Charles Carleton Coffin

April, 1865.

The attitude of Great Britain towards the United States during the Rebellion will make a strange chapter in history. The first steamship returning from that country after the firing upon Fort Sumter brought the intelligence that the British government had recognized the Rebels as belligerents. Mr. Adams, the newly appointed Minister to the Court of St. James, was on his way to London, but without waiting to hear what representations he might have to make, the ministry with unseemly haste gave encouragement to the Rebels.

Palmerston, Russell, the chief dignitaries of state, and of the Church also, with the London Times and Morning Post, espoused the cause of the slaveholders, while the weavers of Lancashire, though thrown out of employment by the blockade, gave their sympathies to the North. They were ignorant of the causes which led to hostilities. The English press informed them that it was the tariff; that the people of the South had a right to secede; that the United States had no right to restrain them; that the South was fighting for liberty: but notwithstanding this, the operatives, from the beginning, ranged themselves on the side of the Union. They stood in opposition to Palmerston and the peers of the realm,—the press, the aristocracy, and the mill-owners. In this they were guided, perhaps, more by instinct than by reason.

They knew that in the North labor was free, but that the South had made slavery the corner-stone of their Confederacy. Their life was ever a battle, for Labor was the slave of Capital. They knew nothing of State rights, or the rights of belligerents, or of American tariffs, but instinct by a short road led them to the conclusion that the conflict was not merely national, but world-wide, and that the freemen of the North were fighting for the rights of men everywhere. The London Times was foremost among the newspapers to prophesy the disruption of the Union. Its utterances were oracular. It claimed superior knowledge and a deeper insight of the American question than any of its contemporaries, and its opinions were accepted as truth by all Englishmen who approved the slaveholders' war. Ship-builders, cotton-brokers, and capitalists regulated their faith and works by the leading articles of that journal, and loaned their money to the South.

"The great republic is gone, and no serious attempt will be made by the North to save it," wrote Mr. W. H. Russell to the Times in April, 1861.

"General bankruptcy is inevitable, and agrarian and socialist riots may be expected very soon," was the despatch of that individual immediately after the battle of Bull Run.

The tradespeople of England believed him. The South was victor; the Confederacy was to become a nation. The agents of the South were already in England purchasing supplies, paying liberal prices. They found that Englishmen were ready to engage in any scheme of profit,—in running the blockade, building war-ships for the Confederate government, or selling arms and ammunition, in violation of the laws of the realm.

As a large number of letters written by Rebel agents and emissaries in England and France have fallen into my hands, I purpose in this chapter to give a rÉsumÉ of their contents, which expose the secret history of the Cotton Loan.

Soon after the beginning of hostilities the Liverpool correspondent of the Times, Mr. James Spence, entered heartily into the support of the cause of the South. He was engaged in commercial pursuits, but found leisure not only to keep up his correspondence with the Times, but to write a book entitled the "American Union," in which he advocated the right of the South to secede, and extolled slavery as a superior condition of life for the laboring man.

"The negroes," said he, "have at all times abundant food: the sufferings of fireless winters are unknown to them, medical attendance is always at command; in old age there is no fear of a workhouse; their children are never a burden or a curse; their labor, though long, is neither difficult nor unhealthy. As a rule, they have their own ground and fowls and vegetables, of which they sell a surplus. So far, then, as merely animal comforts extend, their lot is more free from suffering than those of many classes of European laborers."

Such sympathy with slavery received its reward in the appointment of Mr. Spence as financial agent of the Confederacy. Large sums of money were sent from Charleston, Savannah, and Richmond to England. Vessels found little difficulty in running the blockade during the first year of the war, and Nassau became the half-way station, and thousands of Englishmen counted up their gains from blockade-running with glee. Societies were formed in London and other principal cities, called "Confederate Aid Associations."

An address to the British public was issued, setting forth the barbarism of the North against the South, struggling for her rights.

"The women of the South," reads the address, "have been insulted, imprisoned, flogged, violated, and outraged in a most inhuman and savage manner. Their homes and goods have been destroyed, their houses forcibly entered, the helpless and unresisting inmates murdered, the fleeing overtaken and cut down in cold blood by the savage soldiery of the North.... They are now glutting their hellish rage against the people they seek to destroy in inflicting every kind of torture, punishment, and misery that their fruitful minds can invent upon those that they would fain call fellow-citizens.... The atrocities, cruelties, crimes, and outrages committed against the South in this war are without a parallel in the history of the world....

