Why the Confederacy Lost—and Why We Should Care Today (Part 2)

by Christian B. Keller, editor of Southern Strategies: Why the Confederacy Failed. Read Part 1 here.

In the second segment of my analysis on why the Confederacy failed in its bid for independence we will focus on the diplomatic and economic instruments of national power, which, like the military one, proved inadequate to the monumental tasks required of them. As several of the contributors to my book, Southern Strategies, argue, the Richmond government performed woefully in its attempts not only to compensate for its inherent shortfalls in these realms but also to develop and integrate these two critical elements, leading to inexorable and ultimately unsustainable pressures which hindered the rebel armies. In the modern global environment, we would do well to remember that the military instrument cannot and should not carry the full weight of national security responsibilities.

Admittedly, in the diplo-economic arena, the fledgling Confederate government had little to work with after its establishment in 1861. The vast bulk of the American financial infrastructure and the overwhelming majority of personnel familiar with operating national monetary policy, large corporations, and big banks resided in the North. Nearly all of the country’s gold and silver reserves and mines and almost all of its shipping industry were located in loyal states and territories, as well as three-quarters of its railroad mileage, ninety percent of its heavy industry, and the lion’s share of its agricultural foodstuff production. Further, the Union retained a three-to-one population advantage and a well-established national government replete with multiple ostensibly well-staffed departments and bureaucracies—including a seasoned diplomatic corps.

Yet even worse odds faced the colonists in the American Revolution after whom the secessionists modeled themselves, and unlike their grandfathers, the Confederates possessed one definite advantage over their adversary: a European reliance on Southern cotton. This “white gold,” as it was then termed, offered numerous opportunities for both diplomatic and economic strategic success, especially if the two instruments could be cleverly integrated in time. After the firing on Fort Sumter, however, Abraham Lincoln called for a blockade of rebel ports and directed 75,000 men to suppress the rebellion, signaling the advent of a war that Jefferson Davis and his government needed to win quickly. Like a gigantic engine sputtering to life, the Union war machine required little time to bring its full weight to bear on the outclassed Confederacy. Thus, what rebel diplomats and economists could accomplish in the first two years of the war was of paramount importance. The longer it took to create a viable war economy and convince Europe to support their cause, the weaker the seceded South became in proportion to its enemy.

Multiple challenges confronted Secretary of the Treasury Christopher Memminger. He had to build the Confederate national economy literally from scratch, including such basic necessities as acquiring buildings for his department in Richmond and other cities, recruiting and training personnel, and designing banknotes. He even had to pay for his own writing desk with personal funds. Such hurdles were difficult by themselves, but when paired with a Southern cultural aversion to taxation that stretched back to the early days of the Republic, a public belief that the war would be short, and a national Congress dominated by representatives more interested in states’ rights than efficient federalism, Memminger’s job quickly turned Herculean. It became abundantly clear that direct taxation of the Confederate people was a political hot potato that most lawmakers would not touch. Therefore, after achieving minimal success in that area the Secretary tried to raise national funds through issuance of government securities (bonds), but found his efforts increasingly stymied by rising inflation and apprehension both at home and abroad about investing in a country that might not be able to honor its debts. That left one major option: printing money, and lots of it.

For about the first year of the war, this financial strategy worked, as inflation remained low, the Union blockade of Southern ports was spotty at best, and public faith in the Confederacy remained high. But by the end of 1862 the proverbial chickens came home to roost and inflation skyrocketed. With the Confederate dollar massively devalued, Memminger and Davis were forced to turn to other, more draconian measures, such as the hated tax-in-kind (collecting national taxes in the form of actual portable goods) and the physical impressment of private property by government officials and army quartermasters. These policies, in turn, inspired hoarding by citizens and especially farmers, black market activities, trading with the enemy, and, most ominously, a growing distrust of the Richmond government. Cries of the “rich man’s war and poor man’s fight” thus contained a clear economic tinge and began to circulate widely throughout much of the Confederacy by the middle of 1863. More and more pressure fell on the one consistently victorious rebel army, the Army of Northern Virginia under Robert E. Lee, to deliver peace and economic relief.

