Trading with the Enemy Page 7

  Sprague, who became one of Rhode Island's US senators in March 1863, formed a partnership with Harris Hoyt, a putative Union-loyal Texan. Hoyt approached Treasury Secretary Chase for the necessary cotton-trading permits but was denied them. Sprague soon became involved with Chase because of the romantic interest he developed for the secretary's twenty-two-year-old daughter, Kate. The two were married in November 1863. At the wedding, Kate wore a $50,000 tiara gift from her husband. Afterward she promptly began decorating their sixty-room Rhode Island mansion and using the senator's influence and wealth to promote her father's presidential ambitions.

  Although it was unable to get cotton-trading permits, Hoyt, Sprague & Company purchased three vessels. (Ironically, one of them, the Ella Warley, would accidentally collide with The Star of the West, the ship that President James Buchanan had employed in a failed effort to provide relief to Fort Sumter before the war began during the secession crisis. Both ships sank about ten miles from New York.) Hoyt quickly sailed one of the ships to Havana, where he changed its name and adopted a British registry. The vessel next sailed to Matamoros with a cargo of guns, rifles, cartridges, caps, gunpowder, and other contraband. The goods were finally shipped to Houston, where Hoyt reached an agreement with the Confederate government to supply $400,000 of similar merchandise in exchange for cotton.25

  About two years later, in November 1864, the Union army arrested Charles Prescott, who skippered Hoyt's ship. On December 6, 1864, Prescott provided a full confession, which led to the arrest of two Hoyt, Sprague & Company partners, including one of the senator's first cousins. Panicked that he would be charged with treason, the senator wrote unconvincing denials to Major General John Dix, who had ultimate authority of the investigation. As the enquiry expanded, Hoyt also implicated Senator Sprague, who was eventually arraigned on six charges of treason. Fortunately for Sprague, Dix himself had compiled a questionable record of interbelligerent trade when commanding occupation troops in Norfolk, Virginia. Dix pardoned the three Hoyt, Sprague partners who confessed and left the matter of the senator's prosecution up to Secretary of War Stanton.26

  In correspondence, Sprague referred to the incident as Hoyt's “Texas Adventure.” Messages the senator wrote at the time of the “Texas Adventure” to General Butler in New Orleans and the “Officer Commanding the Gulf Squadron, Gulf of Mexico” reveal that he almost certainly was aware of the mission. But the assassination of President Lincoln in April 1865 soon shifted public attention. Officially, Stanton took no further action, but the compiled evidence was accessible should he and Sprague ever battle politically.

  After the war, its very existence may have been an unspoken threat during the Senate vote in 1868 on whether to convict Lincoln's successor, President Andrew Johnson, on the articles of impeachment brought against him by the House. Sprague's father-in-law presided over the proceedings as chief justice and probably opposed impeachment because he believed the contested Tenure of Office Act was unconstitutional. Essentially, the act denied President Johnson the authority to replace selected civil officeholders whenever the Senate was not in session, which was comparatively frequent during the era. The secretary of war was one such officeholder. When Johnson tried to replace Stanton, who was resisting the president's Reconstruction policies, the impeachment charges were drawn up against the president. The trial took place in the Senate, where Stanton obviously desired Johnson's conviction. Sprague voted for conviction, which Johnson avoided by a single vote.27

  Thereafter, the cracks in William and Kate's marriage grew into publicly visible fractures, leading it to collapse. Both fled to extramarital affairs, with Kate choosing New York senator Roscoe Conkling, whom William once ran off with a shotgun. Conkling was one of the most flamboyant figures to walk on America's political stage. At six-foot-three, “Lord Roscoe” dressed outlandishly, with ornate vests and white flannel trousers, thereby giving “the appearance of strutting even while sitting down.”28 Kate often traveled to Europe, spending huge amounts of her husband's money. William became an alcoholic. The family fortune took a serious blow in the Panic of 1873, and the couple divorced nine years later.

