Black Market

The underground economy—or black market, to use the term coined after World War I to describe illegal commodity exchange—often thrives during wartime as governments impose tighter restrictions, attempting to proscribe certain items or to limit trade between one side and the other. The U.S. Civil War was no exception.

The laissez-faire ideas that prevailed in the nineteenth century kept political leaders of the Union and the Confederacy from introducing regulations on consumer consumption of liquor and other substances. Despite taxes on virtually all commodities, the Union did not experience severe shortages or exorbitant prices during the war, and never imposed widespread rationing on its citizenry. Consequently, few Northerners ever encountered the underground economy.

In the South, however, the region's lack of industry and manufacturing, a poor transportation and distribution system, the Union blockade, disruptions caused by the Union army's penetration, and the Confederacy's own economic policies resulted in shortages of everything from shoes, leather, food, and salt to military arms and ammunition. As the war wore on, Southerners faced runaway inflation, widespread shortages, and, for some, the real possibility of starvation. Southern women, especially those left behind by Confederate soldiers, demanded government action. An observer of a riot in Richmond, Virginia, watched as crowds of mostly female Southerners armed with "clubs, axes, brooms, etc.," rushed "frantically up and down the street, crying for bread," and raided prisons, warehouses, and grocers for food in response to sky-high prices and government inaction (Scioto Gazette, October 25, 1865). Similar events also were reported in Richmond, Virginia; Mobile, Alabama; and Augusta, Georgia. Confederate states and cities sometimes responded with price controls or antimonopoly laws, which almost never succeeded.

In Richmond, for example, General John Winder (1800-1865) instituted price controls in spring 1862, but farmers and fishermen stopped selling their products at the stipulated prices, and the controls were rescinded within a month. Some merchants were punished if enough people complained that their prices had far exceeded the prescribed limit, or if they sold inferior provisions. In Mobile, Alabama, a trader who was convicted of violating the city's price controls was fined and jailed for three months. A Richmond butcher named Louis Frick was charged with selling "filthy and unsound meat" when one of his customers broke open a sausage Frick had sold him to discover "a number of puppy's claws," according to an account from the Richmond Examiner (reprinted in the Cleveland Daily Herald, October 3, 1863).

Probably the most widespread and profitable black-market activities involved the "contraband trade" with the enemy, and illegal speculation in cotton; these two sometimes were closely linked. Civilians in areas between the Union and Confederate armies often traded with the enemy. The Official Records of the War of the Rebellion note that in all areas of the South where Union forces penetrated, military officers complained of civilians engaged in illegal trade (U.S. War Department 1995). Southerners who found themselves in Union-occupied areas often continued to support the Confederacy by selling salt, coffee, shoes, leather, food, weapons, and ammunition to Confederate guerrillas, regular Confederate army units, or civilians.

In 1864, for example, the Eleventh Wisconsin Infantry surprised a boatload of men and women carrying supplies of coffee, salt, and a chest full of merchandise from Union-occupied Louisiana to outlying Confederate forces. In December of the same year the colonel of the Third Minnesota Infantry reported that between Memphis and rural Arkansas "an extensive contraband trade is carried on… at enormous profits (such as a bale of cotton for a barrel of salt) to the parties at Memphis engaged in it," and concluded his report with a list of recently captured articles that included "10 barrels salt, 1 barrel pork, one-half barrel molasses" (U.S. War Department 1995, Vol. 51, p. 990). Union soldiers on garrison duty in occupied territory spent much of their time stopping illegal trade.

The Lincoln administration recognized fairly early in the war that the United States needed Southern cotton to supply Northern textile mills and to export to Great Britain. To restore the flow of cotton after secession, the administration devised a system overseen by Treasury Secretary Salmon P. Chase (1808-1873) to license individuals to trade Northern goods for Southern cotton and other agricultural products in areas that came under the Union flag. Unfortunately, as cotton prices skyrocketed, the temptations became too great for many soldiers, officers, and civilians, and corruption flourished. Unlicensed speculators flooded into areas controlled by the Union military, trading supplies or Union gold to Southerners for cotton. Jewish merchants were singled out by military officers for their participation in the illegal cotton trade. In late 1862 Ulysses S. Grant banned all Jewish traders from his theater of operations.

Soldiers often made fortunes trading or seizing cotton and selling it at a premium—often using government ships or wagons to transport it to markets in Memphis or New Orleans. The practice became so widespread among the military in the Mississippi River Valley that Lincoln appointed a special commission headed by General Irvin McDowell (1818-1885) to investigate. The commission exonerated General S. R. Curtis of using his position to obtain and sell cotton in violation of regulations, but the testimony confirmed the existence of a thriving and extremely profitable black market in cotton and supplies. Captain S. N. Wood of the Sixth Missouri Cavalry, for instance, admitted to making $20,000 in cotton speculation (Chattanooga Daily Gazette, July 10, 1864). The commission's final report was never made public.

In 1862 William T. Sherman (1820-1891) argued that the legal and illegal trades in cotton, supplies, and gold were prolonging the war: The "secessionists" who traded cotton to Northern speculators "had become so open in refusing anything but gold…Without money…they cannot get arms and ammunition of the English colonies; and without salt they cannot make bacon and salt beef. We cannot carry on war and trade with a people at the same time" (U.S. War Department 1995, Vol. 17, pp. 140–141). Despite the efforts of Sherman and other officials to curb illegal trade, where large profits or dire necessity existed, the underground economy continued to flourish throughout the Civil War.

BIBLIOGRAPHY

Chattanooga Daily Gazette, July 10, 1864.

Cleveland Daily Herald, October 3, 1863.

Cole, Garold L. Civil War Eyewitness: An Annotated Bibliography of Books and Articles, 1955-1986. Columbia: University of South Carolina Press, 1988.

Coulter, E. Merton. The Confederate States of America, 1861-1865: A History of the South. Vol. 7. Baton Rouge: Louisiana State University Press, 1962.

Fite, Emerson David. Social and Industrial Conditions in the North during the Civil War. New York: Macmillan, 1910.

Freehling, William W. The South vs. the South: How Anti-Confederate Southerners Shaped the Course of the Civil War. New York: Oxford University Press, 2002.

Gallman, J. Matthew. The Civil War Chronicle. New York: Gramercy, 2003.

Massey, Mary Elizabeth. Ersatz in the Confederacy: Shortages and Substitutes on the Southern Homefront. Columbia: University of South Carolina Press, 1993.

McPherson, James M. Battle Cry of Freedom: The Civil War Era. New York: Oxford University Press, 2003.

O'Connor, Thomas H. "Lincoln and the Cotton Trade." Civil War History 7, no. 1 (1961): 20-35.

Ramsdell, Charles. Behind the Lines in the Southern Confederacy. Baton Rouge: Louisiana State University Press, 1997.

Scioto Gazette, October 25, 1865.

Smith, George Winston, and Charles Judah. Life in the North during the Civil War: A Source History. Albuquerque: University of New Mexico Press, 1966.

Speyer, Ronald Jeffrey. "The McDowell Commission: February—July, 1863." Ph.D. diss., St. John's University, 1974.

U.S. War Department. War of the Rebellion Official Records of the Union and Confederate Armies. Series I. Wilmington, NC: Broadfoot Publishing, 1985.

Robert S. Shelton