Civil War Diplomacy - Cotton diplomacy

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Photo by: steve estvanik

Confederates were disheartened by the peaceful settlement of the Trent affair, and by 1862 had realized that their best hope for British and European support would come from a cotton famine in England. Distress in the cotton manufacturing districts increased greatly during the spring and summer of 1862. The jobs of an estimated 900,000 workers in the textile industry, centered in Lancashire, were in jeopardy. The British welfare system was severely strained, and Southern sympathizers increased their demands for intervention to relieve the cotton shortage. Although Seward made available cotton that came into Union hands, and imports of non-American cotton increased, the distress in Lancashire did not diminish, and Confederate reliance on cotton diplomacy seemed to be working.

In fact, although less American cotton was reaching Britain, British manufacturers, unlike their workers, were not in dire straits. In 1859 and 1860 the South had produced bumper crops that had glutted the market and driven down world prices. British warehouses were thus filled with huge stocks of cheap cotton fiber, and manufacturers were producing cloth at unprecedented levels, which also depressed textile prices. The Union blockade and Southern embargo were a blessing for these manufacturers as well as financiers dealing in cotton securities and futures. The prospect of a shortage of fiber and cloth immediately caused the value of both raw and finished cotton to rise dramatically. Merchants and manufacturers hoarded their goods, reduced their output, and made fortunes in the process. Those who had been promoting the development of alternate sources in Egypt and India appeared vindicated as planters in those regions also reaped huge profits. Only the workers suffered.

Outside of the cotton districts, other British industries prospered from the war. Both the Union and the Confederacy purchased war materials in increasing quantities, and producers of woolen cloth benefited from the reduced production of cotton cloth and inflated textile prices. Finally, Confederate raiders had enormous success in attacking Northern commercial vessels. American merchantmen were driven from the seas or forced to pay enormous premiums for maritime insurance. British merchants replaced American merchants in direct trade and strengthened their domination of other markets.

Despite the new wealth generated by the American war and continued national prosperity, by the fall of 1862 the distress in Lancashire was real and the news of bloodshed and destruction from America was shocking. It also seemed that the Union would never be able to subdue the South and that continuing the war was pointless. With the approval of Palmerston and Chancellor of the Exchequer William E. Gladstone and the prior agreement of Napoléon, Russell therefore brought the question of mediation to the cabinet. The discussion was extensive, and the cabinet was divided. Russell and Gladstone urged their colleagues to support an offer of mediation to both sides. However, after an impassioned argument against offering mediation by Minister of War George Cornewall Lewis—who pointed out that neither Lincoln nor Seward would accept the offer and that Britain could be forced into supporting the slaveholding Confederacy—news arrived that the Battle of Antietam had ended without a clear victory by either side. Palmerston decided to continue waiting until the war took "a more decided turn." Napoléon then proposed offering the Americans a six-month armistice if both Britain and Russia agreed to act jointly with him. Russia declined first, and on 13 November the British also declined. Confederate confidence in King Cotton was shaken, and the Confederate government sought support from Europe along other avenues.