  Ever since assuming command from General Butler in New Orleans in December 1862, Union Major General Nathaniel Banks was anxious to move against Texas. A former speaker of the House, Banks had been a congressman from Massachusetts. He worked as a bobbin boy in the state's textile industry as a youth. Consequently, he was sensitive to the demands from his home state for access to cheap cotton. Less than two months before Banks arrived in New Orleans, Secretary Stanton sent notes to the governors of New York and the New England states saying that Banks was organizing an army for the purpose of occupying parts of Texas. He urged the governors to provide army volunteers and implied that the ensuing military invasion would provide Texas lands for white Northerners to cultivate cotton, much like had been attempted in Port Royal. On October 30, 1862, the New York Times editorialized, “Texas needs to be colonized as well as captured. New England and the Middle states must furnish the new population for Texas.”29

  Nonetheless, the November 1862 national elections provoked a shift in military plans. Republican losses in states northwest of the Ohio River convinced Lincoln that clearing the Mississippi River for unobstructed commerce was more important. A warning from Indiana's governor, Oliver P. Morton, particularly influenced Lincoln's decision:

  The fate of the North-West is trembling in the balance. The results of the late [autumn 1862] election admonishes all who understand its import that not an hour is to be lost…. During the recent campaign, it was the staple of every democratic speech, that we of the North-West had no interests or sympathies in common with the people of the Northern and Eastern States; that New England is fattening at our expense; that the people of New England are cold, selfish, money-making and through the medium of tariffs and railroads are pressing us to dust;…that socially and commercially [our] sympathies are with those of the people of the Southern States rather than with the people of the North and East; that the Mississippi river is the great artery and outlet of all Western commerce; that the people of the North-West can never consent to be separated politically from the people who control the mouth of that river…. And I give it here as my deliberate judgment, that should the misfortune of arms, or other cause, compel us to the abandonment of this War and the concession of the independence of the Rebel States, that Ohio, Indiana, and Illinois can only be prevented…from a new act of secession…by a bloody and desolating Civil War.30

  Therefore, by December, Banks was told that he must first aid Major General Ulysses Grant in freeing the Mississippi River from Rebel fortifications. Accordingly, while Grant held Vicksburg in a death grip, Banks laid siege to the companion Rebel fortress at Port Hudson, Louisiana, which fell shortly after Vicksburg in July 1863. Not until November 1863 was he able to send an expeditionary force to capture Brownsville. In response, the Rebels burned the town's available cotton and, like the trail of an ant colony raiding a jar of honey, shifted their Rio Grande caravans to fordable points two hundred to three hundred miles upstream such as Eagle Pass and Laredo. Until the Confederates recaptured Brownsville nine months later, upstream Mexican towns such as Piedras Negras became prosperous cotton trading centers and duty collection points. The change also enriched the Texas families of King and Kenedy, who had a monopoly on Rio Grande steamboat traffic. Their pilots were the masters of the river's tortuous channels and unpredictable currents. The Kings later became more famous cattle barons as owners of the King Ranch. At Matamoros, the result was a moderate decline in traffic and sharp increase in transportation costs due to the lengthy detours.31

  Federal soldiers were able to hold Brownsville for only nine months. Confederates recaptured the town in July 1864. Thereafter, trade volume through the upriver villages declined to insignificance. The shorter routes through Brownsville led to a resurgence of commerce. In August 1864, a visitor to Matamoros wrote, “There are millions of dollars of merchandise in
the place. Every room…capable of holding a man was rented at a large price.” Simultaneously, the US consul in Matamoros complained that “large quantities of merchandise now cross the river daily…[the Rebels] having taken advantage of the absence of our troops.” During October and November alone, three hundred tons of ordnance passed through Brownsville and on to San Antonio. By Christmas, San Antonio was experiencing such a boom that specie was once again the common currency in the city's markets, whereas hard money had nearly vanished everywhere else in the Confederacy.32

  Eventually one federal naval commander decided to test the international legitimacy of open trade at Matamoros. On February 25, 1863, Acting Rear Admiral Charles Wilkes instructed the USS Vanderbilt to stop and board the British-flagged merchant ship Peterhoff as the latter was leaving the neutral port of St. Thomas in the Danish West Indies. Although the boarding party learned the Peterhoff was officially bound for Matamoros, it also discovered evidence that most of the cargo was contraband destined for the Confederates in Texas. As a result, the ship was seized and taken to a New York prize court. The chief matter for adjudication was whether a neutral-flagged merchant ship could be seized when bound from one neutral port to another. Admiral Wilkes stirred up considerable animosity, which resulted in British saber rattling across the Atlantic.

