Page:Cambridge Modern History Volume 7.djvu/642

 610 Confederate loans. [i 861-3 politically had the war lasted much longer, or even if the result had been different. The war accentuated the natural antagonism between those districts of the South where slaveholding predominated and those where slaves, for industrial reasons, did not exist in large numbers. It was claimed that the war was being carried on for the benefit of the slave-owners, primarily the cotton-growers, but at the expense of the other sections of the population. That the raisers of food-produce bore the largest part of the burden of the war is clear from a study of the Confederate finances. From the outset the Confederate Treasury relied mainly upon loans. The first issue of bonds was authorised in February, 1861, and was known as the Fifteen-million Loan. Interest at 8 per cent, was secured on the export duty on cotton. The government obtained the desired $15,000,000 in specie, principally through the generous help of the New Orleans and Charleston banks; the proceeds were sent abroad for the purchase of war supplies. The amount, in addition to the funds seized in the United States' mints and custom-houses, constituted practically the only supply of specie that the government ever secured. The loan was the only successful one of a long series attempted during the war. In May, 1861, a further loan of $100,000,000 was invited. Owing to the banks having suspended specie payments, and to the absence of an investing class, subscriptions to at least a part of the loan were made payable in agricultural produce. This was the first of a series of produce loans, through which the government accumulated both food material for the army and also large quantities of cotton. Before the end of 1861, 400,000 bales of cotton were subscribed. The policy met the wishes of the impoverished cotton-planters, who were shut out of their customary market and welcomed the appearance of the government as a buyer of their produce, even if payment were made in bonds whose value was rapidly declining. These planters were loud in their demands for relief by the banks or by the government. The latter met their wishes by extending the produce loan system in 1862 and 1863, and by allowing them to retain the hypothecated cotton on their plantations. The State governments too were drawn into the practice of borrowing cotton by the issue of bonds. The central and State governments thereby accumulated a stock of cotton, which they attempted to hypothecate abroad, by using it as a basis for foreign loans. The authorities had from the outset been urged to buy the entire cotton crop; the notion prevailed that thereby they would acquire a valuable asset, on the security of which they could effect advantageous loans abroad. The hope of political recognition by the great European Powers had been dissipated by the skilful diplomacy of the representatives of the United States government in foreign capitals, notably by that of Charles Francis Adams in London. The desire for financial recognition abroad was equally strong, and more was