USA > Kentucky > History of Kentucky, Volume II > Part 44
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Another phase of the state's geographic position that tended to draw her toward a state of indecision, expressed in her neutrality, was the fact that being on a frontier subject to the influences of both sections, she could not be unconsciously carried through by an overwhelming sentiment around her, as in the case of Mississippi or Massachusetts. And when her position is taken into consideration with the time element in the secession movement, it becomes still more evident why Kentucky decided to remain in the Union. The different Confederate states seceded as follows: South Carolina, on December 20, 1860; Mississippi, Florida, Alabama, Georgia, and Louisiana, in the following January; Texas, in February ; Virginia, Arkansas, and North Carolina, in May ; and Tennessee, in June. During January, February, and March, Ken- tucky was nearer secession than any time following. The state had been worked up to the point where secession was no remote possibility ; but when she looked around she found herself surrounded on every side by loyal states. Tennessee, Virginia, Arkansas, and North Carolina were still in the Union. In February, when the first attempt was made to call a sovereign convention, Texas, Virginia, Arkansas, North Caro- lina, and Tennessee were still in the Union; and on May 10, when a second attempt was made to call a convention, Virginia, Arkansas, North Carolina, and Tennessee, had not yet seceded. Furthermore Kentucky had seen the course that the secession movements had run with some of her close neighbors, and it afforded no consolation to her that she would not be completely surrounded by hostile states, if she seceded. She had seen the Legislature of North Carolina submit to a vote of the people the question of a sovereign convention, and she had seen the
51 Discourse at Lexington.
52 Discourse at Lexington.
53 Letter from Joseph Holt to J. A. Speed.
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HISTORY OF KENTUCKY
people of that state refuse even to consider secession.54 When the northern tier of Southern states had finally decided to secede, affairs had undergone such a change in Kentucky that secession was extremely unlikely. Had Tennessee, Virginia, Arkansas, and North Carolina seceded in the early part of the year, it would have been much easier for Kentucky to have cast her lot with the South.
Although political affairs seemed to be upset throughout the early months of the Confederacy, and the state seemed to be as likely to turn one way as another, the financial world lost no faith in Kentucky. Be- fore the secession movement had made its appearance (in 1859), the state bank notes ran at I per cent discount, with the notes of the Bank of Louisville at par.55 During the troublous days of 1861, Kentucky bank notes stood high upon the Northern markets. The following is an extract from a financial report in May, "Confidence in the Kentucky bank notes continues to gather strength, and the currency has an im- proving tendency." 56 On May 29, 1861, the market for bank notes stood as follows for certain states:
Kentucky 2 to 21/2 per cent discount
Virginia (Eastern)
25 per cent discount
Missouri
I5 per cent discount
Maryland
5 to IO per cent discount
Tennessee
20 to 25
per cent discount
Georgia
50 per cent discount
Wisconsin
.25 to 75
per cent discount
Illinois
25 to 75
per cent discount 57
This shows the standing of Kentucky, as compared with states in the North as well as in the South, and bespeaks strongly the faith the North had in Kentucky's position. This confidence continued to grow as is seen from these quotations: On June 3, bank notes were 2 per cent discount ; on the 4th, I to 2; on the 12th, I to 11/2; on July 4, I; on the 10th, 34; on August 2, 1/2; on the 19th, 38; and on Sep- tember 18, when she abandoned her neutrality, the discount was only 1/4.58 In the stock market, Kentucky stocks showed an upward move- ment during the period under consideration. The whole trend in finan- cial transactions showed a remarkable stability in credit and a confi- dence in Kentucky's ultimate decision, that only the financial agent with his trained powers of observation could justify.
Kentucky's final position in the Civil war was, thus, the result of many forces. On the one side there were many considerations that made the Kentuckians sympathize with the South; while on the other side there were forces drawing them to the North. Many of these forces and movements, pulling the state one way or the other were deep-seated. They had been in the process of formation throughout the growth of the state. Other deciding factors were born of the
54 D. H. Hill, Young People's History of North Carolina (Charlotte, N. C., 1907), 269
55 Memphis Weekly Avalanche, April 5, 1859.
56 Cincinnati Daily Gazette, May 31, 1861.
57 Ibid., May 29, 1861.
58 Cincinnati Daily Commercial and Cincinnati Daily Gazette for dates concerned. On August 2, 1861, the Northern quotations on bank notes of various states stood as follows :
Kentucky 1/2 per cent discount
Missouri 8 per cent discount
Virginia 20 to 25 per cent discount
Maryland I to 5 per cent discount Tennessee 25 per cent discount
Wisconsin .25 to 65 per cent discount
Illinois
20 to 40 per cent discount
Cincinnati Daily Gazette, Aug. 2, 1861.
