Opting to Support the Union or the Confederacy Was NOT Simple for the Major British Banks Who Could NOT Remain Neutral

However, unlike the preceding decades when statesmen on both sides of the Atlantic took the views of transatlantic financiers into account, the pleas of the financial lobby fell upon deaf ears in 1860–1. The roots of the conflict were too deep and passions on both sides were too high for economic rationales for conciliation to carry the day—a lesson that Wall Street leaders similarly learned when their support of compromise proposals failed to forestall war. When the sectional conflict turned into all-out war, many European financiers, particularly Anglo-American banking houses, were forced to choose a side. Although neutrality was a feasible policy for the Palmerston government, many British financiers were too intimately involved in the American economy to remain on the sidelines and the warring parties would bring them into the conflict by requesting war loans. Opting to support the Union or the Confederacy was not simple as the major banks were deeply divided in their sympathies. The two American partners of Baring Brothers were split on which side to support. Joshua Bates staunchly advocated the cause of the Union, while Russell Sturgis, though a New Englander, supported the South. The firm’s loyalty to the Union was tested as early as the autumn 1861 when Governor Francis Pickens of South Carolina requested a loan for the procurement of arms. The Rothschilds were also split on which side to support. Their American agent, August Belmont, vowed to ‘‘stand by the Government at any sacrifice in order to subdue this atrocious heresy of secession,’’ while Salomon de Rothschild, who was visiting the United States from Paris during the secession controversy, urged his family to ‘‘recognize the Republic of the Southern Confederacy as quickly as possible.’’ George Peabody and partner J. S. Morgan, though New Englanders and sympathetic to the Union, doubted the North’s ability to conquer the South and feared the economic consequences of a protracted war.

—Jay Sexton, Debtor Diplomacy: Finance and American Foreign Relations in the Civil War Era, 1837-1873 (New York: Oxford University Press, 2014), 80-81.