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.

British Pro-South Sympathizers Made Sure that the Tariff Argument Remained Prominent for Many Months

The South’s governmental and nongovernmental free-trade diplomacy was paying propagandistic dividends, compounded by the Union government’s initial unwillingness to declare slavery the primary issue of secession and reunion. Confederate diplomat Edwin de Leon wrote a letter to the editors of the London Times in late May that slavery was “a mere pretext” for secession, as shown by continued northern defenses of the institution through its guarantee of slavery where it existed and through its enforcement of the fugitive slave law. The Preston Guardian even asserted that when northerners cried “no slavery,” they really meant “protection.” William H. Gregory called for British recognition in the House of Commons. He argued that it would bring an end to the slave trade; keep the states from fighting a “fratricidal, needless war”; and provide retaliation against the North’s “selfish, short-sighted, retrograde” protectionist policy. The Union minister to England, Charles Francis Adams, Sr., after meeting with Britain’s foreign secretary, Lord John Russell, noted that the Morrill Tariff and the conflict’s seeming nonissue of slavery yet left southern recognition on the table.

All the while, Britain’s maintenance of neutrality appeared to benefit the South and antagonize the North. The 1862 construction in British ports of Confederate war vessels like the Alabama further outraged the Union, many of whom viewed their construction as a covert act of war by the British against the North. The issue would remain a source of Anglophobic ire for years to come. Alongside northern protectionism, British neutrality heightened Anglo-Union animosity.

British pro-South sympathizers made sure that the tariff argument remained prominent for many months to come. James Spence, Liverpool’s pro-Confederate merchant and London Times writer, spent but one chapter on slavery in his influential publication The American Union (1861). He spent the other seven on the Morrill Tariff, the right to secession, and why he thought a future reunion was culturally and philosophically impossible. After a close reading of Spence in late 1861, Charles Dickens himself became decidedly pro-South, and argued in the pages of All the Year Round that the Morrill Tariff had “severed the last threads which bound the North and South together.” John Bright wrote to Charles Sumner that the subject of the tariff was of such “great importance” that little “would more restore sympathy between England and the States than the repeal of the present monstrous and absurd Tariff,” as it gave “all the speakers and writers for the South an extraordinary advantage in this country.”

Northern attempts to acquire loans from England further illustrated the tariff’s unfavorable transatlantic traction. Following the southern rout of northern troops at Bull Run in July 1861, New York banker August Belmont sought a Union loan from the British. As leverage, he reminded Prime Minister Palmerston of the South’s continued maintenance of slavery, to which Palmerston retorted: “We do not like slavery, but we want cotton and we dislike very much your Morrill tariff.”

—Marc-William Palen, The “Conspiracy” of Free Trade: The Anglo-American Struggle over Empire and Economic Globalisation, 1846-1896 (Cambridge, UK: Cambridge University Press, 2016), 44-45.

The Republican Party Was In Favor [!] of Slavery Because They Feared Emancipated Slaves Residing in Northern States

Lincoln did not launch a military invasion of the South to free the slaves. No serious student of history could deny this fact. In 1861 Lincoln’s position—and the position of the Republican Party—was that Southern slavery was secure: He had no intention of disturbing it; and even if he did, it would be unconstitutional to do so. This is what he said in his First Inaugural Address. The Republican Party, led by Lincoln, was in favor of Southern slavery because its leaders feared the spectacle of emancipated slaves residing in their own Northern states. Lincoln’s own state of Illinois had recently amended its constitution to prohibit the emigration of black people into the state, as had several other Northern states. Most Northern states had adopted Black Codes that discriminated in the most inhumane ways against freed blacks. Such discriminatory laws existed in the North decades before they were adopted in the South. There were very few blacks in the North in 1861, and most Northern voters wanted it to remain that way.

As of 1861 Lincoln and the Republicans were opposed only to the extension of slavery into the new territories. One reason they gave for this opposition was that they wanted to preserve the territories as the exclusive domain of the white race. A second reason articulated by Lincoln was the desire to avoid the further artificial inflation of Southern (i.e., Democratic Party) representation in Congress that was created by the three-fifths clause of the Constitution. The few abolitionists in the party undoubtedly believed that prohibiting slavery in the territories would quicken its overall demise.

—Thomas J. DiLorenzo, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (New York: Three Rivers Press, 2003), 257-258.

Let the South Adopt the Free-Trade System and the North’s Commerce Must Be Reduced to Less Than Half What It Now Is

In the mid-nineteenth century, newspapers were openly associated with one political party or another, and numerous Republican newspapers in the North had been calling for the bombardment of the Southern ports in order to destroy the South’s free-trade policy long before Fort Sumter.

On December 10, 1860, the Daily Chicago Times candidly admitted that the tariff was indeed a tool used by Northerners for the purpose of plundering the South. The editor of the newspaper warned that the benefits of this political plunder would be threatened by the existence of free trade in the South:

The South has furnished near three-fourths of the entire exports of the country. Last year she furnished seventy-two percent of the whole . . . we have a tariff that protects our manufacturers from thirty to fifty percent, and enables us to consume large quantities of Southern cotton, and to compete in our whole home market with the skilled labor of Europe. This operates to compel the South to pay an indirect bounty to our skilled labor, of millions annually. 

 “Let the South adopt the free-trade system,” the Chicago paper ominously warned, and the North’s “commerce must be reduced to less than half what it now is.” In addition “[o]ur labor could not compete . . . with the labor of Europe” and “a large portion of our shipping interest would pass into the hands of the South,” leading to “very general bankruptcy and ruin.” . . .

The Newark Daily Advertiser was clearly aware that the free-trade doctrines of Adam Smith had taken a strong hold in England, France, and the Southern states. On April 2, 1861, the paper warned that Southerners had apparently “taken to their bosoms the liberal and popular doctrine of free trade” and that they “might be willing to go . . . toward free trade with the European powers,” which “must operate to the serious disadvantage of the North,” as “commerce will be largely diverted to the Southern cities.” “We apprehend,” the New Jersey editorialists wrote, that “the chief instigator of the present troubles—South Carolina—have all along for years been preparing the way for the adoption of free trade,” and must be stopped by “the closing of the ports” by military force.

—Thomas J. DiLorenzo, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (New York: Three Rivers Press, 2003), 242-243.