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HISTORY OF KENTUCKY
exigencies of the times. Each force or factor treated separately has a tendency to magnify its importance into a sole deciding issue; but no factor acted alone. The influences of all exerting their pressure on each deciding factor produced the final result. The forces for the Union won, but the position of the state as the war progressed and after it ended shows how strongly she was allied with the South.
CHAPTER LXII COMMERCE AND COMMERCIAL RESTRICTIONS IN WAR TIMES
The problems connected with the regulation of trade with the enemy were very perplexing both to the Federal Government and to the Confederacy. The latter, however, had a much easier task, as it was chiefly concerned in obtaining food and munitions of war. During the early period of hostilities the products which the Confederacy wished to be kept from the North, such as cotton and sugar, were more easily prevented from being carried out than later when the Federal armies had pierced the center of the producing area. The problem of the Federal Government was to challenge the best efforts of both army and treasury officials. Prices were high in the South and many in the North and along the border, with doubtful sympathies, took advantage of the situation to smuggle much material south through the numerous avenues that had not or could not be sealed. It was only natural that Kentucky by the very fact of her geographic position should prove a stumbling block throughout the war in the attempts of the treasury de- partment to co-ordinate commerce with military affairs. Coupled with this, the divided sympathies of her people made the difficulties almost insurmountable. Lying across the path of trade from north to south, the state was sure to profit by whatever trade there was, whether it originated with her or not. In the light of this situation, it is pertinent to examine the general trade regulations of both belligerents, reserving until later the more specific rules for Kentucky.1
As previously stated, the Louisville and Nashville Railroad was finally sealed as an avenue of trade to the southward, while Cairo blockaded the river highways. This blockade was destined to be very vexatious to legitimate commerce, and in itself could not prove to be permanently the best or most effective way to control commerce on the rivers. As far as Kentucky west of the Cumberland River was concerned, Secretary Chase declared that it was in "rebel hands," and that no trade whatever should be permitted with it.2 To supplement the block- ade, and to make trafficking along the Ohio River above Cairo impos- sible, all boats were required to get permits to load freight and to carry on board a Federal officer, whose duty it was to prevent such illicit trade.3 Attempts were soon being made to absolutely cut off communi- cations with the South so that there could be "no connection with the seceding States on matters of business, pleasure, caprice, or affection." 4 In the minds of many, only by such a program could the situation be managed. An observer in the Ohio Valley wrote in the latter part of 1861, "It is easy to see the situation of the States on the Mississippi must soon be deplorable if Cairo and New Orleans continue to be block-
1 See E. M. Coulter, "Commercial Intercourse with the Confederacy in the Mis- sissippi Valley 1861-1865" in Mississippi Valley Historical Review, Vol. V, No. 4, March, 1919, pp. 377-395.
2 Cincinnati Daily Commercial, Sept. 18, 1861.
8 Ibid., Sept. 20, 1861; Jan. 20, 1862; Collins, History of Kentucky, I, 98.
4 Cincinnati Daily Commercial, Oct. 24, 1861.
868
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HISTORY OF KENTUCKY
aded. The advances of our forces are all that can save them from starva- tion if one-half told here is true." 5
Trade regulations were very closely correlated with the situation pro- duced by the army at any given time. As long as the Federal armies lay idly on the defensive in Kentucky, the policy of the treasury was manifestly to prevent absolutely any trade with anyone or any place by or through which it might reach the enemy. At this time the problem of the Federal forces was to prevent the Confederacy from obtaining products from the North, as the cupidity of Northern traders had not yet asserted itself very strongly. But in the early spring and summer of 1862 when the Federal forces began to move southward, and to open up great areas of territory, which though in Federal hands, yet were inhabited by people whose views had changed little since secession, a new situation confronted those intrusted with regulating commerce. Early in February, Fort Henry and Fort Donelson had fallen, and by the middle of the month, Nashville was in the hands of the Federal army. A month later, Grant had opened up the Tennessee River to Pittsburg Landing, and through the fall of Island No. 10, the Missis- sippi was opened to Memphis. Thus, the great water highways to the South were opened for considerable distances through conquered terri- tory. New rules for steamboat traffic on these rivers were at once imperative, and numerous questions of what commercial relations might be entered into with the inhabitants arose.
