A History of the American People

million; by March 1862 $100 million; August 1862 $200 million; December 1862 $450 million.
In 1863 it doubled again to $900 million and continued to increase, though later figures are mere
guesswork. Gold was quoted at a premium over paper as early as May 1861 and was 20 percent
premium by the end of the year. By the end of 1862 a gold dollar bought three paper ones and,
by the end of 1862, no fewer than twenty.
In July 1846 Memminger, accused of making private profits on cotton-running, resigned in
disgust, and Davis then appointed a real economic wizard called George A. Trenholm, a
Charleston cottonmerchant who had proved extraordinarily adept at selling the South's staple.
But by then it was too late: the South's finances were beyond repair. Inflation became runaway,
the gold dollar being quoted at 40 paper ones in December 1864 and l00 shortly thereafter.
Inflation, if nothing else, doomed the South. In the second half of the war Southerners showed an
increasing tendency to use the North's money, as it inspired more confidence. Towards the end
people cut themselves off from paper money altogether, and bought and sold in kind-even the
government raised taxes and loans in produce. The only people with means to move around were
those who had kept gold dollars. Davis was like everyone else. In the final weeks of the
Confederacy he sent his wife Varina off with his last remaining pieces of gold, keeping one five-
dollar coin for himself.
The South's diplomacy was as inept as its finance. Davis did not initially see the need for a
major diplomatic effort since he believed the economic arguments would speak for themselves.
The key country was Britain, because in the 1850s it had imported 80 percent of its cotton from
America, and it had the world's largest navy, which could break the Union blockade if it wished.
Davis accepted Senator Hammond's assertion: You dare not make war upon our cotton. No power on earth dares make war on it. Cotton is King.' But overproduction and stockpiling in anticipation of war led to a 40 percent oversupply of cotton in the British market by April 1861, before the war had properly begun. Britain got cotton from Egypt and India and, later in the war, from the United States itself, via the North. In the years 1860-5 Britain managed to import over 5 million bales of cotton from America, little of which was bought from the South directly. British manufacturers welcomed the opportunity to work off stocks and free themselves from dependence on Southern producers, whom they found difficult and arrogant. It is true the cotton blockade caused some unemployment in Lancashire and Yorkshire-by the end of 1862 it was calculated that 330,000 men and women were out of work in Britain as a result of the conflict. But they had no sympathy for the South. They identified with the slaves. They sent a petition to Lincoln:Our interests are identical with yours. We are truly one people ... If you have any ill-
wishers here, be assured they are chiefly those who opposed liberty at home, and that they will
be powerless to stir up quarrels between us.' Lincoln called their words `An instance of sublime
Christian heroism.'
The truth is, by opposing slavery and by insisting on the integrity of the Union, Lincoln
identified himself and his cause with the two most powerful impulses of the entire 19th century-
liberalism and nationalism. He did not have to work at a powerful diplomatic effort-though he
did-as world opinion was already on his side, doubly so after he issued his Emancipation
Proclamation. It was the South which needed to put an effort into winning friends. It was not
forthcoming. Davis hated Britain anyway. The South had many potential friends there-the
Conservative Party, especially its leading families, newspapers like The Times, indeed a
surprisingly large section of the press. But he did not build on this. The envoys he sent were
extremists, who bellowed propaganda rather than insinuated diplomacy. The British Prime
Minister, Lord Palmerston, was a Whig-Liberal nationalist who played it cool: on May 13,