Disunion follows the Civil War as it unfolded.

Gen. Ulysses S. Grant took command of the Department of Tennessee on Oct. 25, 1862, and immediately started planning to capture Vicksburg, Miss., the principal remaining Confederate stronghold on the Mississippi River. In doing so, he came face to face with the dangerous consequences of a surprising fact of the Civil War: the semi-illicit trade in cotton between North and South. Northern merchants paid well, and often in gold, for the Southern crop; the Confederates then used that gold to buy new weapons, sometimes from clandestine suppliers in Northern or occupied cities like Cincinnati and Memphis. Grant soon found himself confronting rebel troops sustained by such trade, including cavalry armed with modern breech-loading carbines.

It’s well known that British textile manufacturers relied heavily on Southern cotton for their raw materials, but the New England mills ranked second. Consequently, by the autumn of 1862 Northern “cotton speculators” were regularly infiltrating front lines seeking to acquire feedstock needed in Britain and New England. The year before Lincoln’s election, the South accounted for 70 percent of American exports, the great majority of it cotton.

The war, and the federal blockade of Southern ports, sharply curtailed those exports. This wasn’t just a problem for the textile industry: President Lincoln could scarcely hope for a favorable trade balance without cotton. Given that gold was the international settlements standard, the situation could strain the Treasury thereby eroding America’s international status and inviting foreign recognition of the Confederacy. At the same time, Lincoln, Seward and others believed that Europeans might intervene if their textiles industries were overly deprived of the commodity. And so the decision was made to quietly allow intersectional trade in cotton.

Federal policy toward North-South trade evolved fitfully. Expecting limited activity, in July 1861 Congress gave the president and Treasury secretary the right to issue “such trading licenses as the public good might require.” But even within the administration, Cabinet members disagreed and even changed viewpoints. To complicate matters further, Washington’s official policy rarely translated perfectly in the field, where generals and Treasury agents pursued their own agendas, even when they ran at cross purposes to the president’s.

Things were more straight-forward in the South. Confederate armies were so desperate for essential supplies like salt for food preservation that they had little choice but to accept the benefits of trade despite official prohibition. The historian James McPherson summarized, “The Davis administration looked the other way out of necessity; the Lincoln administration looked the other way out of policy.”

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The money, after all, was very good. By the fall of 1862 a combination of an initial Southern embargo and a tightening Federal naval blockade created a scarcity that inflated cotton prices. Behind Confederate lines the staple could be purchased at 10 cents a pound, but was worth 70 cents or more in Northern or overseas markets. Given that differential, efforts to prevent North-South trade were as ineffective King Canute’s orders to hold back the waves.

Government officials and military officers were bribed to shut their eyes. As the historian Ludwell Johnson wrote, “Cotton permits were sold on the streets of New York; soldiers were bribed; traders were blackmailed; Treasury agents were disgraced.” In January 1863 Charles Dana, who was a special investigating agent for War Secretary Edwin M. Stanton, wrote from Memphis, “the mania” for cotton had “corrupted and demoralized the army.” Five months later, Lincoln himself admitted to his Illinois friend William Kellogg, “The officers of the Army in numerous instances are believed to connive and share in the profits” from the cotton trade. Treasury Secretary Salmon P. Chase’s agent in New Orleans repeatedly wrote that he could not stop “unwarranted” trade because the brother of Gen. Benjamin Butler, who ran the city, profited from it.

Of course, this being war, the Union Army saw an easier way to get cotton than by purchase: it could simply capture it. But whenever a Union advance appeared imminent, only the opportunity to sell their crops and inventory might prevent Southern farmers and soldiers from routinely burning the cotton.

Lincoln’s policy did not go unchallenged. Among others, Gen. Edward Canby wrote to the president that cotton traders “follow the track of the army (and) traffic in its blood,” with all the “baseness of Judas Iscariot, but without his remorse.” Lincoln responded that, since higher cotton prices enabled the Confederacy to make as much profit as before the war off a small fraction of the antebellum tonnage, it was better to let Northern commercial interests buy and export the cotton than to let the rebels do it directly.

And there was no getting around the fact that the North desperately needed cotton itself. The historian Lauriston Bullard wrote, “Massachusetts was almost as much dependent upon cotton as South Carolina or Mississippi.” The demand was ravenous: two weeks before the Union captured Memphis, a major cotton port on the Mississippi River, 18 New England textile manufacturers petitioned Congressman Samuel Hooper of Massachusetts to re-establish trade there.

The Bay State’s colorful Edward Atkinson — variously a prominent abolitionist, cotton mill industry leader and weapons supplier to John Brown — persuaded Lincoln to liberalize between-the-lines trading. Later in the war Atkinson urged that New Englanders be given Texas lands to raise cotton, utilizing former slaves for labor. To questions about whether ex-slaves would accept the scheme, he answered that if they declined, they should be allowed to starve, “and so remove the Negro question – but still we must have cotton.”

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Aside from the pragmatism and self-interest that drove the trade, there was also a humanitarian impulse. Put simply, cotton sales in the occupied regions were the principal means by which destitute whites — including those loyal to the Union — and former slaves avoided starvation. Owing to the poverty left behind as Confederates withdrew from western Tennessee, Gen. Henry Halleck resolved that the cotton trade was a matter of “extreme necessity.”

Slaves, and former slaves, were similarly affected. After reporting that Federal troops had confiscated 700 acres of his corn, 150 of his cattle and 400 of his hogs, a Southern planter sought permission to sell cotton to buy a sizable quantity of provisions to feed the hundred slaves wishing to remain on his plantation. Otherwise, he said, he would turn them over to Federal authorities because he did not want them to starve.

Whatever the motive, the North-South cotton trade propped up the Confederacy just when it was reeling back on its heels. After the fall of Vicksburg, the Confederate general Edmund Kirby-Smith, who oversaw rebel territory west of the Mississippi, organized a Cotton Bureau and empowered it to impress half the production of each grower. The bureau would then sell cotton to almost any agent, including Northerners, who could make his way to the general’s headquarters in Shreveport, La. The money Kirby-Smith made off the trade supported him in his successful effort to turn back two Northern campaigns.

With or without cotton, the South was doomed. But the quiet, robust trade in cotton let it live longer and fight harder than it might have otherwise.

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Sources: Ulysses S. Grant, “Personal Memoirs”; Robert F. Futrell, “Federal Trade With the Confederate States: 1861-1865”; Ludwell Johnson, “Contraband Trade During the Last Year of the Civil War”, Mississippi Valley Historical Review, March 1963, “North Against South: The American Iliad: 1848 – 1877” and “Red River Campaign: Politics and Cotton in the Civil War”; James McPherson, “Battle Cry of Freedom” and “No Peace Without Victory, 1861 – 1865,” American Historical Review, February, 2004; The Lincoln Institute, “Abraham Lincoln and Cotton”; Frank L. Owsley, “King Cotton Diplomacy”; Robert L. Kerby, “Kirby-Smith’s Confederacy”; Ward Hill Lamon, “Recollections of Abraham Lincoln”; Lauriston Bullard, “Lincoln’s ‘Conquest’ of New England”, Abraham Lincoln Quarterly, June, 1942; David G. Surdam, “Traders or Traitors: Northern Cotton Trading During the Civil War”, Business and Economic History, Winter, 1999.

Phil Leigh is an armchair Civil War enthusiast and president of a market research company. He is preparing an illustrated and annotated version of the memoirs of Confederate Pvt. Sam Watkins, which will be released by Westholme Publishing next spring entitled “Co. Aytch: Illustrated and Annotated.”