Stanton, secretary of war, in early March informed Halleck that the act of Congress, of July 13, 1861, which prohibited trade with states south of Kentucky and Missouri was to remain in force and that trade with the conquered regions should be regulated by instructions issued by the secretary of the treasury.6 On March 3, the licensing and permit system in force on the Ohio and Upper Mississippi rivers was applied to the remainder of the latter river in Federal hands, and was extended to the Tennessee and Cumberland rivers. According to a commander in the field, it was "made necessary by the persistent efforts of persons in the loyal states who sympathize with those engaged in the rebellion, and by peddlers and corrupt traffickers, many of whom have come from disloyal states and sections expressly for this purpose, to smuggle goods, medicines, and other supplies through to the insurgents." 7 All baggage and packages taken into this region were required to bear an official seal and all vehicles, railroad cars, and water crafts were forbid- den to carry merchandise not covered by customhouse permits. These permits were "not intended to impose additional expenses or burdens of any kind upon trade, or to impede or in any manner interfere with the freedom of legitimate and proper transportation or travel." Surveyors of the customs were to be empowered to grant permits and to "use liber- ally, though cautiously, the discretion with which they are intrusted.
* * *" 8 The pressure to engage in this trade was great, and the sur- veyors were undoubtedly more liberal than cautious, for on March 28, an order was issued cancelling all licenses on the 15th of April.º New licenses might be secured under much more strict regulations.
The mad scramble that set in to get the trade of this region was further checked by treasury regulations which required all boats run- ning south of St. Louis and Louisville to show their manifests at every port and also to carry "aids to the revenue" who should prevent or supervise the taking on of additional freight along the way.10 Only
5 Cincinnati Daily Commercial, Dec. 10, 1861.
6 Official Records, Series I, Vol. X, Part 2, p. 19.
7 Ibid., Vol. VIII, 585.
8 Official Records, Series I, Vol. VIII, 585.
9 Ibid., 834.
10 Ibid., Vol. XIII, 553, 698-700.
870
HISTORY OF KENTUCKY
persons of known or proved loyalty were to be given permits to engage in this trade. This order also allowed a certain amount of trade with the regions under "insurrectionary control." Under this permission and through the rather loose construction of the other regulations, there soon sprang up in Southern Tennessee and Northern Alabama an animated traffic in cotton. In theory, purchases were made from loyal people only or those who promised to become and remain loyal. The Federal com- mander at Huntsville, Alabama, on his own authority offered the facili- ties of outgoing wagon trains and railway cars for getting the cotton out.11 Soon the wildest speculation broke loose. One person here made $4,000 on sixty bales of cotton sent out to New York. It could be bought at 10 and II cents a pound.12 As the Federal Government at this time was in bad need of cotton for war purposes, it instructed the military authorities to permit the payment of gold or treasury notes to stimulate the trade, with the argument that the Confederacy could buy no more readily with gold than it could with cotton.13 With the War Depart- ment trying to fight the South into a peace and the treasury department trying to trade it into a peace, confusion and bitterness soon grew up between the two departments, in the course of which the latter sent the former this admonition: "There will be no interference with trade in our shipments of cotton, or other merchandise conducted in pursuance of said regulations, within any territory occupied and controlled by the forces of the United States, unless absolutely necessary to the successful execution of military plans or movements therein." 14 Under such en- couragement it is little wonder that confusion and fraud grew up. The military authorities soon began to complain that their campaigns were being seriously interfered with by this trade. Often cars for army stores were not available due to their use in hauling out cotton. Restrictions on the use of Government trains were finally secured.15
The experiences of the military authorities with the traffic in cotton going on under their commands were enough to severely try their patience. There soon grew up friction between the two authorities over trafficking in the military districts that proved unfortunate for the success of the military operations. Trade regulations were being constantly changed and modified, resulting in great confusion. Generals in the field issued trade regulations on their own authority or supposedly in compliance with Treasury orders, none too well construed. It soon became almost impos- sible with these changing and conflicting rules, to ascertain which should be obeyed, with the result generally of exasperation for the military offi- cers and free rein for the traders. Admiral Porter in bewailing the state of affairs in a confidential letter to General Sherman said: "It requires a nice distinction on the part of an officer to discriminate in these matters and to run against the regulations of the treasury department, and I am sorry to say that some of my command commit blunders enough. I can give them all orders, but I cannot furnish them with brains." 16
The antagonism between the treasury department and the military commanders was carried into every phase of the trade regulations. Gen- erals Sherman and Grant were the bitterest opponents of the system of allowing trade in occupied areas. Sherman summed up his position thus, "We cannot carry on war and trade with a people at the same time." 17 Admiral Porter questioned the efficiency and even honesty of the numer- ous treasury officials, "A big circular was issued by the Treasury Depart-
