Trading with the Enemy Read online

  Fortunately for the United States, following Great Britain's lead, the other European powers ignored the provision in the Paris declaration specifying that blockades were only legal if they were “effective”—meaning capable of being reliably enforced. For much of the war—certainly the first year or two—the federal blockade failed to be effective because too few ships were available to enforce it dependably. Although Confederate foreign commissioners correctly argued that the blockade did not meet the required standards of legality, Britain and the rest of Europe disregarded their pleas. Thus, blockade-running became a separate business in which European deep water vessels carried cargo to centers like Nassau and Bermuda, where the last leg of the trip into the Confederacy was executed by specialized carriers that assumed the risk of capture.

  Britain concealed its chief reason for failing to recognize the illegalities of the blockade. Essentially, it was not merely thinking of the present war in North America but of potential future European conflicts. The Paris declaration had never been popular with leaders whose prime interest was the prominence of the British Empire. It reduced the flexibility of the British fleet to protect its interests. In fact, that was the precise objective of the Continental powers sponsoring the declaration. Essentially, the British could not optimally employ their fleet in a future war if it was required to effectively blockade mile after mile of enemy coastlines, such as, hypothetically, the combined Atlantic and Mediterranean shorelines of France. If signatories of the Paris declaration generally acquiesced to Lincoln's implementation of the blockade, it would become a legal international precedent that would effectively nullify the treaty provisions most objectionable to the British navy.42

  Three

  The Port Royal Experiment

  DURING THE FIRST YEAR OF THE CIVIL WAR, A MASSACHUSETTS mill owner, abolitionist, and antebellum weapons supplier to John Brown named Edward Atkinson wrote a booklet titled Cheap Cotton by Free Labor. “Free” referred to nonslave white or black workers. “The object of this…pamphlet is to prove that labor upon cotton…by whites…will yield a larger return to the small cultivator than almost any other agricultural product.” His book promoted a belief that cotton could be produced at lower cost by eliminating slavery and substituting free laborers. He advocated destruction of the power of the “planters and businessmen of the cities” in order to rebuild the Union with the “poor white trash composing the large majority of the Cotton States.”1 Evidently wearing his mill owner hat, instead of his abolitionist one, Atkinson added, “[For purposes of argument] we may admit that we must have cotton, and that the emancipated slave will be idle and worthless; we may [disregard that] in our southern climate, labor or starvation would be his only choice, and…labor upon the cotton field would be the easiest and most profitable way in which he could engage—let him starve and exterminate himself if he will and so remove the Negro question—still we must have cotton.”2

  Throughout the war, Atkinson persistently lobbied for the invasion, occupation, and redistribution of Southern lands for the deliberate purpose of cultivating cotton with free labor. The first opportunity arrived in November 1861, when the federal navy drove off the Confederate defenders at Port Royal Sound, South Carolina. From the Rebel viewpoint, the defeat was sudden and unexpected. Consequently, planters in the area abruptly abandoned their plantations, leaving behind many valuables, including about ten thousand slaves, who had previously composed 80 percent of the population. The region was a center for growing a premium, long-fiber version of cotton termed Sea Island cotton.3

  On November 8, 1861, federal troops under Brigadier General Thomas Sherman seized the town of Port Royal. Together with the surrounding area known as the Beaufort District, the region produced about fourteen thousand cotton bales annually before the war.4 The slaves left behind went on a “carnival of idleness” by looting from the homes of their former masters. One federal officer wrote, “The Negroes were perfectly wild, breaking into every building and destroying or carrying off every portable valuable.” They destroyed all cotton gins and many tools used in cotton production. Soon, however, Union troops joined them, but they also robbed from the slaves. Blacks attempting to resist were sometimes shot and continually abused by soldiers from the lowest to some of the highest ranks, despite orders from Sherman to the contrary. Former slaves were compelled to labor on government-owned plantations under the eyes of gun-toting federal soldiers. For the former slaves, their long-anticipated freedom proved to be profoundly tested by Union soldiers.5

  But they were caught between two fires. While some of the evacuating plantation owners advised blacks to remain behind because they would likely starve in the hinterlands, others tried to take their slaves with them. In some instances, slaves failing to obey were shot, and others attempting to hide were accidentally killed as plantation properties were immolated by a combination of evacuating owners, federal soldiers, and freed slaves.6

  The War Department soon notified Sherman that he must stop the pillage and seize all available cotton. On the recommendation of his future son-in-law and the Rhode Island governor, William Sprague, Treasury Secretary Chase assigned Lieutenant Colonel William Reynolds to collect the area's abandoned cotton and sell it at auction in New York. With the aid of former slaves, he was able to harvest a few thousand bales from the 1861 crop, which grossed $500,000 before transportation and other expenses.7 However, when all expenses were taken into consideration, the venture resulted in a loss of $50,000 to $75,000.8

  Accordingly, Chase was dissatisfied with Reynolds and abruptly dismissed him after the cotton was delivered. Reynolds and his agents collected fat commissions, and on his departure, an unexplained 10 percent discrepancy remained in his accounts. Nonetheless, after marrying Chase's daughter, Sprague joined with Reynolds and other partners to promote what historian Willie Lee Rose identified as “an illegal private trade in guns and cotton with Confederate agents. It was treason by almost any definition.”9