While Confederate financial and economic power continued its downward spiral, diplomatic success eluded the commissioners sent to England and France to negotiate formal recognition of their new country, foreign trade, and, if possible, outright intervention. Some of the blame for this debacle rests on the shoulders of the initial emissaries themselves, all of whom were inept bunglers. The second cadre of diplomats, led by James Mason and John Slidell, proved slightly more competent, and a Union misstep in the famous Trent Affair of early 1862 raised hopes throughout the seceded states that a British alliance was forthcoming. Adroit Federal diplomacy and common sense in Viscount Palmerston’s cabinet, however, diffused the crisis, and thereafter kept Queen Victoria’s vast empire neutral in the American war. The French regime under Napoleon III was more willing to directly support the Confederacy, but like the British found its hands tied by its own uniquely European national interests.

Therein lay the root of the failure of rebel diplomacy in the Civil War: a misperception of the European great powers’ national values and interests. Confederate leaders in Richmond and throughout the South steadfastly believed from spring 1861 until at least mid-1864 that the English and French, by virtue of their perceived dependence on Southern cotton, would be compelled to abandon their initial neutrality and formerly recognize—if not overtly aid—the Confederacy. “Cotton is king!” declared prominent fire-eater James H. Hammond before the war, a statement backed up by raw export statistics. But peacetime and wartime decision-making are different, and when confronted with the choice between allying with a slaveholding republic (after abolishing slavery in their respective empires in the 1830s) or suffering a temporary dearth of cotton imports, the courts of St. James and Versailles opted for the latter. The political price at home among the antislavery working classes of both nations would have been too high, they reasoned, despite any sympathies the aristocracies harbored for the Southern secessionists. When added to the fact that the last antebellum years’ bumper cotton crops kept European warehouses filled and textile mills operating well into 1862, it was a sound economic decision.

Just as deleterious for Confederate diplomacy was the informational strategy adopted by most of its diplomats abroad and statesmen at home: slavery was an inherent good and served as the “cornerstone” of the new nation. This message, repeated again and again, was eminently distasteful to most thinking Britons and Frenchmen. Just as vexing was the unofficial cotton embargo that many rebel states and localities initiated after secession which purposefully withheld exportation of cotton in hopes of coercing European decision-making in their favor. Twisting the British lion’s tail in this manner was akin to blackmail, according to Palmerston and his cabinet, and only made them more pliable to the demands of the United States embassy. By the time the Richmond government officially outlawed the voluntary embargo in late 1863, the damage had more than been done: the Union blockade had become powerfully effective, thereby greatly restricting rebel exports; the British had developed alternative sources of cotton from within their empire; and Lincoln’s Emancipation Proclamation clarified once and for all what the Union was fighting for. Again, only sustained and climactic Confederate military victories could salvage the deteriorating strategic situation. As the third full year of the war commenced, however, the failures of rebel diplo-economic policies were clearly affecting the military instrument, proportionately piling onto the already heavy burden it carried in the quest for independence.

The “what if’s” regarding rebel diplomatic and economic strategies had they been designed, implemented, and integrated better are just as intriguing as the more clichéd and famous military ones. Had Davis cracked down early on the impromptu and unsanctioned cotton embargo or had Memminger somehow received more cooperation from the Confederate Congress on his initial taxation schemes in 1861, much might have changed for the rebel war effort. Similarly, had those same Congressmen selected stronger envoys with more nuanced diplomatic skills as their first emissaries to London and Paris, it is possible the Europeans may have done more to assist the secessionist republic. But in the end, as in any war, military power is primal, and exists within a symbiotic relationship with the other national instruments. Victory on the battlefield promotes diplomatic efforts and eases economic pressures, whereas defeat weakens both. Success in the diplo-economic arenas, in turn, can prop up military strategies, provide them with credibility, and offer national “buffers” in case generals meet with disaster. Thankfully for the future of the United States, the Union enjoyed such synergies whereas the Confederacy did not; it had no buffers at the strategic level and could not afford more than a handful of reversals in any of the instruments of national power. Only in the military realm, and then only in the Eastern Theater, did the rebels enjoy anything close to consistent success for any period of time. Lee’s spectacular victories of 1862–1863 were not decisive enough, though, to carry the weight of the entire Confederate nation to the final goal of independence. As George Pickett once quipped, “the Yankees had something to do with that,” but so did Confederate errors in political judgment that could have been avoided. Today, in an era when the United States frequently leads its diplomacy with military power and much of its national economy is reliant on military spending, we should remember the example of the failed Confederacy, ponder its mistakes, and avoid similar ones in our modern context.

Dr. Christian B. Keller is Professor of History and Director of the Military History Program at the US Army War College. His book, Southern Strategies: Why the Confederacy Failed, was published by the University Press of Kansas in June 2021.