144 CONFEDERATE ECONOMIC ACTIVITIES. aid of various railroads. To assist the extension of the Richmond and Danville Railroad southward to connect with the North Carolina railroads at Greensboro, the congress granted $1,000,000 in February of 1862, and other grants were made in aid of railroads in Georgia and Louisiana. In all, the appropriations by the Confederate congress to assist railroad construction amounted to more than $5,000,000. Many of the States supplemented this action by enacting railroad aid laws during the war, such legislation being but the continuation of a policy which had prevailed in many Southern States in the 50's. Military reasons afforded an added argument to railroad promoters. The operation of Southern railroads during the war was marked by progressive deterioration. It was impossible to make needed repairs. The Confederate government took control of the railroad machine shops for military purposes. The existing stock of cast and wrought iron, which might have been used for car wheels and rails, was impressed and used in the manufacture of ordnance and wagon tires, and for other army service. Iron production in the South during the war was too small to afford relief to the railroads. At the close of hostilities Southern railroads were in a condition of physical wreck. In their crippled condition, government business so occupied the railroads that private business had to be neglected. Profitable government contracts enabled the roads to show large profits in currency, and in some cases to increase their dividends. But they made no proper allowance for depreciation, and it took many years to restore them to even tolerable condition. The poor railroad service interfered with the regular carriage and delivery of the mails under the post-office department of the Confederacy. This department was organized by John H. Reagan as postmaster-general with the aid of employees drawn from the Post-Office Department at Washington. They brought with them blank forms and necessary papers used in the dispatch of business. The date fixed for the Confederacy's taking over the postal service within her borders was June 1, 1861. There were initial difficulties, such as the failure to have the Confederate postage stamps ready before October. By the end of 1861 the department had about 8,300 post-offices open. The provisional constitution of the Confederacy required the post-office department to be self-sustaining after March 1, 1863. It seemed a difficult task to comply with this provision, but steps were taken, as soon as possible, to lessen expenses and increase revenues. Payments to the railroads were much reduced. Some mail routes were discontinued, and on others trips were made less frequently. The franking privilege was abolished. Rates on letter postage were raised. A deficit in the CONFEDERATE ECONOMIC ACTIVITIES. postal revenue was turned into a surplus in the last quarter of 1862. The department continued to produce a surplus revenue in the remaining years of the war. Though there were many complaints of the postal administration, it seems to have done better under adverse circumstances than might have been expected. There remains for discussion the matter of the trade relations of the Confederacy with the United States and foreign nations. At the very beginning of the war there was much sentiment in favor of freedom of trade with all nations other than the United States. But there was soon a change, and, during the first year of the war, trade limitation was strongly advocated. It was thought that, by depriving England, France, and other European nations of cotton, their manufacturing interests might be so injuriously affected as to force them. to interfere in behalf of the Confederacy. The government for a time supported this policy, although there were those who urged that the Confederacy ought to enlarge its exports and market its cotton at a good price, in exchange for needed supplies. By 1862 the pressing needs of the army and the insufficiency of internal production had caused the government to reverse its policy and send out all the cotton possible. Bacon, saltpetre, arms, shoes, medicines, etc., were secured in return. Four government steamers were soon engaged in carrying out cotton and bringing in sup 145 plies. The governments of North Carolina and other States also engaged in trade with foreign countries. Numerous importing and exporting companies were formed to carry on blockade running, and a few successful voyages meant extraordinary profits. Frequently private companies and the government made shipments on joint account. In 1864 the Confederate government required the private owners of blockade-running vessels to admit the government to a half share in the freight capacity of their vessels. On the whole, the efforts to send cotton from the South to Europe seemed to have had only limited success, and the reported receipts. in Europe were comparatively small. So far as the government was interested in this trade because of the need for supplies, there were complaints of mismanagement, monopoly, and violation of contract. Pollard an able Southern writer, says that the results of the traffic were far below the necessities of the country, and that through mismanagement great quantities of meat were left to rot at Nassau and Bermuda. In Texas, agents of the Confederate government speculated in cotton which was exported to Mexico. A cotton bureau was established in Texas in 1864. It made contracts with persons who undertook to transport cotton across the boundary into Mexico and to bring back in return supplies for the government. During the war there developed a 146 CONFEDERATE ECONOMIC ACTIVITIES. large trade between the South and 66 As greater advantage to the Confederacy than to the Union. For the South it was a necessary evil; for the North it was an evil and not a necessary one.' The best energies of the Confederacy were devoted to obtaining an adequate supply of arms and ammunition for its soldiers. Here a great measure of success was attained, and the Confederate armies were not defeated because of lack of arms. Less success was achieved in supplying subsistence and clothing, and there was resultant distress and suffering. The military struggle called for all the strength of the South and there was little progress in the arts of peace. Much as was achieved by the Confederacy in the face of great difficulties, there did not come about a complete and effective industrial reorganization of the country.