  While the matter was under litigation, Lincoln unilaterally took steps to relax international tensions and restrict the flexibility of Union naval commanders to initiate similar provocations against powerful European neutrals. First, he directed that the Peterhoff's mail pouch be delivered unopened to British authorities. Second, he instructed Navy Secretary Gideon Welles to advise all ship commanders that they “will avoid the reality, and as far as possible, the appearance of using any neutral port to watch neutral vessels and then dart out to seize them on their departure…. Complaint has been made that this has been the practice at the port of St. Thomas which practice, if it exists, is disapproved, and must cease.”33

  Although the Peterhoff's seizure appeared to be illegal, the prize court condemned the ship, which was purchased by the federal government, armed, and added to a blockading squadron. Ironically, less than a year later, the renamed USS Peterhoff was mistakenly sunk by another federal warship when it was incorrectly assumed to be a blockade-runner. Two years after the Civil War, the Supreme Court overruled the decision of New York's wartime prize court and concluded that Wilkes's seizure was unlawful. The author of the court's opinion was Chief Justice Salmon P. Chase.34

  After the fall of Vicksburg, the Confederate Trans-Mississippi depended almost entirely on cotton trade to obtain the necessities of war and many of the things required to merely avoid hunger and provide shelter for civilians. There were essentially two markets for the cotton. One was export, either across the Rio Grande or via blockade-runners. The other was overland trade directly with enemy agents infiltrating through enemy lines. Although Matamoros would remain important after the fall of Vicksburg, Trans-Mississippi Confederates would increasingly rely on growing interbelligerent trading at Shreveport, Louisiana, and along tributaries of the Mississippi River.

  Five

  Mississippi Valley Trade

  A COUPLE OF MONTHS AFTER THE WAR BEGAN, TREASURY Secretary Chase adopted a “follow the flag” trade policy. Specifically, he intended that cotton traders be allowed to accompany Union armies as Rebel territories were occupied. In the western theater, the initial motivation was to sell provender from the Ohio and upper Mississippi River valleys. The breakdown in prewar supply lines inflated prices below the Ohio River, where corn was priced at forty to fifty cents a bushel, compared to twenty cents on the right bank.1 However, as indicated by the map on page 61, when Brigadier General Ormsby Mitchel took his division of Major General Don Carlos Buell's Army of the Ohio into south-central Tennessee and north Alabama in April 1862, they were among the first federals to enter rich cotton fields. Traders quickly learned there were greater profits in buying cotton for the North than in selling provender to Southerners.

  Estimating that at least ten thousand cotton bales were available in the area, Mitchel invited New York buyers into the region, including his son-in-law, W. B. Hook. Unfortunately for the general, some of his letters to Hook including one advising the younger man that “it is the bold man who wins” were captured by the Confederates. A Rebel general forwarded the correspondence to Union General Buell, presumably to reveal Mitchel's self-serving commercial activities. Senator Zachariah Chandler of Michigan later accused the army of stealing $2 million of north Alabama cotton. William Sprague charged that army officers bought all the cotton they could while seizing all that Northern businessmen purchased, presumably including Sprague's representatives.2

