King Cotton (and Fear)

Jefferson Davis, President of the Confederate States, was sitting quietly in his office in the Custom House in Richmond. It was February, 1862, and he had taken the oath of office a year earlier in Montgomery. The capital had previously been located there but the decision had been made to move to Richmond the previous May. It was a vital city for the manufacture of weapons and other war supplies and also served as the terminus for five railroads. Richmond would thus have been defended to the last man so it was deemed to be a logical place for the capital of the Confederate States. 

Following the move to Richmond, there were a few weeks of confusion in the government offices but things had settled down and he had some unoccupied time to think strategically. The subject he was pondering at this very moment was the future of King Cotton, the source of both his greatest fears and hopes. After several minutes of reflection, he shook the small bell on his desk. His personal secretary quickly escorted his Secretary of the Treasury, Christopher Gustavus Memminger, into the office. 

As soon as Memminger was comfortably seated across from him, Jeff addressed him slowly and deliberately in his soft, southern drawl. He was anxious to set the proper tone for the conversation that was about to begin. “Christopher, the topic that I am interested in discussing with you this morning is specifically to whom we are going to sell this year’s cotton crop. The answer to this question, as you surely understand, will go a long way toward determining the future of the Confederacy.

“As you know, we decided to enact a cotton embargo about eight months ago for the purpose of ‘persuading’ various countries, particularly England, to declare themselves as allies of the Confederate States. The country currently has a policy of neutrality toward us. The criticality of our cotton for the British economy is well known. By the late 1850’s, our cotton exports accounted for 77% of the 800 million pounds of cotton consumed by their mills. Our embargo has thus resulted in severe shocks to the English economy. They are now desperately seeking to remediate this shortage by various means.

“Why, you may ask, and in the face of their dependency on our cotton,” Davis continued, “is England continuing to pursue this policy of neutrality? The answer is that, first, they are concerned about the future of their Canadian provinces which are proximate to the Union’s northern border. Secondly, the policy also reflects Britain’s growing dependence on wheat and corn imports from the northern states, a situation that can only increase in coming years.

 “As a result of all of this, Britain has thus far failed to recognize us as a sovereign nation nor signed a treaty with us nor exchanged ambassadors with us. On a more positive note, they are continuing to send us arms and supply us with numerous war ships. Last year, I dispatched James Mason to England to see if he can negotiate a more harmonious relationship with them. There were some ‘complications’ that occurred in his journey abroad but he has now finally arrived. His remit is to attempt to dissuade England from pursuing its current diplomatic stance.

“As you also know very well, we also burned some 2.5 million bales of cotton last year to create a cotton shortage. On the basis of all of the aforementioned events, the number of our bales exported to Europe dropped from 3 million bales in 1860 to mere thousands presently. 

“Unfortunately, all these actions have not caused the cotton ‘famine’ that we had predicted for England because of our bumper crops of the late 1850’s and 1860. This resulted in a surplus of cotton stocks in their warehouses. However, and on the positive side of the ledger, we anticipate that the British will experience a severe cotton shortage starting next year and this may well soon put us back into the diplomatic driver’s seat.

“And now, all of this information brings me to the central topic for our discussion this morning. The impending cotton shortage in Britain dictates that the country must urgently turn to its colonies and other friendly nations such as Egypt, India, and Brazil for cotton to make up for the shortage. All of these countries have either an abundance of slaves or poor peasants which makes their production costs for cotton similar to ours. We thus need to carefully consider today the threat of Egyptian cotton exports replacing our product and how we might go about counteracting this challenge.

“I will now turn to the very specific topic relating to Egyptian cotton—the crop is flourishing there and the country is on the verge of becoming a major factor in the global trade. It also turns out that Jacob Sassoon, of the Sassoon family line, has become the largest individual cotton plantation and cotton mill owner in Egypt. His older brother, Nissim, has also made a fortune exporting cotton to England and is now the largest individual cotton exporter in Egypt. These Sassoon brothers are the major focus for our discussion today. 