"In the name of suffering Lancashire, civilization, justice, peace, liberty, humanity, Christianity, and a candid world; and by the highest considerations that can call men into action, we beg you to come forward to aid, contribute, and support a brave and valiant people that are fighting for their homes, firesides, birthright, lives, independence, sacred honor, and all that is dear to mankind. By all the sorrows, deprivations, bereavements, losses, hardships, and suffering that now ingulf the Confederate people, we appeal to you to arouse, and rush to their aid with your pence, shillings, and pounds; give them your sympathy, countenance, and influence, to hurl the tyrants from their country, and obtain the greatest boon to man,—self-government. Fairest and best of earth, for the sake of violated innocence, insulted virtue, and the honor of your sex,—come in woman's majesty and omnipotence, and give strength to a cause that has for its object the highest human aims, the amelioration and exaltation of humanity."

The address was issued by Englishmen, had a wide circulation, and undoubtedly was accepted as a true representation of affairs.

Then Whittier sent his stinging words, "To Englishmen," across the Atlantic:—

"But yesterday you scarce could shake,
In slave-abhorring rigor,
Our Northern palms, for conscience' sake;
To-day you clasp the hands that ache
With 'walloping the nigger'!

* * * * *

"And is it Christian England cheers
The bruiser, not the bruised?
And must she run, despite the tears
And prayers of eighteen hundred years,
A-muck in Slavery's crusade?

"O black disgrace! O shame and loss
Too deep for tongue to phrase on!
Tear from your flag its holy cross,
And in your van of battle toss
The pirate's skull-bone blazon!"

The Trent affair had inflamed the British public, and Rebel sympathizers were fierce for war, that the South might reap the advantage; but Mason and Slidell had been given up by President Lincoln, and Mr. Mason stood hat in hand at the gate of St. James. But Earl Russell could not conveniently see him just then. Lancashire had spoken. Men upon whose humble hearths no fire warmed the wintry air, in whose homes poverty was ever a guest, around whose doors the wolf of want was always prowling,—the bone and muscle of England, with whom the instinct of Liberty was stronger to persuade than distress and famine to subdue,—they, the hardy workers of England, were with the North.

At home, in the valley of the Shenandoah, Mr. Mason had been a Virginia lord. It was his nature to be proud, imperious, and haughty. He lived in the greatness of an ancient family name. He expected ready admittance at St. James; but though he rang the bell early and often, and sent in his card, Earl Russell was not "at home" to him.

He was ready to turn away in disgust, but the wants of the Confederacy compelled him to submit to whatever humiliation Earl Russell might choose to administer. He told his griefs to Mr. Benjamin, the Confederate Secretary of State, and received condolence.

"Your correspondence with Lord Russell," wrote the Secretary, "shows with what scant courtesy you have been treated, and exhibits a marked contrast between the conduct of the English and French statesmen now in office, in their intercourse with foreign agents, eminently discreditable to the former. It is lamentable that at this late period of the nineteenth century, a nation so enlightened as Great Britain should have failed yet to discover that a principal cause of the dislike and hatred towards England, of which complaints are rife, in her Parliament and press, is the offensive arrogance of some of her public men. The contrast is striking between the polished courtesy of M. Thouvenal and the rude incivility of Lord Russell.

"Your determination to submit to these annoyances in the service of your country, and to overlook personal slights, while hope remains that your continued presence in England may benefit our cause, cannot fail to command the approval of your government."[99]

Englishmen wanted to see the great republic broken to pieces, but there were repulsive features in that system of civilization which the South was attempting to establish. The Union dead were mangled at Manassas; their bones were carved into charms and amulets. Among the mountains of Tennessee old men were dragged from their beds at midnight, and hung without judge or jury, because they loved the flag of their country. In Missouri bridges were burned at night, and men, women, and children upon railroad trains were precipitated into yawning gulfs by their neighbors! This was the work of the "master race," too "refined," "chivalric," and "gentlemanly" to associate with the laboring men of the North. Were the workingmen of Old England any more worthy than they of New England to associate with the slave-masters of the South? British operatives and mechanics understood the question,—that it was a conflict between two systems of labor,—and they rejected with disdain all overtures from the South.