11 Ibid., Vol. X, Part 2, pp. 174, 640.
12 Official Records, Series I, Vol. X, Part 2, pp. 638-640.
13 Ibid., Vol. XVII, Part 2, p. 186.
14 Ibid., Series III, Vol. II, 482; Series I, Vol. X, Part 2, p. 632.
15 Official Records, Series I, Vol. XVI, Part 2, pp. 80, 183.
16 Ibid., Vol. XXXI, Part I, p. 781.
17 Official Records, Series I, Vol. XVII, Part 2, p. 140.
871
HISTORY OF KENTUCKY
ment," he said, "and an army of Treasury aids appointed to carry out the regulations. A greater pack of knaves never went unhung. Human nature is very weak, and the poor aids, with their small pay, could easily be bribed to allow a man to land 100 barrels of salt when he only had permit for 2. And so on with every thing else. The thing is done now so openly that the guerrillas come down to the bank and purchase what they want." 18 Together with the other army and naval officers, he thought "commerce should be a secondary consideration; the Govern- ment do not get repaid for the army of Treasury aids they have ap- pointed. It is very much like setting a rat to watch the cheese to see that the mice don't get at it." 19
The cotton trade especially was bitterly attacked by army officers. One wrote to his superior, "My hard-earned reputation as a soldier is being frittered away hourly by Southern Traitors and Northern thieves. Cotton is the corrupting element." 2º Grant said, "I regard a mercenary Union trader within the lines of our army as more dangerous than the shrewdest spy." 21 He held out as one solution that the Government buy up all the cotton and drive out the traders.22 To the army the trader was as much an enemy as the Confederates, whom they were undoubtedly helping with their traffic. The Federal commander at Memphis claimed that that city had since its fall been of more value to the Confederates than Nassau. The Federal commanders feared no attack on Memphis as it was worth more to the Confederates in the enemy's possession. It was claimed that $500,000 worth of material went through the lines at Memphis weekly.23 Grant summed up his position thus, "My experience in West Tennessee has convinced me that any trade whatever with the rebellious States is weakening to us of at least 33 per cent of our force. No matter what the restrictions thrown around trade, if any whatever is allowed, it will be made the means of supplying to the enemy all they want. Restrictions, if lived up to, make trade unprofitable, and hence none but dishonest men go into it. I will venture that no honest man has made money in West Tennessee in the last year, while many fortunes have been made there during the time." 24 Sherman said he would, of course, have to respect the treasury rules on the cotton trade, but added signifi- cantly, "But I will move heaven and earth for its repeal, as I believe it will be fatal to our success." 25 The army commanders disagreed with the treasury officials also on the advisability of paying gold for cotton. Grant actually forbade the passage south of gold from Forts Henry and Donaldson, but was later forced to rescind his order.26 It was claimed that the gold paid for cotton was smuggled out, and deposited to the Confederacy in Europe.27 Sherman said, "If we provide our enemies with money, we enable them to buy all they stand in need of. Money is as much contraband of war as powder." 28
This, then, was the commercial situation in the interior by the time the war was well started, largely produced by the commercial rules and regulations issued by the Federal Government. Another important ele- ment was the attitude assumed by the Confederate Government. At first its policy was to prevent products necessary to the North from leav- ing the Confederacy for that destination. The acts of the Confederate
