"The Emperor of the French," wrote Mr. Benjamin to Mr. Slidell, "has determined to conquer and hold Mexico as a colony, and is desirous of interposing a weak power between his new colony and the Confederate States, in order that he may feel secure against interference with his designs on Mexico.... The evidence thus afforded of a disposition on the part of France to seize on this crisis of our fate as her occasion for the promotion of selfish interests, and this too after the assurances of friendly disposition, or, at worst, impartial neutrality, which you have received from the leading public men of France, cannot but awaken solicitude."[103]
The French consuls at Galveston and Richmond were dismissed by Jeff Davis, but that did not outwardly ruffle the temper of the Emperor, nor stop the cotton loan, as will presently be seen. The Rebel congressmen looked upon Slidell's scheme with distrust, but the bill was eventually passed in secret session. The finances of the Confederacy were going to wreck. There were heavy debts in Europe, and, unless the bills were promptly paid, there would be an end of supplies. England was suffering for cotton, and the time had come for the successful negotiation of a loan, based on cotton, with great apparent advantages to the subscribers. The mill-owners of Manchester were ready to enter upon any speculation which would start their machinery; the aristocracy would subscribe out of sympathy for the slaveholders; the Liverpool shippers would take stock, as it would give employment to their blockade-runners; while the unusual risks and great chances of profit would make it attractive to the multitude with whom the Derby is the whitest day of the year.
Mr. Slidell had made the acquaintance of Baron Ermile d'Erlanger of Paris, a Jewish banker, who had a branch house in Frankfort conducted by his brother, Raphael d'Erlanger. This firm was recommended by Slidell as a suitable agency for bringing out the loan, and the contract was given them by Mr. Memminger. D'Erlanger began preparations for putting it on the market in February, 1863. He desired to issue it in England, France, Holland, and Germany at the same time, to bring to the Confederacy the financial support of Europe. The considerations were political as well as financial. He found some difficulty, however, in obtaining English agents. The Barings and Rothschilds stood aloof. He offered the London management to Messrs. John H. Gilliat & Co., but that firm declined having anything to do with it. It was offered to other bankers, but refused. He found willing agents at last in Messrs. John Henry Schroeder & Co., and the firm of Messrs. Lawrence, Son, and Pearce. In Liverpool Messrs. Frazer, Trenholm, & Co. had been acting as agents of the Confederacy, and the management was placed in their hands. Schroeder's agents in Amsterdam managed it there, while D'Erlanger's branch house in Frankfort brought it out in that city. D'Erlanger himself manipulated it in Paris.
D'Erlanger and Mr. Beer, of his firm, visited England, and arranged matters with Mason and Spence, and with Frazer, Trenholm, & Co., all of whom were acting as agents of the Confederacy. A special agent had been appointed by the Rebel government to take charge of the loan,—General C. J. McRae,—who was on his way from Richmond to Paris; but as the needs of the Confederacy were urgent, the loan was opened before his arrival.
The support of the press was secured,—all but two or three papers being brought, through the agency of Mr. De Leon, Mr. Mason, and Mr. Spence, to praise the Confederacy, cry down the Union, and urge recognition by France and England as the surest way to put an end to the war.
The correspondence in my possession between the parties opens on the 1st of March. Mr. Spence, sitting in his parlor in the Burlington Hotel, Old Burlington Street, London, writes to Baron d'Erlanger, who is in Paris, asking for a copy of the contract.
D'Erlanger did not place a very high estimate on the ability of Mr. Spence as a financial manager; but as he was the correspondent of the Times, and commercial agent of the Confederacy, thought best not to offend him. Spence, on the other hand, saw an opportunity to make money. A week later, on the 6th of March, he wrote thus to D'Erlanger:—
"You said something in the last interview of £50,000 of the stock. If it had occurred to you to put down to me that quantity at the gross price of seventy-seven, I should be disposed to consider it, looking to the advantage to all concerned of having a common interest."
As the loan was issued at 90, this proposal of Mr. Spence to take it at 77,—giving him a margin of 13 per cent under the contract price,—was, in the language of bankers, "a shave" for his services as correspondent of the Times,—a transaction upon which more light will be thrown further on in this history.
The loan was put upon the market on the 19th of March. Fifteen per cent was to be paid at the time of subscribing. The stock was limited to three million pounds sterling ($15,000,000); but so desirous were Englishmen to take it, the applications were for £9,000,000 ($45,000,000).