The intervention of England and France was necessary to insure the success of the Rebel cause, and English and European public sentiment must be brought round to the Southern side by the power of the press. Mr. Edwin De Leon therefore was made an agent of the Confederacy to subsidize the press of Europe. The wires were pulled by Mr. Benjamin, who wrote thus to Mr. De Leon:—

"I will take measures to forward you additional means to enable you to extend the field of your operations, and to embrace, if possible, the press of Central Europe in your campaign. Austria and Prussia, as well as the smaller Germanic powers, seem to require intelligence of the true condition of our affairs, and the nature of our struggle; and it is to be hoped that you may find means to act with efficiency in moulding public opinion in those countries."[100]

That this scheme of bribery was successful will appear further on. The British government having with precipitate haste recognized the Rebels as belligerents, English merchants were quick to follow in the track of Palmerston and Russell. Merchants, bankers, admirals of the navy, officers of the army, speculators, spendthrifts, adventurers from the slums and stews of London and Liverpool, in common with members of Parliament and peers of the realm, engaged in blockade-running, not only to enrich themselves, but to aid in establishing a government based on human slavery. The agents of the Confederacy in England found hearty welcome from all classes, especially the ship-builders.

Soon after the attack upon Sumter Mr. Mallory, Secretary of the Confederate Navy, sent Captain Bullock of Savannah to England, to engage ship-builders to fit out privateers. He found W. C. Miller & Son of Liverpool, and the Lairds of Birkenhead, ready to engage in the work of destroying American commerce. He contracted with the first for the building of the Oreto, or Florida, and with the Lairds for the "290," or Alabama. He also found warm welcome from Roebuck, Gregory, and other members of Parliament, and from capitalists, who subscribed liberally in aid of the enterprise.

Funds were needed for the payment of Rebel debts in England, and the Confederate Congress passed a bill in April, 1862, authorizing the exchange of bonds for articles in kind, and Mr. Benjamin thereupon wrote to Mr. Mason, advising him of the financial arrangements which had been made.

"At your suggestion," said Mr. Benjamin, "I have appointed Mr. James Spence of Liverpool financial agent, and have requested him to negotiate for the sale of five million dollars of our eight per cent bonds, if he can realize fifty per cent on them. I have already sent over two millions of bonds, and will send another million in a week or ten days. Mr. Spence is directed to confer with Messrs. Fraser, Trenholm & Co. who had previously been made our depositaries at Liverpool.... I have also directed Mr. Spence to endeavor to negotiate for the application of two and a half millions of coin, which I have here, for the purchase of supplies and munitions for our army. I hope that this coin will be accepted by British houses in payment at the rate of sterling in England, less freight and insurance. It seems to me that upon its transfer to British owners, they could obtain transportation for it on their vessels of war from any Confederate port, inasmuch as it would be bona fide British property, and in any event the holder of the transfer would have a certain security."[101]

This scheme of an alliance between British naval officers and the Rebel government was carried out, and a portion of the coin shipped in a British man-of-war, the Vesuvius, from Bahama, by the English consul.[102]

The bonds referred to by Mr. Benjamin were the regularly issued bonds of the Confederacy. Cotton certificates were also issued; but in addition to these means, the Rebel government deemed it advisable to bring out a loan based exclusively on cotton.

The proposition came from Mr. Slidell, who was in Paris, envoy to the Court of France, but who, instead of attending the receptions of the Emperor at the Tuileries, was endeavoring to obtain social and political recognition by giving luxurious entertainments. Napoleon was ready to recognize the Confederacy, but Palmerston and Russell hesitated, and he was not quite prepared to move alone in the matter.

He was anxious to see the great republic broken up, not that he particularly desired the establishment of the Confederacy, but for the furtherance of his own designs in Mexico. While professing to Mr. Slidell good-will, and a readiness to give substantial aid to the Rebellion, his agents, M. de Saligny, French minister in Mexico, M. ThÉron, French consul at Galveston, and M. Tabouelle, French vice-consul at Richmond, were intriguing to dismember Texas from the Confederacy.

