1863.]

THE COTTON SCANDALS.

175

speculations in cotton which were to be promoted by the Red River expedition, according to popular rumor. By this time, the failure to send to the world's markets the usual supply of cotton had created something like a cotton famine wherever mills and factories, shipping and exchanges were to any degree dependent upon that commodity. It was the scarcity of cotton for the milling districts of England that was relied upon by the insurgents and their foreign sympathizers to hasten negotiations to end the rebellion by the recognition of the Southern Confederacy. It was known that vast amounts of cotton were stored in the extreme southwest, especially in the Red River region, awaiting opportunity for safe shipment; and one of the accusations brought against Banks, who was stigmatized as a "political general," was that he was in league with producers and speculators inside the Confederate lines, and with political favorites in the Federal lines, to get out great quantities of the coveted article, on which handsome profits were to be made. It was even charged that Kirby Smith, the Confederate commander of that portion of the State, was in league with the speculators.

As a matter of fact, the cotton captured by the military arm of the Red River expedition was accounted for with scrupulous Their accuracy. That captured by the navy, about 6,000 bales, falsity. according to Admiral Porter, was taken out and sold, the proceeds being divided as prize money among the naval officers, according to the laws of war. Kirby Smith could not have known of the advance of the Red River expedition until after it was fairly under way; and as soon as he was assured of its approach, he ordered the burning of all cotton within striking distance of the enemy; the total value of the amount thus destroyed was estimated at sixty millions of dollars. It is more than likely that the calumnies circulated in the Department of the Gulf at that time were set in motion by civilians who followed the expedition in the hope of reaping a rich harvest when the long continued blockade of the cotton-producing region of Louisiana should be broken and the much-desired stores of cotton should pour forth; they were disappointed men. During the war, the cotton trade, which followed hard upon the advance of the Federal armies, was a prolific source of scandal; and the chances for securing rich

returns by purchasing or seizing condemned "rebel cotton" and selling dear, were regarded with eager cupidity by men who besieged the National authorities for permits to engage in these enticing speculations.

The political programme in Louisiana was interrupted more than once by military operations. Much hostile criticism was levelled at General Banks for the incongruity of his duties, civil and military, in New Orleans; and much of this criticism eventually reacted upon those who made it; and the President himself ultimately became the object of angry Unionists who sought for some one responsible for the failure of the Red River expedition. The attempts to reconstruct a civil government in Louisiana were the most difficult and delicate of any of the so-called reconstruction measures. The precedent of appointing military governors in States where the National authority had been partly or fully reëstablished was that of Andrew Johnson, appointed as military governor of Tennessee, with the rank and pay of brigadier-general, on confirmation by the Senate, March 4th, 1862. The next case was that of Edward Stanley, who was appointed in the following May military governor of North Carolina. The third instance was that of Colonel George F. Shepley to be military governor of Louisiana, soon after the capture of New Orleans, when the foothold so obtained promised to be permanent. Colonel Shepley was an officer in the army of General Butler and had been appointed already by that officer to be mayor of New Orleans. Subsequently (in December, 1862), Shepley, under the direction of the President, ordered an election for Congressmen in the districts that were wholly inside of the military lines of the National Government; and the two Representatives so chosen were admitted to their seats in the House on a report from the Committee of Elections, which, among other things, said that the election under which these men claimed seats had been conducted with every essential of a regular election in a time of profound peace, except that the proclamation calling for it had been issued by a military, instead of a civil, governor of the State.

Affairs in
Louisiana.

In course of time, there arose some contention and disagreement between Military Governor Shepley and Department Commander Banks regarding their respective powers in the civil affairs of Louisiana. This contention was finally quieted by the dictum of President Lincoln, who assured General Banks that he had all along intended that the general should be "master, as well in regard to reorganizing a State government for Louisiana as in regard to the military matters of the department." Accordingly, before the organization of the Red River expedition, Banks had proclaimed an

held on February 22d, 1864. At that election, Michael Hahn received a majority of the 11,411 votes cast; and he was duly inaugurated on the following 4th of March.

