As President Abraham Lincoln Looks to Rebuild North-South Commercial Ties, He Issues a Permit To Allow the Bank of Louisiana To Sell Cotton Through Union Military Lines

An unpublished document, showing Lincoln's insistence that the trade of cotton continue in the face of objections from Generals Grant and Sherman; Encouraging this South-North trade furthered Lincoln’s hopes for a benign Reconstruction

With the blockade of the Confederacy, goods in control of the South ceased to be able to leave for northern or overseas markets, causing widespread hardship. Nowhere was this pinch felt more felt than with cotton. Southern planters continued to grow it, and the lack of markets resulted in impoverishment there; but the markets they served, particularly in Great Britain and France, suffered equally serious consequences. The British were then the world’s manufacturing powerhouse, with their mills creating clothing for the world. With the stoppage of the cotton supply, the mills closed or went on part time, there were substantial layoffs, and of course British businessmen lost immense profits. Before the war, southern secessionists made much of the fact that Europe could not do without their cotton, and that Britain would come to their aid with military force against the United States should there be a blockade. “If slavery was the corner stone of the Confederacy, wrote historian Frank Owsley, Jr, "cotton was its foundation. At home its social and economic institutions rested upon cotton; abroad its diplomacy centered around the well-known dependence of Europe…upon an uninterrupted supply of cotton from the southern states.”

And indeed the British upper class was pro-Confederacy. In 1861, during the Trent affair, there were calls in Britain for just such a war, and it took the intervention of Prince Albert and a strong anti-slavery stance by the British working class to forestall that.

President Lincoln knew the foreign relations benefit of allowing as much cotton as possible to flow to Europe to dull the clamor of those calling for a war to support the Confederacy. Moreover, many wealthy men in the North wanted to cash in on the cotton glut in the South by taking the cotton from areas under Union control and sending it North for sale there or in Europe. Legislation was passed to make this feasible.

By the first Confiscation Act, August, 1861, the President was authorized to seize any property used in promoting insurrection; but in practice this had to do principally with slaves more than cotton. A second act of July 17, 1862 authorized the taking of property belonging to civil and military officers of the Confederacy, or to any persons who had given aid and comfort to the rebellion. As Federal lines were extended, plantations, buildings, live stock, and especially cotton, were often either found without a visible owner, or were owned by Confederate sympathizers or soldier’s families; and since this property was expected to come into the Treasury, it fell within the jurisdiction of Secretary of the Treasury. In order to manage this immense volume of valuable property, he was authorized to appoint a special body of Treasury agents, who followed in the wake of the armies, and sometimes went ahead of them.  But there was very little order to the actual seizure and disposal of property, and competing with government agents were a virtual army of private northern businessmen, all seeking to get their hands on this cotton and profit thereby. Another problem was that when cotton planters were on the scene and getting paid for their crop, some of that money headed South and benefited the cash-starved Confederacy.

As the war progressed and more territory fell under the control of the invading Northern armies, the Lincoln Administration struggled to adjust its policies to get cotton out of the South efficiently, and without helping the Confederacy.  General Generals Sherman and Ulysses S. Grant were harsh critics of the cotton trade, believing that it should fall entirely under the control of the government, and Grant particularly took extreme measures to push cotton traders out of the areas under control of his army.  This was not the only area where Lincoln felt the pressure.  As his involvement with the problems with cotton trading increased in the final two years of the war, he told an inquirer seeking a permit to trade, “I think you do not know how embarrassing your request is.  Few things are so troublesome to the government as the fierceness with which the profits of trading in cotton are sought.”

Something else was on Lincoln’s mind late in the war, and his feelings seems to be clear. He felt the resumption of this trade important and wanted to find a way for the government to be able to buy cotton that was legitimately acquired.  Historian Gabor Boritt makes the argument that his use of a policy allowing, under strict controls, cross-border trade in cotton, allowed him to build a bridge between the economies of North and South and ease the path toward reconstruction.   

