower tariffs would chop trade away from the North thereby devastating federal tax revenue, Northern industries dependent upon protective tariffs, maritime trade, and the overall commercial activities at export centers such as New York. Goods imported into a low-tariff Confederacy could be smuggled across the Ohio River thereby further attenuating business for the Northeast. Eventually, the United States might have become Balkanized into three or four different countries.

Although the War induced massive federal deficit spending which diluted the previous intersectional dependence, when it started nobody knew that the War would generate such a gigantic fiscal stimulus. Consequently the GNP of the Northern states grew at an estimated annual rate of over 20% during the four years of the War, whereas the economy of the South shrank.

Q: Any final anecdotes?

A: Surprisingly, Northern shippers sometimes transported cargoes directly through the Union blockade instead of delivering them to a blockade running anchorage such as Nassau or Bermuda.

One clever variation was to initially ship Northern goods to Halifax where the merchandise would be unloaded to become “Canadian” and thereafter re-loaded. From Halifax skippers would next run the blockade at a popular Confederate port such as Wilmington, North Carolina with the “Canadian” goods.  Typically, on the return they would first proceed to Halifax and thence re-enter the United States with a load of “Canadian” cotton.

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