Wartime Cotton Trade

By: Jack Becker and Matthew K. Hamilton

Type: General Entry

Published: July 10, 2012

At the onset of the Civil War, it was the policy of the newly-created Confederate States of America to withhold cotton from European markets in the hopes of inducing either foreign intervention or, at the very least, encouraging recognition of the fledgling Confederacy. It was believed that cotton was “king” and that foreign markets required the South’s most valuable staple crop in order to support European economies. As a result, Confederate President Jefferson Davis and his cabinet adopted a policy that came to be known as King Cotton Diplomacy. This policy hinged on the farce that early in the war the Union blockade denied Confederate shipment of cotton to Europe and aimed at provoking European (most notably the British) intervention.

In addition to the purposeful withholding of cotton from foreign exports, the Confederate government in 1861 persuaded planters across the South to abide a policy of lending proceeds from the sale of their cotton to the central government. Known as a produce loan, the Confederate government would use the loans as security for borrowing English pounds and French francs in order to purchase supplies to be run through the blockade.

The Confederate government’s policies affected Texas planters in different ways. While the intentional withholding of cotton in order to produce foreign intervention was accepted by Texans, the Lone Star State’s unique position of having a common border with Mexico allowed for the possibility of cotton to be shipped across the Rio Grande from counties in the western parts of the state, which in the 1860s consisted of areas west of the Brazos River to the present-day corridor created by Interstate 35. From small towns along the border of Texas such as Brownsville, Laredo, and Eagle Pass, cotton could be moved across the Rio Grande and transported downstream to the thriving export center in Matamoros, Mexico. In the final leg of its journey at the coastal port of Bagdad, Mexico, the cotton was placed on foreign vessels bound for European markets in exchange for necessary war materials such as Enfield rifles, ammunition, and percussion caps. In short, Texas offered an unparalleled and significant opportunity to export Southern cotton out of the Confederacy and import necessary war supplies.

What started as a slow trickle of Southern cotton into Mexico quickly sprouted into a lucrative cotton trade along the Rio Grande that made fortunes for both Texans and Mexicans. Yet the Rio Grande cotton trade was not without its difficulties. Indeed, throughout the war the cotton trade was continually hampered by numerous problems. Bandits on both sides of the border routinely raided wagon trains loaded with cotton and then retreated to the other side of the Rio Grande; Union sympathizers in Mexico provoked raids by Confederate soldiers that violated Mexican neutrality and threatened a cessation of the trade; and the potential of a French invasion of Mexico all combined to prevent the Mexico-Texas cotton trade from reaching its full potential.

In spite of these difficulties, wartime cotton trade was instrumental to the Confederate war effort in the Trans-Mississippi Department. Not only did it provide the Confederacy with much needed war materials but its impact led many of President Lincoln’s cabinet officers to consider an invasion of Texas to put a stop to it.

Planters in regions east of the Brazos River experienced wartime cotton trade differently than their western counterparts. Distance from the Mexican border and the main blockade-running port of Galveston made it difficult, at best, for growers to get their cotton out to foreign markets. Before the war, cotton producers east of the Brazos made use of their location near navigable rivers to ship their cotton to the coast and then on to either Galveston or New Orleans for transportation to Europe. The Union blockade, however, closed these routes and resulted in little more than 1 percent of the prewar cotton export getting out. In addition, the high cost associated with transporting cotton from northern and eastern Texas to the Rio Grande discouraged this practice. As a result, much of the cotton produced in 1861 remained where it was harvested.

As conditions worsened in Texas, the Confederate government and military took over the shipping and selling of cotton. One such policy was the recommendation that cotton producers east of the Brazos make use of the produce loan. Some planters in East Texas subscribed to the loan which resulted in the Confederate government’s ownership of 25 percent to 100 percent of the cotton crop. The cotton remained where it was grown and was later used as security for a bond issue in Europe that raised more than $8 million for the Confederacy. Historian Judy Gentry notes that cotton producers in East Texas subscribed more than 14,000 bales of cotton to the loan.

While the prospects of a Confederate victory in the war in early 1862 were high, defeats at Shiloh and the fall of New Orleans necessitated the government in Richmond to begin conscripting men who were not currently in the service. This affected East Texas by draining away its labor force and cotton production in the region declined. This decline in production, of course, greatly hampered the Confederate government’s ability to meet the army’s needs.

As a result, the Confederate government authorized the creation of a cotton bureau within the Trans-Mississippi Department. Gen. Kirby Smith organized the bureau for the sole purpose of acquiring cotton to be exchanged for foreign supplies funneling in through the blockade at Galveston and across the Rio Grande. The Cotton Bureau authorized civilian agents to negotiate the sale of Confederate cotton to Union buyers and made possible the shipment of cotton grown in East Texas near the Red River to Shreveport, Louisiana, where Union buyers purchased it and then shipped it to New Orleans. This measure, however, was not enough because many cotton producers withheld cotton in anticipation of higher prices in the future. As a result, General Smith routinely professed an authorization to force cotton producers to sell half of their cotton at low prices or risk the impressments of all of it.

While some Texas cotton producers refused to sell their cotton at such low prices, evidence suggests that most did rather than have it confiscated. In fact, during the last year of the war, the Trans-Mississippi Department Cotton Bureau, using various methods of intimidation, was able to procure large amounts of cotton that were used to pay for supplies for the Confederate armies in the field.

In the end, for West Texans the cotton trade during the Civil War was a lucrative operation that made many individuals wealthy on both sides of the Rio Grande. Likewise, steamship owners Mifflin Kenedy and Richard King, along with cotton broker Charles Stillman, merchant and banker Patricio Milmo, and others, greatly profited from the trade. However, cotton producers east of the Brazos River never shared in this profit. For East Texans, only the end of the war and the lifting of the blockade brought back prosperity in the cotton trade.

James W. Daddysman, The Matamoros Trade: Confederate Commerce, Diplomacy, and Intrigue (Newark: University of Delaware Press, 1984). Judy Gentry, “Confederates and Cotton in East Texas,” East Texas Historical Journal 48 (Spring 2010). Fredericka Meiners, “The Texas Border Cotton Trade, 1862-1863,” Civil War History 23 (December 1977). Ralph Wooster, ed., Lone Star Blue & Gray (Austin: Texas State Historical Association, 1995).

  • Agriculture
  • Business
Time Periods:
  • Civil War

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this entry.

Jack Becker and Matthew K. Hamilton, “Wartime Cotton Trade,” Handbook of Texas Online, accessed May 23, 2022, https://www.tshaonline.org/handbook/entries/wartime-cotton-trade.

Published by the Texas State Historical Association.

July 10, 2012

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