In 1860, the states that would secede and form the Confederacy had a near monopoly on the world's supply of raw cotton fiber – they produced about 80 percent of the world's cotton, and raw cotton represented roughly 50 percent of the value of goods and produce exported from the United States.
At the same time, Britain was the world's largest producer of cotton cloth and cotton goods, making it the largest consumer of cotton fiber, followed by France.
In these facts lie the origin of the Confederates' "King Cotton Diplomacy", the undeclared Confederate program to use their control of the cotton supply to extort the powers of Europe into recognizing the Confederacy's independence. By withholding their cotton, the Confederates expected to create a cotton famine in Britain and France, that would shut cotton mills, put thousands of millworkers out of work and created an internal economic crisis that the powers would attempt to solve by using diplomatic or military means to intervene in the Civil War and restore their supply of cotton.
Although the Civil War was perceived at the cause of a cotton famine in Europe, a curious twist is that a bumper crop in 1860 along with the developing political disturbance in the United States resulting from the presidential election had caused cotton mills to buy larger than usual supplies of raw cotton. At the same time, overproduction had produced excess inventories of cloth and finished cotton goods that had sated world demand – mills started to shut down since it did not make economic sense to produce more goods when large inventories of just such goods remained on hand. These conditions were in the process of creating severe economic dislocations in Europe's cotton industries when the Civil War started in April 1861, by which time the 1860 cotton crop had been sold, and the 1861 crop had just been planted and would not be harvested until the fall.
The Federals imposed a naval blockade that was difficult to enforce at first because the Federal Navy lacked the ships for the job, but the Federals quickly increased the size of their fleets from dozens to hundreds of vessels. Little cotton came out of the Confederacy due not so much to the Federal blockade but principally because the stocks remained were withheld from the international market.
Notwithstanding the gap between actual and perceived causes, the King Cotton Diplomacy came close to succeeding. In the second half of 1862 France indicated her willingness to join with Britain to intervene in the Civil War in America, nominally for humanitarian reasons but undoubtedly for reasons of domestic and international self-interest. In late 1861, Britain, France and Spain invaded Mexico for the purpose of forcing the republican government under Benito Juarez to repay Mexico's international debts, which were in arrears. When it emerged that France had an ulterior motive of replacing Mexico's republican government with a monarchy, Britain and Spain withdrew.
France maintained an active military presence in Mexico throughout the Civil War. In 1823, President James Monroe had declared that the United States would regard as a hostile act the attempt of any European power to reassert its authority over any territory in the Americas. With the United States divided by a civil war, it was restrained from interfering with France's adventure in Mexico. Moreover, If the Confederates sustained their claim of independence, and the former United States was permanently divided in two, neither resulting nation would possess the potential power of the prior undivided whole. If Confederate independence was obtained with the aid, even nominal, of France, the Confederacy as the immediate northern neighbor of Mexico, were less likely to be hostile to a French sponsored monarch in Mexico
The French proposal to intervene in the American Civil War was favored by some members of the British cabinet where it was discussed at length. In 1862 the Civil War had grown larger and bloodier with enormous battles of the Peninsular Campaign, Shiloh and Antietam. President Lincoln had issued the Preliminary Emancipation Proclamation. It was criticized in Britain – at best and correctly – as the offer of a corrupt bargain that proposed to end slavery but offered to relent if a quick peace was achieved and – at worst and not unreasonably – as an indication of Federal desperation that threatened to incite servile and racial warfare in the American south.
However well intentioned the stated humanitarian purpose of the intervention, the reality was that it might well lead to war with the Federals. Even if the result of an intervention was to relieve the cotton famine in Britain, the cost of such a war would far exceed the cost of feeding the poor and unemployed. In Britain the wisdom of doing nothing ultimately prevailed.
The Confederates sugar coated their diplomacy by only asking for recognition of their independence, probably because it seemed like very little to ask and, therefore, very easy to give. Britain had been very quick to recognize the Confederates as a belligerent power engaged in a war, but they refrained from a recognition of independence. The Federals had blustered about the former, but the British action was correct as a matter of international law as it existed at the time. Though an insurgency, the Confederacy appeared to be a viable proto-nation with the means of carrying on the war. Whether it would be successful in the war and achieve its independence remained to be seen.
The Federals threatened war against Britain if she recognized Confederate independence, and in this the Federals were correct – international law maintained that premature recognition of an insurgent's independence was a legitimate reason for war. The facts determined what was premature, and history provided examples. In 1832 the European powers recognized the independence of Greece from the Ottoman Empire in a treaty by which they committed to guarantee independence – although the Empire had not abandoned its effort to reestablish its dominion had not ceased, the willingness of the guarantors to use military force effectively put an end to the issue. Also during the nineteenth century, the powers of Europe recognized the independence of the former colonies of Spain in South America, Spain having for all practical purposes ceased to assert dominion.
(The Monroe Doctrine, published in 1823, was related to the latter situation. At the time, the United States had recognized the independence of the nations of South America, although she might have been premature in doing so – none of the other nations of the world had acted in kind. Indeed, certain nations in Europe proposed to discuss how the claims of Spain might be reasserted. Britain proposed to the United States that they join in opposing any such conference or attempt, although Britain refused to commit to join in recognizing independence. The Monroe Doctrine was a unilateral statement by the United States that it would regard as an unfriendly act any interference by a European power with the independence of a nation in the western hemisphere. It was a declaration of policy that was said to have enhanced the international reputation of the United States if only by showing that the United States did not feel the need to partner with Britain in the matter.)
What France proposed, and what Britain considered, was not in the first instance "recognition" but "intervention" – the neutral powers proposed to request the belligerent powers to agree to a ceasefire and to engage in mediation. Although the proposal had the appearance of neutral evenhandedness, it favored the Confederates – the Federals had to defeat the Confederates outright to win the Civil War, while the Confederates had only to hold on until the fighting stopped. A ceasefire stopped the fighting, and a mediation was unlikely to result in a total Confederate surrender. If the offer of ceasefire and mediation were refused, Britain and France proposed to recognize the Confederacy and act militarily to lift the Federal naval blockade of the Confederate coast. If mediation was attempted and the effort had failed, the ceasefire interval would have permitted to Confederates to rebuild their forces and prolong the war when it resumed. Neither outcome was acceptable to the Federals.
At the end of 1862, when Britain was considering the French proposal, the Federals remained committed to restoring the union, and the conditions then prevailing would have justified the Federals to declare war against them, although for them to have done so would have served the Confederates well.
Just as the Confederate's King Cotton diplomacy sugarcoated the request of recognition by appearing not to ask for military assistance, so also the intervention proposal sugarcoated the request by not appearing to give recognition. But under the circumstances, the intervention proposal was certain to fail and thereby beget recognition, and under the circumstances recognition was apt to beget war.
In the end, despite the almost irresistible to do something some politicians (and the public) feel in the face of the war or insurrection in another's country, the view prevailed in Britain's government that feeding their own unemployed – champagne and venison – would be cheaper than the cost of the threatened war.
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