"The Emperor of the French," wrote Mr. Benjamin to Mr. Slidell, "has determined to conquer and hold Mexico as a colony, and is desirous of interposing a weak power between his new colony and the Confederate States, in order that he may feel secure against interference with his designs on Mexico.... The evidence thus afforded of a disposition on the part of France to seize on this crisis of our fate as her occasion for the promotion of selfish interests, and this too after the assurances of friendly disposition, or, at worst, impartial neutrality, which you have received from the leading public men of France, cannot but awaken solicitude."[103]

The French consuls at Galveston and Richmond were dismissed by Jeff Davis, but that did not outwardly ruffle the temper of the Emperor, nor stop the cotton loan, as will presently be seen. The Rebel congressmen looked upon Slidell's scheme with distrust, but the bill was eventually passed in secret session. The finances of the Confederacy were going to wreck. There were heavy debts in Europe, and, unless the bills were promptly paid, there would be an end of supplies. England was suffering for cotton, and the time had come for the successful negotiation of a loan, based on cotton, with great apparent advantages to the subscribers. The mill-owners of Manchester were ready to enter upon any speculation which would start their machinery; the aristocracy would subscribe out of sympathy for the slaveholders; the Liverpool shippers would take stock, as it would give employment to their blockade-runners; while the unusual risks and great chances of profit would make it attractive to the multitude with whom the Derby is the whitest day of the year.

Mr. Slidell had made the acquaintance of Baron Ermile d'Erlanger of Paris, a Jewish banker, who had a branch house in Frankfort conducted by his brother, Raphael d'Erlanger. This firm was recommended by Slidell as a suitable agency for bringing out the loan, and the contract was given them by Mr. Memminger. D'Erlanger began preparations for putting it on the market in February, 1863. He desired to issue it in England, France, Holland, and Germany at the same time, to bring to the Confederacy the financial support of Europe. The considerations were political as well as financial. He found some difficulty, however, in obtaining English agents. The Barings and Rothschilds stood aloof. He offered the London management to Messrs. John H. Gilliat & Co., but that firm declined having anything to do with it. It was offered to other bankers, but refused. He found willing agents at last in Messrs. John Henry Schroeder & Co., and the firm of Messrs. Lawrence, Son, and Pearce. In Liverpool Messrs. Frazer, Trenholm, & Co. had been acting as agents of the Confederacy, and the management was placed in their hands. Schroeder's agents in Amsterdam managed it there, while D'Erlanger's branch house in Frankfort brought it out in that city. D'Erlanger himself manipulated it in Paris.

D'Erlanger and Mr. Beer, of his firm, visited England, and arranged matters with Mason and Spence, and with Frazer, Trenholm, & Co., all of whom were acting as agents of the Confederacy. A special agent had been appointed by the Rebel government to take charge of the loan,—General C. J. McRae,—who was on his way from Richmond to Paris; but as the needs of the Confederacy were urgent, the loan was opened before his arrival.

The support of the press was secured,—all but two or three papers being brought, through the agency of Mr. De Leon, Mr. Mason, and Mr. Spence, to praise the Confederacy, cry down the Union, and urge recognition by France and England as the surest way to put an end to the war.

The correspondence in my possession between the parties opens on the 1st of March. Mr. Spence, sitting in his parlor in the Burlington Hotel, Old Burlington Street, London, writes to Baron d'Erlanger, who is in Paris, asking for a copy of the contract.

D'Erlanger did not place a very high estimate on the ability of Mr. Spence as a financial manager; but as he was the correspondent of the Times, and commercial agent of the Confederacy, thought best not to offend him. Spence, on the other hand, saw an opportunity to make money. A week later, on the 6th of March, he wrote thus to D'Erlanger:—

"You said something in the last interview of £50,000 of the stock. If it had occurred to you to put down to me that quantity at the gross price of seventy-seven, I should be disposed to consider it, looking to the advantage to all concerned of having a common interest."

As the loan was issued at 90, this proposal of Mr. Spence to take it at 77,—giving him a margin of 13 per cent under the contract price,—was, in the language of bankers, "a shave" for his services as correspondent of the Times,—a transaction upon which more light will be thrown further on in this history.

The loan was put upon the market on the 19th of March. Fifteen per cent was to be paid at the time of subscribing. The stock was limited to three million pounds sterling ($15,000,000); but so desirous were Englishmen to take it, the applications were for £9,000,000 ($45,000,000).