“It has become increasing clear to me that we need to gather more intelligence about their plans and ambitions. Would it be possible to attempt to befriend them so that they would work in concert with to achieve our goals? I have been pondering how to best pursue this goal and I think that I have come up with a possible solution. And I am now inviting our possible ‘solution’ to enter the room."

He then reached over his desk and rang the bell again. The door opened and his personal secretary escorted into the room a distinguished looking gentleman. He bowed graciously to Jefferson and Memminger, immediately picking up on the gravity of the moment, and took a seat. He cocked his head as a show of the importance he was applying to the conversation that was about to commence.

“Here is a man, Christopher, who obviously needs no introduction: Judah Benjamin. As you know, Judah was born a British citizen in Saint Croix. He studied law at Yale and then launched a legal practice in New Orleans. He was the first professing Hebrew elected to the Senate in 1852. He was subsequently appointed as Attorney General of the Confederacy about a year ago and then promoted as our Secretary of War by me later that year.

“So, Judah,” Jeff said, as he rearranged his chair to speak directly to Benjamin. “I will be very direct with you, sir. I believe that we would be well served by having you communicate with Jacob and Nissim Sassoon in Egypt about the development of some sort of agreement between them and our Confederate states regarding their cotton exports from Egypt to Great Britain."

“Jeff,” Benjamin responded quickly, “I suspect that I already know the answer to this question, but why have you chosen me to discuss this economic matter given that I am your Secretary of War and fully engaged with the duties and obligations of this important position?”

“Well, not too put too sharp a point on it,” he replied, “it occurred to me that communicating with the Sassoon brothers, as your co-religionists, might deliver a particular advantage for us. Even if they do not feel an emotional attachment to our cause, perhaps they could be swayed from reducing their cotton and cloth exports to the British Isles by some sort of financial arrangement with us.”

“Jeff,” Benjamin responded in a cautious but firm manner, “I need to tell you a few facts about the Sassoon family. Firstly, the family line was funded by Sheikh Sassoon ben Salih who was born in Bagdad. One might thus refer to them collectively as Middle Eastern Jews, a very different ‘line’ than my family. In addition, the Sassoon family has wealth beyond imagining. Along with the Rothchilds with whom they have intermarried, the Sassoons are one of the richest families in the world. For a start, the family totally controls the global opium trade. Any sort of formal financial ‘understanding’ with them would be impossible.

“Secondly, the brothers are currently reaping a fortune by exporting their raw cotton and cloth to England. On this basis alone and also because of the family history in Britain, they are welcomed and entertained at the estates of the crème de la crème of high society there. Their businesses and their cultural orientation are strongly aligned with that of Britain and they are viewed as social peers by most of the aristocrats there.

“And thirdly, Jeff, I am totally certain that these hardened global capitalists would not afford me personally any favors on the basis of my being a co-religionist of theirs. Their actions will be totally determined by the pursuit of profit. They may periodically dip into global political issues but only to enhance and burnish their business interests.” 

“Thank you for your well-reasoned response, Judah," Jeff responded. "I now understand that my idea to approach the Sassoon's with you as an intermediary does not make sense. Although this is a depressing thought, not only are our cotton markets being disrupted but I also now fear that New Orleans is highly vulnerable to an attack by the Union troops. This would rob us of the largest city in the Confederacy, control of the Mississippi, and our largest port for the export of our cotton.

“Well, gentlemen,” Davis continued as he raised both of his hands in a gesture of despair, “my fears about the future of our enterprise have only increased as a result of our discussion today. I tried all in my power to avert this war. I saw it coming. For twelve years, I worked night and day to prevent it, but I could not. The North is both mad and blind; it would not let us govern ourselves and so the war arrived.

“Here are my three conclusions from today’s discussion. First, the global market for our cotton has been disrupted and will probably never return to its former state. Second, our currency is highly unstable because it’s not backed by specie—only our promise to stand behind it. We therefore can only win this war on the battlefield by shedding more of our enemy’s blood than ours. I am extremely proud of the fact that our Southern boys have risen to defend to the death our peculiar institution, slavery. God bless the Confederate States Army and God bless Robert E. Lee.