18 Ibid., Vol. XXXI, Part I, p. 780.
19 Ibid., 781.
20 Ibid., Vol. XLI, Part 2, p. 328.
21 Official Records, Series I, Vol. XXIV, Part 3, 119.
22 Ibid., Vol. XVII, Part 2, pp. 357, 422.
23 Ibid., Vol. XXXIX, Part 2, pp. 22, 60.
24 Official Records, Series I, XXIV, Part 3, 538.
25 Ibid., Series III; Vol. II, 350.
26 Ibid., Series I, Vol. XVII, Part 2, p. 155.
27 Ibid., Vol. XXXIX, Part 2, p. 22; Vol. XVII, Part 2, p. 123.
28 Ibid., Series III, Vol. II, 350.
672
HISTORY OF KENTUCKY
Congress passed on May 21 and August 2, 1861, were designed to estab- lish this policy. As Kentucky had not seceded from the Union, she rested under the ban of Confederate trade regulations. However numerous the friends of the South might be there, still the Confederacy had no assurance that cotton and other southern products, permitted to be taken into Kentucky, would not eventually fall into the enemy's hands. George WV. Johnson, who became governor in the Provisional Government of Kentucky, desired the Confederates to push their lines farther into the state. Kentucky, he said, would sell clothing, foodstuffs, and horses and mules and would receive in return cotton, sugar, and rice. A licens- ing system would prevent the trade from getting into the hands of the Northerners. 29
Trade in Southwestern Kentucky, west of the Cumberland River, upon which Secretary Chase had placed an embargo, was open and unrestricted with the Confederacy.30 On November 3, 1861, Leonidas Polk, the Confederate commander of this region, forbade any trade until his agents had bought up for the army all the food and provisions he needed. This, he claimed, was intended to prevent speculators from raising the prices.31 The Memphis merchants protested to President Davis on this action. Davis at once ordered the embargo to be lifted, saying that the Confederacy would rather pay higher prices than to obstruct free intercourse. Judah P. Benjamin added, "We have left commerce free in everything but the arms and munitions of war in- dispensable for defense." 32 The Confederacy adopted the policy that the Congressional acts restricting trade should not apply to those parts of Kentucky under its control. A licensing system was set up for the benefit only of Kentuckians loyal to the Confederacy, allowing trade in most southern products except cotton and naval stores. No trade was to pass northward beyond the Confederate lines.33 In Southeastern Kentucky where the Confederates were attempting to occupy the state no trade or communication of any kind was permitted. No one was allowed to cross the Cumberland Mountains into Virginia. An army order gave the warning: "If he is living at home, subdued by tyranny, or satisfied with the usurpations of Lincoln, and has only enterprise enough to come into the Southern States to collect money or to arrange business connected with property, such a man had better stay away from a people whose whole energies now belong to their country." 34
The policy of the Confederacy thus came to be absolute non-inter- course with those parts of Kentucky not under their control. But the varying fortunes of war soon placed the Confederates far south of the Kentucky border. Great stretches of their territory were thrown open to the enemy. The question now arose concerning trade with these lost districts. To many persons it appeared that those who were so unfor- tunate as to be in conquered areas, should not be deprived from trading with their more fortunate sympathizers in the Confederacy yet intact, when opportunity offered. But the Confederate Government believed that keeping certain products from the North merited first consideration, and so on April 19, 1862, the Confederate Congress passed an act making it unlawful to trade with any part of the Confederacy occupied by the enemy or to transport thereto "any cotton, tobacco, sugar, rice, molasses, syrup or naval stores." 35 At certain times and places, this
29 Official Records, Series I, Vol. IV, 450, 451.
30 The Confederates held Columbus (Kentucky) at this time, and, of course, controlled the region.
31 Officiol Records, Series I, Vol. IV, 504, 505.
32 Official Records, Series I, Vol. IV, 533-
33 Ibid., 532.
34 Ibid., Vol. X, Part I, p. 37.
35 Official Records, Series VI, Vol. I, 1077. For the three Confederate Con-
gressional Acts concerning trade see Ibid., Series I, Vol. XXIV, Part 3, p. 610.
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HISTORY OF KENTUCKY
law was very strictly enforced. In the latter part of 1863, to prevent the wholesale violation of this law, orders were issued to seize all wagons and mules used in the attempt to carry cotton toward the enemy's lines.36 This worked great hardships at times, but it was declared neces- sary to combat the wild rush of Northern traders for cotton. This policy found many opponents among Confederate citizens. The sale of cotton appeared to them to be very beneficial to the Confederacy, despite the fact that it was helping the North. A Confederate Brigadier-General at Oxford, Mississippi, declared, "The Yankee was born for trade, and for a sufficient consideration would build boats to navigate on spring branches and bring us food and clothing for our naked and starving armies.
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