Honest Abe and the Mad Scramble for Cotton

  • February 12, 2017

Abraham Lincoln liked to eat beef. His chef somehow got army commissary officers to deliver choice cuts from the military herds around Washington, D.C. When Lincoln realized where his steaks originated, he put a stop to the practice. He noted that the largest scandals often erupted from some minor indiscretion, such as getting the choicest cuts of beef from the military herd.

Lincoln’s scruples with regard to his personal affairs contrast with a policy he implemented during the Civil War. During the antebellum years, southern cotton growers collectively produced the vast majority of the industrial world’s supply of raw cotton, yielding the Confederate States of America an opportunity to create a national monopoly on the raw cotton supply in order to get higher prices. Lincoln understood cotton’s potential power as an economic weapon; his proclamation of a blockade of southern ports was intended to stop the export of southern staple goods and import of European- and American-produced arms and munitions.

The blockade suppressed the price of cotton at southern ports and triggered a tripling or quadrupling of raw cotton prices in New York and Liverpool. Southerners faced ever-increasing prices of imported goods—munitions, arms, and food. For southerners, the purchasing power of raw cotton shrank.

There was a drawback to the suppression of raw cotton shipments: Northern and British manufacturers needed raw cotton. One of their spokesmen told Lincoln that allowing trade through captured ports or between-the-lines would alleviate the misery in the cotton textile-producing towns. The cotton manufacturer claimed that the blockade allowed southerners to get guns and ammunition for their cotton, while allowing the between-the-lines trading would enable southerners to only get guns for cotton. Lincoln accepted this mistaken argument and remarked, “If pecuniary greed can be made to aid us in such effort, let us be thankful that so much good can be got out of pecuniary greed.”

Lincoln ordered the Treasury Department to establish a system of permits. Northerners could apply and, by claiming the controlled cotton in the South, receive a permit to take goods and greenbacks through the lines and bring back cotton. For Confederate army officers, such a trade was attractive, as the trade promised to alleviate their troops’ supply shortages and enable their troops to continue fighting.

The potential profits from the between-the-lines trade were staggering, a possible quintupling of money for a few weeks’ effort. Many prominent northerners, including hardline Unionists who urged a harsh war, sought the permits. Few appeared to consider the scruples of making profits while helping sustain southern troops and prolonging the war. What was wrong with buying a few hundred bales of cotton? After all, the President approved the program. It was legal and perhaps even patriotic by sustaining Massachusetts textile manufacturing owners and their workers.

The stampede for permits was unseemly and tawdry. Applicants boasted about controlling cotton in the South, and treasury officials went along with their transparent lies. Friends of Abe and friends of friends of Abe often received permits that acted as “Open Sesame” cards enabling the lucky holder to go through the lines and take supplies to southerners in return for cotton.

Near the war’s end, General Robert E. Lee advised that the between-the-lines trade around Norfolk sustained his armies. After the war, a Congressional committee, comprised of a majority of Lincoln’s fellow  party members, criticized the policy, noting the lust for gain during a time of struggle to preserve the nation.

Why Lincoln allowed such a blatant violation of ethics remains unclear. He was a canny politician, who knew Massachusetts’ electoral votes were crucial. He may have convinced himself that the trade was not that harmful to the North’s war effort. He did, after being safely re-elected in 1864, allow General Grant to end the trading. General Lee’s troops quickly became hungrier (one book cleverly called them “Lee’s Miserables”), and Lee surrendered.

Just because an action is legal does not make it ethical, even if the President approves of the action. The scramble for profits in such a sleazy endeavor marks a low ebb in American business ethics. Mark Twain’s fabled “Gilded Age” started well before that era’s rampant corruption. Honest Abe presided over a dubious policy, risking the Union in order to sustain political allies.

The views and opinions expressed are those of the author and do not imply endorsement by UNIBusiness or the University of Northern Iowa.

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