  Owing to unsettled conditions in the border states, Lincoln was not then prepared to emancipate the Port Royal slaves. Instead, he employed the useful precedent set by General Butler when he was in command at Fortress Monroe, Virginia, and declared escaped slaves to be “contraband of war.” They were not free, but neither would they be returned to their Rebel owners. However, Chase was also eager to transform the former slaves into self-sustaining citizens. Consequently, he sent Boston attorney Edward L. Pierce to organize a cotton-growing enterprise to be managed by the federal government but worked by about four thousand contraband blacks. The initiative would also provide education for the former slaves. In March 1862, a group of about fifty men and women, known as Gideonites because of their resemblance to the biblical Gideon's band, arrived to set up schools and preach Christianity.

  Pierce and the soon-to-be-dismissed Reynolds fell into persistent squabbling. In one instance, Pierce ordered $6,000 worth of cottonseed from New York without knowing that Reynolds already had an abundant supply. Owing to tardy wage payments, many of the ex-slaves were soon lamenting the loss of “the good times they had when ‘old massa’ was here.” Many spent more time with their pigs and chickens than in the cotton fields. When Major General David Hunter starting recruiting soldiers among them, many ran away. “Sometimes whole plantations…ran into the woods for refuge.”10

  Although Lincoln ordered Hunter to cease recruiting, it took nearly a month for the government-operated plantations to return to normal. Responsibility for Sea Islands plantations was transferred to the War Department in July 1862, and Brigadier General Rufus Saxton took charge of the area. He was made military governor of South Carolina and commander of the Department of the South, both of which mainly comprised the Sea Islands at the time.11

  Nonetheless, the modest 1861 cotton crop may have partially motivated Congress in June 1862 to augment the direct tax of the August 1861 Revenue Act by enabling it to become a legal pretext for confiscating real estate owned by Southerners in Union-occupied regions o
f the Confederacy. Owners who did not pay the tax with currency acceptable to collectors—which excluded Confederate paper—would lose their property for nonpayment of taxes. Terms of sale for lands thus confiscated and later auctioned granted buyers an undisputable title, thereby precluding any chance that the original owners could reclaim them. It was intended that such lands could be used to raise large quantities of cotton under the free-labor system contemplated by Edward Atkinson.

  But efforts to grow meaningful quantities of cotton by such methods in the Sea Islands failed, whether on privately owned free-labor plantations or those operated by the federal government. The 1862 crop yielded only twenty-six pounds per acre.12 The following year, the per-acre yield on government plantations increased but was still only forty-one pounds. While one large, privately owned plantation operated by New Englander Edward Philbrick averaged ninety pounds per acre that year, all yields were far below the antebellum slave-grown average of 135 pounds. The disappointing results chiefly reflected a clash of cultures and poor treatment of the former slaves.13

  Culturally, the free-labor ethics of New Englanders, typified by the twelve-hour workdays characteristic of textile mills back home, clashed with the lingering customs of former slaves. Ex-slaves considered the unstructured time available after tasks were completed on prewar plantations to be one of their most pleasurable freedoms. One ex-slave announced in a church meeting, “The Yankees preach nothing but cotton, cotton,” while the freedman wanted to spend at least some time planting corn and other edibles. In complaint, one Gideonite commented, “The [blacks] are very wayward—now they work and then they stop—and some stop before they begin.” Northerners retaliated by evicting, or cutting the rations of, former slaves who failed to work “diligently.”14

  Owing to a chronic food shortage, blacks sought to supplement their diets through hunting and fishing. But Northern superintendents—federal versions of plantation overseers—interpreted such activities as “recreation” and were unwilling to make much time available for them. The Yankees held a similar viewpoint toward the proclivity of ex-slaves to grow foodstuffs. When two workers on one free-labor plantation insisted on the need to plant corn, they were arrested. Essentially, superintendents were forcing ex-slaves to raise cotton in the same manner as before, but without the rations and privileges to which field hands were accustomed on antebellum plantations.15

  Additionally, former slaves were often paid belatedly, which partly reflected government bureaucracy. One reason the large Philbrick properties were more than twice as productive as those owned by the federal government was that he quickly paid his workers out of his own pocket. His freedmen were paid by the task and did not have to wait until harvest time to be paid. Another reason is that he promised to sell his inexpensively acquired lands to the former slaves after they had saved enough money to buy them, which they erroneously presumed would be at the price he had paid. Philbrick also priced each task at a rate based on the performance of the ablest field hand at maximum output in the prewar era. Consequently, few could meet his standard within the allotted time and were required to put in extra time in order to be paid.16

  By March 1863, confiscations under the direct tax and other authority totaled eighty thousand acres in the Sea Islands. However, only twenty-one thousand were sold to private buyers, and former slaves were able to buy only two thousand of that. White Northern buyers with larger purses frustrated African-American residents who hoped to buy a meaningful share of the auctioned property and thereby become self-sustaining economically.