On the evening of the 19th Mr. Spence wrote to D'Erlanger of its success in Liverpool:—

"All goes well here. The cotton trade take it up with strong interest, and it will come out for large sums. I applied very early for £20,000, and thought I should have been first, but found P—-- was before me, with his £100,000. You will have a lot of applications in London from the storgs,—that is, those who join to sell at the premium. Here we have no class of that kind, and our applicants, as in Manchester, being more bona fide, will, as a rule, take a day or two to digest its merits. The market closed here at 4-1/4,—quite high enough for the first day."

On the next day, the 20th, Mr. Spence writes:—

"We shall very much exceed a million here, I think, by noon to-morrow. The political effect will be enormous. It is the recognition of the South by the intelligence of Europe."

On the 21st, congratulations were received by D'Erlanger from Slidell, who was in London.

"Allow me to congratulate you," said he, "on your magnific success. Apart from the direct advantages of the affair, it cannot fail to give great prestige to your house." "The Emperor himself, through the medium of his Chef de Cabinet," wrote D'Erlanger to Memminger, "complimented us upon the great success; a proof with what interest the operation had been received by all friends of the South."

Notwithstanding the "intelligence of Europe" had rushed to secure it, bankers of respectability—men who prized honor and integrity above pounds and pence—stood aloof, for they remembered that Mr. Jefferson Davis, President of the slaveholding Confederacy, was a repudiator. No allegation against him had been made through the press, but the Times came to the rescue before the attack. On the 19th, the day on which the loan was issued, Mr. Sampson, editor of the city article, said:—

"Those among the English people who are still suffering from Mississippi repudiation will perhaps view with wonder and regret the negotiation of a loan for a government of which Mr. Jefferson Davis, by whom that repudiation was defended in his place in Congress, is the head. But the Southern Confederacy includes Virginia, Georgia, and other honorable States, and it is by the prospect of what the Confederacy will do as a whole that people will make their calculation. The reasoning that would exclude the South from a loan on account of the conduct of Mississippi, would apply equally to the North, since the North embraces Michigan. It would also have applied to the United States loans negotiated while Mississippi was a State of the Union, and especially while Mr. Jefferson Davis was an influential member of the Federal government, and regarded with high favor by all the Northern population, by whom the remarks of the Times on his financial views were then declared to be nothing but the outpourings of British rancor."[104]

Turning to the Times of July 13th, of 1849, we find a letter written by Jeff Davis, copied from the Washington Union, in which the repudiator says:—

"The crocodile tears which have been shed over ruined creditors are on a par with the lawless denunciations which have been heaped upon that State."

To this the Times replied:—

"Taking its principles and its tone together, it is a doctrine which has never been paralleled. Let it circulate throughout Europe, that a member of the United States Senate in 1849 has openly proclaimed that at a recent period the Governor and Legislative assemblies of his own State deliberately issued fraudulent bonds for five million dollars to sustain the credit of a rickety bank, that the bonds in question having been hypothecated abroad to innocent holders, such holders have not only no claim against the community by whose Executive and Representatives this act was committed, but that they are to be taunted for appealing to the verdict of the civilized world, rather than to the judgment of the legal officers of the State by whose functionaries they have been robbed, and that the ruin of toil-worn men, of women and of children, and the crocodile tears which that ruin has occasioned, is a subject of jest on the part of those by whom it has been accomplished, and then let it be asked if any foreigner ever penned a libel on the American character equal to that against the people of Mississippi by their own Senator."[105]

Mr. Davis published a rejoinder, dated at Briarfield, Miss., August 29, 1849, addressed to the editor of the Mississippian. "It is a foreigner's slander," said he, "against the government, the judiciary, and the people of the Mississippi. It is an attack upon our republican government, the hypocritical cant of stock-jobbers and pensioned presses,—by the hired advocates of the innocent stock dealers of London change. It is a calumnious imputation."

