Cotton diplomacy

During the 1850s and the American Civil War, cotton diplomacy was the idea that Britain and France required cotton from the South (see King Cotton). However, the Confederate States of America significantly overestimated the leverage that the cotton trade would give them.

In 1860, the feeling in the Confederate States was that there would be no war at all, and that the Great Powers of Europe would lift any blockade of southern ports, the only member of the Confederate Cabinet who anticipated a serious conflict was Judah P. Benjamin who, as Secretary Leroy Walker recalled after the war, suggested that "... the government purchase as much cotton as it could hold, at least 100,000 bales, and ship it at once to England.… For, said Benjamin, we are entering on a contest that must be long and costly. All the rest of us fairly ridiculed the idea of a serious war." Ultimately, the Confederacy's open threats to exploit the economy provoked outrage in the United Kingdom.

By 1861 Southern economists and oligarchs realized that with a blockade of southern ports they would be unable to compete with the North economically. Once they saw that a long war was unavoidable, and that the limited population of the South could not support a fully mobilized army, they made the decision in 1861 to embargo cotton exports. Cotton was then warehoused and used to prop up Confederate war bonds, which were then sold in Europe.

This embargo was effective at first, creating an instant source of income from the valuable cotton backed bonds, shutting down hundreds of textile factories, and putting thousands of people in Europe out of work (The Cotton Famine), but the embargo became a disaster for the Confederacy when the British did not cave in to their demands, choosing instead to import cotton from Egypt and India in 1862.

The opening of these new markets caused the price of cotton to stabilize quickly, and by 1863 the Southern economy, which was completely tied to the price of cotton, had crashed, crippling the South's ability to secure any kind of alliance, or purchase badly needed war supplies.

This idea, known as a self-embargo,was also used by President Jefferson in his Embargo Act of 1807, and was similarly ignored during the Napoleonic wars in Europe.

References

• Charles M. Hubbard, The Burden of Confederate Diplomacy (1998)
• Howard Jones, Union in Peril: The Crisis over British Intervention in the Civil War (1992)
• Frank Lawrence Owsley, King Cotton Diplomacy: Foreign relations of the Confederate States of America (1931)
• http://www.pbs.org/wnet/ascentofmoney/featured/the-ascent-of-money-episode-2-bonds-of-war/90/
• Amanda Foreman, A World on Fire: Britain’s Crucial Role in the American Civil War (2011)
• Eugene R. Dattel. Cotton and the Civil War. Mississippi History Now

See also

• Economy of the Confederate States of America