  Philbrick was one of the chief white buyers. Even though he was a prominent abolitionist and former treasurer of the Massachusetts Anti-Slavery Society, he was also a confirmed capitalist who was previously assistant superintendent of the Boston and Worcester Railroad. Through a hastily organized stock company, he purchased one-third of the Sea Island properties available to private buyers in the March 1863 auction at a cost of only one dollar per acre for seven thousand acres.17 After only a single year, he earned $70,000, or $10 per acre, which translates to a 1,000 percent annual return. Nonetheless, as will be discussed shortly, the returns primarily reflected extraordinary factors, including the bargain price Philbrick paid for the land.18 As a strong proponent of free enterprise, he reasoned that former slaves would benefit morally, as well as materially, by gaining experience as wage earners under Northern whites.19

  Owing to the small amounts of land purchased by blacks, Lincoln announced that a second auction of forty thousand acres in fall 1863 would reserve sixteen thousand acres to be sold only in small parcels to persons of African descent. General Saxton felt that it was not enough. Drawing on principles pioneered in the 1862 Homestead Act, he announced regulations that would also give ex-slaves preemptive rights to buy parcels in the twenty-four thousand acres outside the reserve. Much like western homesteaders who, after improving public lands, were permitted to buy their homestead at a fixed price, Saxton proposed similar preferences for the Sea Island blacks.

  But Philbrick and others argued that preemptive rights for ex-slaves would rob the US Treasury of a fair price. He also concluded that former slaves were not yet ready to manage their own economic activities. In a letter home, his words reflect an attitude that is almost indistinguishable from the stereotypical Southern planter:

  We find the blacks as dependent as children and as ignorant of social laws as they are of the alphabet. We must stand in relation of parents to them until such time as they can be taught to stand alone, and as in all parental authority, should be tempered by benevolence, sound judgment & firmness, backed if necessary by force.

  The fact is that no race of men on God's Earth ever acquired the right to the soil on which they stand without more vigorous exertions than these [former slaves] have made…. I cannot see why [they] should be excepted from the general rule.20

  Most Northerners, including many abolitionists, believed in the merits of a free market. Consequently, in December 1863, Treasury Secretary Chase reversed Saxton's preemptive favoritism for blacks, except for the original sixteen thousand acres of small parcels set aside.21

  Defeated in their efforts to secure preemptive rights, African-American workers in the Sea Islands sabotaged cotton production on the new Northern-owned plantations, demanded pay raises, petitioned Washington, and denounced Yankee plantation management. Consequently, for the balance of the war, cotton yields remained well below those of the antebellum period. Although the new owners operated profitably, the profits were mostly the result of the inflated cotton prices that prevailed during the war.22

  As a final blow, ex-slave productivity fell in the second half of 1864, when Northern states were permitted to fill their draft quotas of soldiers by “recruiting” for substitutes among African-Americans in the South. Armed with powers to offer bounties, agents from the North descended on the Sea Islands like a plague of locusts. They randomly seized ex-slaves and often kept the bounties for themselves. One Gideonite wrote that she saw two former slaves shot for attempting to avoid such conscription. A Treasury agent wrote, “The poor Negroes are hunted like wild beasts…. There is a perfect panic throughout all these islands…. [I can] conceive of no greater terror and distress on the coast of Africa after a slave hunt.”23 During four months of such activities in the Southern states, about twenty-eight hundred African-American soldiers were “recruited” as draft substitutes.24

  In his study of Northern planters during the Civil War and Reconstruction, Lawrence Powell wrote:

  Those missionaries at Port Royal who wanted the confiscated plantations distributed among freedmen had no stronger argument against the scheme of the tax commissioners [to avoid preemptive rights] than the fact that the “gentlemen who have recently visited Port Royal about land are tempted there alone by present high prices of cotton. Their object seems to be to make the greatest amount of money in the shortest possible time, to run the lands & laborers at the exhaustive point & be off to spend their profits elsewhere.”
…The Yankees who went into cotton planting in these years seem to have regarded the South as…a distant colony where men went to make an easy fortune in order to return home and live in comfort.25

  As cotton prices started tumbling toward the end of the war, Edward Philbrick concluded it would be unprofitable to continue his plantation venture. He was convinced that the ex-slaves would fail to “ever work as they were formerly obliged to and…will not produce as much cotton in this generation as they did five years ago.” It was an admission that the free-labor cotton production theory espoused by Edward Atkinson did not measure up to his expectations. So Philbrick divided his lands into small parcels, sold them to local workers, and returned to Boston. He permitted African-American buyers to pay half the price of whites, but even at a 50 percent discount, the values were far above the amounts he originally paid. His timing was good. Two years later, in 1867, there were no bidders for government land sales of properties confiscated for nonpayment of taxes.26

  Despite the disappointing results of the Port Royal Experiment, Edward Atkinson and his followers would later present new proposals for colonizing additional occupied Confederate territories with cheap-cotton-by-free-labor devotees. Meanwhile, however, New England mills and others in need of feedstock would increasingly turn to interbelligerent trade. Within six to eight months after the occupation of Port Royal, new Union military successes in western theaters offered unprecedented opportunities for profit in the cotton market.