An Act of Congress of July 2, 1864 formalized an arrangement where the US government could better regulate commerce between “loyal and insurrectionary states, and to provide for the collection of captured and abandoned property and the prevention of frauds in States declared in insurrection.”  It would fall to Secretary of the Treasury William Fessenden to take charge of this effort.  On August 31, 1864, an order came from the President saying,  “Any person or persons engaged in bringing out cotton in strict conformity with authority given by WP Fessenden, Secretary of the Treasury, must not be hindered by the War, Navy or any other Department…” Thus this was so important to Lincoln that he would brave the disapproval of his top military men to make it happen. In September 1864, Lincoln established regulations relative to the appointment of agents, who would be the governments representatives in the purchase of cotton from the South.

Faced with the actual military backlash against this, he further clarified this order in December of that year.  Lincoln wrote, “I do not wish either cotton or new State Government to take precedence of the military, while the necessity for the military remains; but there is a strong public reason for treating each with so much favor as may not be substantially detrimental to the military.”

New Orleans was one of 7 locales initially established for the purchase the “product of the states declared in insurrection.”  The authorities granted by previous orders were revoked. To have the right to sell to an agent or to bring cotton through military lines, you would have to get new credentials.

In September of 1864, an agent of the Bank of Louisiana had written to Lincoln,  “The undersigned respectfully asks your excellency for a permit or authority in the proper form to proceed through the lines of the Federal army to Shreveport, near the mouth of Red River for the purpose of conveying goods not contraband and returning with 30,000 bales of cotton in accordance with the provisions of the act approved 1864.  The above cotton was purchased by the State Bank of Louisiana under permits of General Butler and Shipley. A.D. Grieff."

But it was not until 1865 that Lincoln began signing permits for new agents. Lincoln’s calendar notes that, while he had signed a small number of passes in January, on March 7, Lincoln turned his attention to considering and granting permits to those traders wishing to sell cotton through the lines in the North, who he believed ought to be granted that right.

Document signed, Washington, March 7, 1865, being one of the original permits to conduct this crucial and controversial trade through military lines.  “Where Archibald D. Grieff of New Orleans Louisiana, claims to own or control products of the insurrectionary states and to have arrangements whereby he will be able to bring such products within the national military lines, and sell and deliver them to agents authorized to purchase for the United States under the act of Congress of July 2, 1864, and the regulations of the Secretary of the Treasury; It is ordered that all such products which an authorized agent of the government shall have agreed to purchase and the said Grieff shall have stipulated to deliver as shown by the certificate of the agent prescribed by regulation eight… And being transported or in store awaiting transportation in fulfillment of said stipulations and in pursuance of regulations of the Secretary of the Treasury, shall be free from seizure, detention or forfeiture to the United States, and officers of the army and navy and civil officers of the government will observe this order and will give the said Grieff and his agents and means of transportation and said products free and unmolested passage through the lines, other than blockaded lines, and safe contact within the lines while going for or returning with said products or while the said products are in store awaiting transportation for the purposes aforesaid.” Thus would Lincoln’s hopes for a benign reconstruction be advanced.

This is a great rarity, as we have found only two of these permits having reached the market in the past 40 years at least (and this is one of them). We acquired it from a very old private collection and it is not among Lincoln's published documents.

It turns out that the cotton of the Bank of Louisiana would form the basis for a consequential legal case just a few months later, after Lincoln’s death.  The bank claimed it had legally purchased the cotton under permission of General Butler.  The US government agents claimed it was in fact contraband.  The firm of Grieff and Zuntz are listed by name in the piece as agents of the bank.  As the New York Times wrote in October of 1865, “A prize suit of considerable interest was tried in the Admiralty Court of tho United States at this place, in September.  It was a suit for the recovery… of cotton captured by a detachment of gunboats from Commodore Porter’s Red River expedition… The importance of this suit arises… from the fact that the rulings of the Court, and the principles of international and domestic law presented by counsel in their elaborate arguments, must influence decisions in somewhat similar cases now before this and other courts of the United States for adjudication.”  The Bank would have to forfeit this cotton.