On the 11th of that month, General Banks ordered an election of delegates to revise and amend the State constitution, the intention being to strike from that instrument the clauses establishing and recognizing human slavery. The convention assembled early in April; and it was in session when Banks departed on his expedition up the Red River. His detention in New Orleans until after the army and navy had gone on their way was due to his having certain important duties to perform in regard to the setting in motion of the new civil government, as already intimated. A faction of the population of New Orleans, having been organized into the so-called Free State Party, had run B. F. Flanders as their candidate for governor, and had been defeated. This faction received the sympathy of politicians in Washington who were known as Radical Republicans, and who were generally opposed to the political policy of President Lincoln. The failure of the Red River expedition was seized upon by these persons as a pretext for severe criticism of the President, whose endowment of General Banks with plenary powers in Louisiana was deeply resented by the friends of the unsuccessful candidate, Mr. Flanders, and was stigmatized by persons in Washington as an unjustifiable interference which had really hastened the disasters overtaking the ill-starred expedition.

Later on in the course of the war, when these asperities had divided the Republicans of the country into hostile camps,-Conservative and Radical, and the opposition to Mr. Lincoln's reëlection had become somewhat pronounced, an unfriendly congressional committee investigated the whole subject of the Red River expedition, the political condition of Louisiana being thereto correlative; and this investigation was so manipulated that the President and the Secretary of State were indirectly censured for ordering the Red River expedition (Secretary Seward's anxiety relative to the French occupation of Mexico and the necessity for the Federal occupation of Texas being well understood), while most unjust and cruel imputations were thrown upon General Banks for his supposed share in cotton speculations.

CHAPTER VII.

SUNDRY CIVIL EVENTS OF 1863.

FINANCIAL LEGISLATION BY CONGRESS. ORGANIZATION OF THE NATIONAL BANKING SYSTEM. THE SOLDIERS AND SAILORS OF THE NATION UNPAID. MORE GREENBACKS ISSUED.-A $900,000,000 LOAN AUTHORIZED. -NATIONAL AND CONFEDERATE DEBTS. SOME OF THE CONFEDERATE EXPERIMENTS IN FINANCE. LETTERS OF MARQUE AND REPRISAL AUTHORIZED BY CONGRESS. POLITICAL OPPOSITION TO THE WAR. LINCOLN'S REPLY TO VALLANDIGHAM'S SUPPORTERS. - ULYSSES S. GRANT MADE LIEUTENANT-General. HE TAKES COMMAND OF THE ARMIES OF THE UNITED STATES.

ONE of the most important acts of Congressional legislation during the period now under review was the enactment of the Financial National banking law. In his first annual report (Decem- legislation. ber, 1861), the Secretary of the Treasury had recommended the establishment of a system which should give to the Government complete control of the currency. In two annual reports he had recommended a tax on bank circulation. He believed that this circulation prevented, or at least embarrassed, the funding process by which alone the bonds of the United States could be absorbed. He proposed to tax the existing banks out of existence and to organize a permanent system designed to establish and maintain a uniform National currency based upon the public credit, limited in amount, and guarded by all the restraints which experience had proved necessary. Such a system was provided for in the bill which was introduced in Congress, in January, 1863, by Senator John Sherman, a brother of General W. T. Sherman. Mr. Sherman had long served in the House as a Representative from Ohio, having first been elected to that body in 1854; and he was now in his first term in the Senate, having been chosen to succeed Salmon P. Chase when Mr. Chase accepted the appointment of Secretary of the Treasury under Abraham Lincoln, in 1861.

The proposition had been fully discussed before the introduction of Mr. Sherman's bill; and its details were now determined in that scheme of law. As finally enacted and approved by the President (February 25th, 1863), the National banking law established a bureau