  By July 1862, Union armies captured and thereafter continuously occupied three cotton-trading centers on the Mississippi River: New Orleans, Memphis, and Helena, Arkansas. Major General Samuel Curtis, who was the victor at the March 1862 battle of Pea Ridge, Arkansas, fortified Helena. After the battle of Shiloh, Major General William T. Sherman was in charge at Memphis. General Butler held New Orleans after it fell to Admiral David Farragut. The Mississippi Delta of that region provided some of the world's richest cotton-growing land. Simultaneously, about three-fourths of New England's textile spindles were idled owing to a shortage of feedstock. Historian David Surdam wrote, “During the Civil War many cotton planters along the Mississippi River chose self-interest over nationalism. Trade resumed at New Orleans and Memphis, as well as many smaller towns. More than 600,000 bales of cotton were exported from Memphis and New Orleans.”3

  MEMPHIS

  Two weeks before Memphis was occupied in June 1862, eighteen textile manufacturers petitioned Massachusetts congressman Samuel Cooper to reestablish trade there. Merchants in Cincinnati, St. Louis, and Louisville feverishly anticipated opening commerce at Memphis.4 As Memphis trade began during summer 1862, a Treasury agent tried to restrict it to a select group of individuals, but the result was that smuggling soon began in earnest.5 When Major General Henry Halleck took over Grant's army after the April 1862 battle of Shiloh in western Tennessee, he encouraged more official trade, partly out of sympathy for the suffering population. As Confederate armies withdrew, they often impressed food supplies and livestock from area residents.

  In his personal memoirs, General Grant explained his reaction to Washington's decision authorizing interbelligerent commerce:

  [T]he government wanted to get out all the cotton possible from the South…. Pay in gold was authorized, and stations on the Mississippi River and on the railroad…had to be designated where cotton would be received. This opened to the enemy not only the means of converting cotton into money…but it afforded them means of obtaining accurate and intelligent information in regard to our position and strength. It was also demoralizing to the troops. Citizens obtaining permits from the treasury department had to be protected…to get out cotton by which they realized enormous profits. Men who had enlisted to fight…did not like to be engaged in protecting a traffic which went to the support of an enemy…and the profits of which went to men who shared none of their dangers.6

  By July, a correspondent for the St. Louis Republican reported that Memphis railroads groaned with cotton transported north.7 When Grant and Sherman attempted to outlaw the use of gold in cotton transactions, they did not realize the potent influence of international politics. Each must have been puzzled that Secretary of War Stanton ordered them (through Halleck, who had been promoted to general in chief and relocated to Washington) to back down, because he normally opposed interbelligerent trade. However, he was pressured by Secretary of State Seward, who was sensitive to the feedstock needs of the British textile industry, which could foresee empty warehouses within a few months. Essentially, the British concluded that if gold transactions were permitted, more cotton would reach the market. In his order to once again permit gold-for-cotton purchases in the Memphis region, Halleck explained that the practice would be consistent with the habit
of General Butler in New Orleans.8

  Lincoln ordered Halleck “to see that all possible facilities are afforded for getting out cotton. It is deemed important to get as much as we can to market.”9 Revealing an anti-Semitic side to his personality, Sherman complained that Halleck's order “is worse than a defeat. The country will swarm with dishonest Jews who will smuggle powder, pistols, and percussion caps…in spite of all the guards we can provide.”10 In his PhD dissertation, Robert Futrell wrote that “considerable amounts of gold were going south at this time, carried in cleverly designed money belts by unscrupulous traders…. [The] Adams Express Company in Cairo…[listed] $355,000 in gold receipts from September 9th to November 30th. [There] is little reason to doubt that all of this coin was secretly carried into Tennessee, Arkansas, and Mississippi [for] cotton.”11

  Effects of the Memphis cotton trade were soon evident in the strengthening Confederate armed resistance. By October 1862, Major General Earl Van Dorn's Rebel army was ready to challenge Grant. Because Grant was temporarily in St. Louis, Van Dorn's attack hit Union Major General William Rosecrans at Corinth. Although Rosecrans was able to hold the fortified town, Van Dorn would have been unable to assume the initiative but for supplies received through Memphis.12 One detective wrote Grant that railroad employees were involved in a smuggling ring that furnished Confederates with many revolvers and carbines.13 Sherman complained that Cincinnati provided more supplies to the Confederacy than Charleston, South Carolina, which was one of the chief entrepots for blockade-runners.14