The State of Mississippi had obtained the money in London on the solemn pledge of the faith of the State, and loaned it to the citizens; but the State had broken its pledge, repudiated the debt, and Mr. Jeff Davis eulogized the proceeding! The courts of the State decreed in 1842 that the debt was valid, and the decision was reaffirmed in 1853. Jeff Davis was then Secretary of War, and through his efforts and influence the State continued to repudiate the claims of the British bondholders. In 1863 Mississippi was indebted to Englishmen not only for the principal, $5,000,000, but for twenty-five years of unpaid interest; yet, notwithstanding this, the Times, eating its words of other days, came before the English people with a certificate of character for the repudiator, also publishing one from Slidell. "I am inclined to think," wrote Slidell, "that the people in London confound Mr. Reuben Davis, whom I have always understood to have taken the lead on the question of repudiation, with President Jefferson Davis. I am not aware that the latter was ever identified with the question."

The Times, commenting upon Slidell's letter, said:—

It was necessary, for the success of the loan, to show that the South was sure of obtaining its independence, and while the editor of the city article was whitewashing Jeff Davis, the editor in chief was assuring the public that the Union was forever broken up.

Thus wrote Mr. Delaine, the editor in chief, on the 19th:—

"So far as it is concerned, the once United States are a mere heap of loose materials, a caldron of molten stuff, ready to receive whatever form fortune may determine. In that vast mÊlÉe are two centres, which severally strive to give law and order to the whole. At Washington a body of men, not without courage, ability, and enterprise, are laboring, not to restore the Union,—they might as well try to restore the Heptarchy,—but to reconquer what has been lost, and, let the worst come to worst, to establish a military power."

On the 27th another leader was given to American affairs. Said the editor:—

"As to the final issue of the war, all the world, except some politicians, soldiers, and contractors at Washington and New York, have made up their minds, ... excepting a few disappointed gentlemen of Republican tendencies, we all expect, we nearly all wish, success to the Confederate cause."

And again, on the 28th:—

"There was room enough for two states on one continent, could the Americans but have believed it. We do not affect to be surprised at the course they have taken. It was natural that a blow should be struck for the Union; but all Europe has long seen that the Union could never be restored."

That men act from motives is a fundamental truth of moral philosophy. Why the Times gave such earnest advocacy to the slaveholders may be inferred from what follows. Opening now the correspondence of D'Erlanger with the Rebel Secretary of the Treasury, we read, under date of June 6, 1863:—

"A great margin had to be given to interest the newspapers, pay commissions, and captivate the opinions of those who treated the loan and its support as a question of profit and loss."

And further on, in the same letter:—

"Thanks to great pecuniary sacrifices made, AND THE SUPPORT OF ALL THE NEWSPAPERS, the subscriptions for the loan surpassed our own expectations. It reached five times the amount of the loan, and success made everybody friends."

At a later date, J. Henry Schroeder & Co., in a note marked "private," writes to D'Erlanger:—

"For the advertisements in the Times, through Mr. Sampson, and later on in the Index, concerning the payment of the coupons, we shall do the needful."

Thus we learn, from the statement of D'Erlanger, that the Times, upon which John Bull pins his faith, was not only by sympathy, but through interest, the advocate of the loan and of the slave-lords' Confederacy. Its financial articles and its leaders were written to the order of D'Erlanger. By the aid of the Times, a Parisian Jew, taking advantage of the sympathy expressed for the South by lords, members of Parliament, bankers, business men, and adventurers, and of the general gullibility of the British public, was able to secure a subscription of forty-five million dollars,—or thirty million in excess of the loan! On page 532 we have seen that the Liverpool correspondent of the Times had been quieted by a commission of £6,500 ($30,000), not for services rendered, but to secure his interest, as explained in D'Erlanger's letter to Memminger, written on the 8th of July, 1863. The banker says:—

"When our loan contract was coming back from America, this gentleman [Mr. Spence] wanted to interfere in the matter, by all means, and claimed a partnership to the contract of one sixth, under the pretence that he was the financial agent of the Confederate government in England, and that our making the loan had put him out of business which he might otherwise have transacted for the South. We knew that Mr. Spence wrote frequently for the Times, that as a public writer he could do a great deal of harm if not any good. We succeeded in escaping his intrusion, and when I had made arrangements to bring out the loan in England, I followed his invitation to arrange matters with him in Liverpool, and went down there myself. I gave him £50,000 of the loan at seventy-seven, taking them back at ninety, which gave him a commission as profit of £6,500."

These extracts from D'Erlanger's correspondence will serve to show the American people that the London Times was in the service and pay of Jeff Davis during the Rebellion.

