The fiscal system was, almost of necessity, of the most simple character. Fraser, Trenholm & Co., of Liverpool, John Fraser & Co., of Charleston, S. C, and Trenholm Brothers, of New York, were practically one concern, and the senior member of John Fraser & Co., Mr. William Trenholm, became Confederate States Secretary of the Treasury early in the war. Mr. Wellsman, senior member of Trenholm Brothers, in New York, joined the Liverpool house, the senior member and manager of which was Charles K. Prioleau, formerly of Charleston. There was no loan to negotiate; for the Confederacy—recognized only as belligerents—had no credit among nations, and no system of taxation by which it could hope to derive any revenue available for purchasing supplies abroad. But it possessed a latent purchasing power such as probably no other Government in history ever had.
The cotton crop of its people was a prime necessity for the manufacturing world outside, and, for want of machinery, was utterly valueless in all the Southern States except Georgia, where there were a few small factories. Almost immediately after the outbreak of hostilities the Confederate authorities began to buy cotton, paying in such "money" as it had; that is to say, its own promises to pay whenever it could. Some of these promises bore interest and were called bonds; some bore no interest, and these constituted the currency of the country.
The cotton, as it lay on the plantations or in the warehouses, was for sale, and the Government was almost the only buyer. To all others there was a difficulty, amounting almost to impossibility, in getting cotton to market. Some, no doubt, was smuggled across the border, to the advantage of "patriots" of each side; but this outlet for a bulky article like cotton was altogether inadequate, and, practically, every one was compelled by the very condition of affairs, without the application of even moral force, to sell to the Government and receive in payment the best that the Government had to offer; namely: its own promises to pay, which, whether stated as a condition of the promise or not, could not be made good till after the favorable close of the war. If the South failed, the promises would be valueless; if it succeeded, the obligations would be met as promptly as possible. The situation was accepted by the people, and the Government acquired cotton and shipped it to Nassau, Bermuda, and Havana as fast as it could.
To get cotton through the blockading squadron called for daring and skill; but there seems to have been no lack of either, and it was not long before every steam vessel that could carry even a few bales, and was sea-worthy enough to reach Nassau, was ready with a crew on board, eager to sneak out any dark night and run to a neutral port,—generally Nassau.
For a long time this traffic went on almost without a capture, and the Confederate Government not only deposited in places of safety large quantities of a commodity in general demand throughout the world, but also had the satisfaction of seeing its property advance rapidly in value as the war went on, and its necessities increased. The cotton thus shipped was all consigned to Fraser, Trenholm & Co., Liverpool, and the consignments for the army, navy and diplomatic departments were carefully kept separate. There was, therefore, no clashing of interests between the army and navy, as to disposition of proceeds. The requirements for the diplomatic agents were trifling compared with those of the army for supplies and the navy for building, equipping and manning ships.
I had not been long in England before the sinews of war began to be available, and I found myself able to meet my engagements in a manner entirely satisfactory to my creditors. To buy supplies was simple enough; but to ship them was another matter. As was to be expected, detectives employed by the U. S. Government as well as volunteer spies were about me. Efforts were made to intercept telegrams and to tamper with employees, but few of these attempts at stopping Confederate army supplies were successful.
One success scored by the United States was the capture of the "Stephen Hart," a schooner of American build, but purchased by an English house and put under the British flag for Confederate use. The proof that she was loaded with army supplies destined for the Confederate States was so complete that no expense was incurred in defending the rights of the quasi British owners. It was a mistake to ship such supplies by sailing vessels, and there were other errors of judgment which were not repeated.
After the "Stephen Hart" episode, all army supplies were carried by steamer, either to a Confederate port direct, or to Nassau or Bermuda. There was little difficulty in chartering steamers to carry supplies to "The Islands." Generally both ship and cargo belonged in good faith to British subjects; and, as the voyage was from one British port to another, the entire business was as lawful as a similar shipment would have been from London to Liverpool. But one of the most innocent shipments was not only captured, but the capture was confirmed, and there was not on board one penny's worth of property belonging to the Confederate States or to any American citizen. The ship "The Springbock," was loaded by a firm from whom I had purchased many supplies; but in this instance, the cargo was to be sold in Nassau, and there was nothing of a suspicious character on board, excepting some brass buttons bearing the device "C. S. A.," and these buttons were put on board the last day against the wishes of one of the partners who feared they would be considered as tainting the whole cargo. And so the United States Court decided. Everything else on board was likely to be wanted in any country whose ports had been blockaded for several months, but none of the articles were such as could be classed as military supplies.
To get the supplies from "The Islands" to the main land required sea-worthy steamers of light draught and great speed. Many such vessels were purchased and sent out under captains who were equal to any emergency, among whom were several former U. S. Navy officers. Some of these steamers had been private yachts, as for example the "Merrimac;" (there were two "Merrimacs"); some were engaged in trade between British ports, as the "Cornubia;" some were taken from the Channel service between England and France, as the "Eugenie;" and some were built for opium smuggling in China. Later in the war, steamers were built expressly for the service.