* The best work of reference for the general reader is Professor John Christopher Schwab's The Confederate States of America (New York, 1901). This contains an extensive bibliography of the industrial and financial history of the Confederacy. James Ford Rhodes's History of the United States is also helpful, especially vol. v., chap. xxviii. The South in the Building of the Nation (Richmond, 1909) contains in volume v. (Economic History, 1607-1865) numerous short articles on various phases of the economic history of the Confederacy. Other useful references are Jefferson Davis, The Rise and Fall of the Confederate Government; E. A. Pollard, The Lost Cause (New York, 1866); W. L. Fleming, Civil War and Reconstruction in Alabama (New York, 1905); Confederate Military History (12 vols., Atlanta, 1899); W. F. McCaleb, The Organization of the Post Office Department of the Confederacy, in American Historical Review, vol. xii., pp. 66-74; Official Records: A Compilation of the War of the Rebellion, series i.-iv. (Washington, 1880 GLOOM IN THE SOUTH. 147 CHAPTER XI. 1862. THE MERRIMAC AND MONITOR: THE SIEGE OF YORKTOWN. Gloom in the South over the fall of Donelson — Davis' inaugural address — His proclamation of martial law Jackson's operations in the Shenandoah Valley Johnston's retreat Destruction of the Cumberland and Congress by the Merrimac - The battle between the Monitor and Merrimac - The battle of Kernstown The commencement of McClellan's forward movement The battle at Lee's Mills- - The siege and evacuation of Yorktown. The fall of Fort Donelson gave the South a taste of the bitterness of defeat which the North had experienced after Bull Run. None appreciated the magnitude of the disaster better than Albert Sidney Johnston who wrote to Davis, March 17: "The blow was most disastrous and without remedy.''* When Nashville was evacuated the people were seized with panic, and disorder, turbulence, and rapine ensued. At Richmond all was consternation. Loud complaints were heard against the management of the campaign, and Davis at once ordered Floyd and Pillow to be relieved from command. Though much pressure was brought to bear on Davis to remove Johnston, he steadily refused. February 22 was the day appointed for the provisional government to give place to the permanent government of 1901); statutes of the Confederate States; State statutes; reports of Confederate cabinet and other officers; Southern newspapers. Exact citations of original sources, many of which are not generally accessible to readers, are to be found in the bibliography appended to Professor Schwab's Confederate States of America. * Official Records, vol. viii., p. 260. the Confederacy and for the inauguration of its President and Vice-President. When Davis delivered his inaugural address every heart was gloomy at the news of the defeats suffered by the Confederate army, and this dejection was reflected in Davis' address: "At the darkest hour of our struggle, the provisional gives place to the permanent government. After a series of successes and victories which covered our arms with glory we have recently met with serious disasters. But in the heart of a people resolved to be free these disasters tend but to stimulate to increased resistance. With humble gratitude and adoration, acknowledging the Providence which has SO visibly protected the Confederacy during its brief but eventful career, to Thee, Oh, God! I trustingly commit myself and prayerfully invoke Thy blessing on my country and its cause." * * 148 DAVIS' PROCLAMATION OF MARTIAL LAW. In his message to the Confederate Congress Davis admitted that " events have demonstrated that the government had attempted more than it had power successfully to achieve. Hence, in the effort to protect, by our arms, the whole territory of the Confederate States, seaboard and inland, we have been so exposed as recently to encounter serious disasters." His allusion was to the losses of Fort Donelson, Roanoke Island, etc., but not deeming it possible "that anything so insane as a persistent attempt to subjugate these States could be made" he did not disguise the strong probability "that the war would be continued through a series of years. The Confederates stood adversity no better than the Federals. On February 27 a secret session of the Confederate Congress passed an act authorizing Davis to proclaim martial law. On March 1, therefore, he issued his proclamation to that effect, covering the city of Richmond and the adjoining county to the distance of 10 miles, and declared the suspension of the privilege of the writ of habeas corpus.* This at first pleased the lawabiding citizens of the community, but their delight was shortlived. General Winder, to whom was delegated practically unlimited power, prohibited the distillation of spiritous liquors and ordered the dram shops closed. But he did not use his arbitrary power with discretion. Extraordinary arrests of responsible citizens were * Mrs. Davis, Life of Davis, vol. ii., General p. 185. made, a vexatious passport system was established, and the independence of the press was much curtailed. Winder's police was composed largely of disreputable men and his rule became a positive tyranny. He was responsible to no one but Davis, who sustained him, but finally public opinion asserted itself so strongly that, on April 19, the Confederate Congress modified the law under which these extraordinary powers had been exercised.* Such were the conditions in Richmond when the Federal army began its advance toward the South. In the meantime, the Confederate armies had been exceedingly active. Early in January, General Jackson left Winchester and advanced northward toward Hancock, about 40 miles distant. He drove out four companies of Union troops at Bathe and then demanded the surrender of Hancock, which General Frederick W. Lander refused. Some desultory firing was engaged in by both sides, but Jackson soon moved westwardly while Lander prepared to cross into Virginia. Colonel Dunning at Romney attacked the enemy stationed at Blue's Gap, 16 miles distant on the road to Winchester, and routed them completely. Lander joined Benjamin F. Kelley at Cumberland and went thence to Romney, but finding that Jackson had nearly surrounded him with a large force, he marched all night to Springfield. Subsequently Moorfield was captured and an attack |