On the evening of the 23d Lord Campbell called up the American question in Parliament, making a speech in favor of recognizing the Confederacy. He spoke of the remarkable success of the loan as a proof that the English public were ready to aid the South. The loan being thus bolstered up rose to four and a half per cent premium.

Mr. McRae having arrived in France, there was a meeting of distinguished Rebels in Paris on the 4th of June, at D'Erlanger's banking-house. Mason, Slidell, and L. J. C. Lamar, who had been purchasing supplies in London for the Confederacy,—and McRae were present. The object of the meeting was to consider the financial condition of the Confederate government in Europe. The indebtedness of the Confederacy abroad, for cannon, arms, ships, and supplies, at that time, was put down at £1,741,000 ($8,705,000). "At the same time," reads the correspondence, "Ermile d'Erlanger & Co. furnished the meeting with a full statement concerning the loan. According to which, £1,850,000 ($9,250,000) of the loan is in circulation; a part of which is full paid, having been subscribed for by the creditors of the government."

The balance of £1,150,000 was in the hands of D'Erlanger for disposal. In a letter written two days later, on the 6th, by D'Erlanger to Memminger, we learn how there happened to be so large an amount of the stock on hand. Unfavorable news from America caused a feeling of uneasiness, and speculative holders began to sell at depreciated rates.

"An arrangement," says D'Erlanger, "was thereupon entered into with Mr. Mason, and heartily approved by Mr. Slidell, which enabled us to buy for the government £1,000,000 of the stock; but so eager was the speculation, that this did not suffice, and the sum had to be extended to £1,500,000. This operation had its effect, and better tidings helped the market."

Upon this amount purchased by D'Erlanger to sustain the price of the loan, 35 per cent had been paid in by the subscribers.

"We would not," writes the banker, "have recommended the course of buying back part of the loan for the government, but for its peculiar character. The first Confederate loan was as much a political as a commercial transaction, and we have done everything that it may be regarded in both ways.... We, as well as our friends Messrs. Schroeder, are happy to have been able to lend our names and credit to the first financial operation of the South."

On the 13th of June McRae wrote to D'Erlanger a sharp letter, charging him with "unauthorized proceedings." D'Erlanger was playing a good game for himself.

"These important modifications of the contract," wrote McRae, "have in every case inured to the benefit of the contractors."

D'Erlanger replied on the same day, saying, "The operation [the repurchase of the stock] was not conducted on any selfish ground, but for the political feeling attached to the loan." It made no difference to D'Erlanger whether he bought or sold on government account, so long as he received his commissions. He objected, however, to receiving the full amount of his commission in bonds; he must have part cash.

"We should," wrote he, "be under too heavy an outlay if we had to take the £150,000 commission in bonds." This commission, therefore, up to the 15th of June, 1863, had reached the nice little sum of $750,000!

D'Erlanger having disposed of the stock to good advantage, was anxious to bring out a second loan on the same terms. In a letter written to Memminger on the 8th of July we discover what those terms were.

"We are ready," said he, "to make a new loan contract, taking exactly the terms of the old contract, and engaging to divide with the government the profits to be realized, between the rate of 77 and the issue price."

The loan then on the market was issued at 90, which gave D'Erlanger a commission of 6-1/2 per cent,—a portion of which doubtless went into the pocket of Slidell. D'Erlanger was fearful that the success of the loan would bring proposals from other banking-houses. "We wish," said he, "that the circumstance of our names being the first connected with a large financial transaction for the government in Europe shall tell in our favor, and that a preference shall be granted to us, which we are quite ready to merit, by making better terms to the government than any other respectable house may offer."

This proposition was indorsed by McRae, who the following week accompanied D'Erlanger to Rippaldson, where "a charming company" had gathered, and "an agreeable week was passed in the society of Madame Caroline and Miss Theresa." McRae, in a letter written on the 17th, urges a new loan, but the news from Gettysburg and Vicksburg had "lessened the appetite," and we hear no more of the proposition for a second loan.

At a later date, in December, the correspondence is in regard to the purchase of boats for the government, in which the Paris banker takes the part of Shylock:—

"Well then, it now appears you need my help:
Go to then; you come to me, and you say,
Shylock, we would have moneys."

McRae wanted £200,000 on government account, and applied to D'Erlanger, whose terms will be seen from the following extract from McRae's letter:—

"Your proposition amounts to this: That the government should pay 100 per cent for the use of £200,000, for probably less than six months, with no risk on the part of the lenders, as the £650,000 of bonds deposited, and the lien on the boats purchased with the sum lent, would protect them against loss in any event. My proposition was to pay 33-1/3 for £200,000, for a period of probably ten or twelve months. This I considered sufficiently favorable for the lenders, as they would have been secured by the deposit of £333,333 of bonds, and a lien on the boats."

The American people, doubtless, care very little who among Rebel agents and manipulators of the loan, or who of the bondholders, made or lost money, and I pass over the details of the interesting correspondence. That D'Erlanger managed it shrewdly for his own benefit is very evident. He charged interest, commission, and exchange on all the stock passing through his hands. In the transaction £140,000, raised from the sale of bonds, was set aside as "caution money" by Mason and Slidell, who wished, for political considerations, to keep the stock at par. D'Erlanger charged commission on the repurchase of this stock, although he held it in his own name, and received interest on the same! McRae was not then in Europe, but upon arriving he refused to ratify the act of Mason and Slidell, but made a proposition to D'Erlanger that the banker should place £704,000 of unsold stock. It is not stated what commission he was to receive. The agreement was verbal, and D'Erlanger was to forfeit £140,000 if the stock was not placed at the end of six months. The months rolled away, and the stock was not placed, and D'Erlanger, instead of paying his forfeiture, held on to the £140,000 of caution money, and helped himself to the interest from government funds in his hands! McRae had no redress except to appeal to Memminger. D'Erlanger wrote a honeyed letter to the Rebel Secretary of Treasury, and offered to "compromise" by giving up one half! McRae finally accepted terms from D'Erlanger; what they were is not stated, but McRae writes a doleful letter to the banker, saying that he is afraid Memminger and Davis will censure him. D'Erlanger seems to have wound McRae round his finger at will.

Schroeder & Co. were in the "ring" with D'Erlanger, and received commission and brokerage on the entire amount of the loan, £3,000,000. D'Erlanger, Schroeder, and McRae each took £50,000 of stock in the "Franco-English Steam Navigation Company," which was to bring out cotton on government account. D'Erlanger fixed the date of issuing the bonds, and thus brought advantage to himself. Among the payments made through Mr. Mason were £55,000 to Captain Crenshaw, £26,000 to Captain North, £38,000 to Captain Maury, £31,000 to Captain Bullock and Mr. Spence. A portion of these sums went into the hands of the Lairds for the rams which they were building. Isaac Campbell & Co. received £515,000 ($2,575,000). This firm took £150,000 of the loan. Bonds to the amount of £117,000 were converted into cotton. It appears that D'Erlanger endeavored to sweep these into his drag-net, and obtain commission and brokerage wholly unauthorized.

Since the close of the war the British holders of the loan have called upon D'Erlanger for an account of his operations, but can obtain no satisfaction. They have despatched an agent to the United States, appealing to the magnanimity of the Federal government for an adjustment and payment of their claims! Such insolent audacity has been promptly rebuked by Mr. Seward. Marvellous their stupidity and effrontery,—to ask pay for the coals on which they sought to roast us, for the rope that was to strangle the young giant of the West, whose growth they had beheld with alarm, and whose power they feared! As is evident from the correspondence in my possession, the whole scheme was well contrived and manipulated by Slidell and D'Erlanger for the benefit of themselves, and also of Campbell & Co., Schroeder & Co., Spence, the Lairds, and McRae, who, by the aid of the London Times, and "all the papers," were able to fleece the English aristocracy out of fifteen million dollars. From mercenary motives they enlisted in the cause of slavery to destroy a friendly republican government. They had persistently asserted that a constitutional democracy like ours must ultimately fail to secure the rights and liberties of the people,—that internal war would crumble it into ruins like the ancient republics; and now they thought the fulfilment of their prophecy so near at hand it was unnecessary longer to disguise their hatred, and openly gave their "aid and comfort" to the enemy, jeering at our efforts and denouncing our measures to maintain our existence among the nations. They ventured their money on the doubtful issue and lost, and now so lugubriously bewail their folly as to make themselves ridiculous in the eyes of the world, and the laughing-stock of the American people.