In less than one week, no one will be publicly celebrating the sesquicentennial of one of the oddest events in American history: General Grant’s expulsion of the Jews from his military district on December 17, 1862.
Jonathan D. Sarna, who teaches history at Brandeis University, has written a book on this event, one which gets no space in high school and college textbooks on American history: When General Grant Expelled the Jews (2012).
In the weeks prior to Lincoln’s issuing of the Emancipation Proclamation, which emancipated no slaves, General Grant grew weary of Jews who violated the government’s price controls on cotton. He wrote a letter to C. P. Wolcott, the Assistant Secretary of War, dated December 17, 1862.
I have long since believed that in spite of all the vigilance that can be infused into Post Commanders, that the Specie regulations of the Treasury Dept. have been violated, and that mostly by Jews and other unprincipled traders. So well satisfied of this have I been at this that I instructed the Commdg Officer at Columbus [Kentucky] to refuse all permits to Jews to come south, and frequently have had them expelled from the Dept. [of the Tennessee]. But they come in with their Carpet sacks in spite of all that can be done to prevent it. The Jews seem to be a privileged class that can travel any where. They will land at any wood yard or landing on the river and make their way through the country. If not permitted to buy Cotton themselves they will act as agents for someone else who will be at a Military post, with a Treasury permit to receive Cotton and pay for it in Treasury notes which the Jew will buy up at an agreed rate, paying gold.There is but one way that I know of to reach this case. That is for Government to buy all the Cotton at a fixed rate and send it to Cairo, St Louis, or some other point to be sold. Then all traders, they are a curse to the Army, might be expelled..
I mean, what can you expect from people who had decided that fiat money issued by Congress — greenbacks — was not as good as gold? Just because the greenbacks traded at a discount to gold’s price was not proof that they were not as good as gold. No, sir. It was the fault of “unprincipled traders,” who in some way — no one is quite sure — colluded with one another, thereby driving the price of greenbacks down.
These people refused to let the government buy cotton at a fixed price. They bid up the price and bought it out from under the military. Can you imagine anyone doing such a thing?
So, Grant decided to nip this in the bud.
General Order Number 11, December 17, 1862
1. The Jews, as a class, violating every regulation of trade established by the Treasury Department, and also Department orders, are hereby expelled from the Department.
2. Within twenty-four hours from the receipt of this order by Post Commanders, they will see that all of this class of people are furnished with passes and required to leave, and anyone returning after such notification, will be arrested and held in confinement until an opportunity occurs of sending them out as prisoners, unless furnished with permits from these headquarters.
3. No permits will be given these people to visit headquarters for the purpose of making personal application for trade permits.
The Wikipedia article on this order goes into considerable detail on the background of this order.
On November 9, 1862, Grant sent an order to Major-General Stephen A. Hurlbut: “Refuse all permits to come south of Jackson for the present. The Israelites especially should be kept out.” The following day he instructed General Joseph Dana Webster: “Give orders to all the conductors on the [rail]road that no Jews are to be permitted to travel on the railroad southward from any point. They may go north and be encouraged in it; but they are such an intolerable nuisance that the department must be purged of them.”In a letter to General William Tecumseh Sherman, Grant wrote that his policy was occasioned “in consequence of the total disregard and evasion of orders by Jews.”Grant tightened restrictions to try to reduce the illegal trade. On December 8, 1862, he issued General Order No. 2, mandating that “cotton-speculators, Jews and other Vagrants having not honest means of support, except trading upon the miseries of their Country … will leave in twenty-four hours or they will be sent to duty in the trenches.”
Grant was not alone in his disgust for Jews “as a class,” who continued to seek out ways to satisfy free market demand in cotton. His colleague, William Tecumseh Sherman, had spotted the same practices. In a letter from Union-occupied Memphis, July 30, 1862; he wrote:
I found so many Jews and speculators here trading in cotton, and secessionists had become so open in refusing anything but gold, that I have felt myself bound to stop it. The gold can have but one use — the purchase of arms and ammunition. . . . Of course, I have respected all permits by yourself or the Secretary of the Treasury, but in these new cases, I have stopped it.
Gold had lots of uses, both north and south of the Mason-Dixon line. Both domestic currencies sold at a discount to gold. Residents on both sides recognized that gold was sound money and fiat money was not.
Grant’s order was enforced.
The order went into immediate effect; Army officers ordered Jewish traders and their families in Holly Springs, Oxford, Mississippi, and Paducah, Kentucky to leave the territory. Grant may not have intended such results; his headquarters expressed no objection to the continued presence of Jewish sutlers, as opposed to cotton traders. But, the wording of the order addressed all Jews, regardless of occupation, and it was implemented accordingly.
There were about 150,000 Jews in the United States.
Immediately, a group of Jews in Kentucky sent a telegram to Lincoln. Other Jews did, too. In December, the Kentucky group sent a delegation to Washington. They met with Lincoln on January 3. He told General Halleck to have Grant repeal the order. Grant complied. He revoked it on January 17.
Jews, as specialists in the market, saw profit opportunities in the discounting of fiat money. In sophisticated markets, this is designated as arbitrage. It means buying low and selling high. Jews bought and sold for sound money, giving up fiat money in exchange. For this, the military authorities despised these entrepreneurs.
The South’s politicians had similar views. The issue was the same: cotton. The South, in the greatest bonehead move in the history of the Confederacy, had imposed an embargo on cotton exports. This order came on November 17, 1861. The South’s politicians thought they could force Great Britain to recognize the Confederacy if the South stopped exporting cotton. They knew this would bankrupt cotton goods manufacturing firms. But British manufacturers had been stockpiling cotton, expecting the war. Then they started importing cotton from India, Egypt, and Brazil. The embargo tactic failed. It was allowed to lapse by the summer of 1862.
There is a scene in Gone With the Wind where Rhett Butler returns Scarlett’s gold wedding ring. Rhett was a blockade runner. But what the fans never knew was that Rhett and his peers were initially running two blockades if they were running cotton: the Union’s blockade on the ocean and the Confederacy’s on land.
Jews were involved in this trade, and they were hated for it by the bonehead politicians who had voted for this law.
If I knew how to use Photoshop, I would get a photo of Clark Gable in his Rhett Butler clothes, and paste a yarmulke on his head. That might get the idea across. What Rhett Butler fans forget is that Rhett was a black marketeer. That was why he had the money that Scarlett wanted to marry. (When I think of Scarlett and Rhett, I always visualize this. It is fixed in my memory.)
What was really going on in the North in 1862? A form of “cotton-running.”
Cotton also spawned a series of federal regulations during the war. The North needed cotton for its textile mills, and it wanted to deprive the South of its financing power. Therefore, federal permits issued by the Treasury Department were required to purchase cotton in the Confederate states. The system was rife with corruption, particularly in the Mississippi Valley. Confederate cotton that was subject to confiscation by the North could not be distinguished from legitimate cotton grown by planters loyal to the Union. Cotton could be purchased for as little as 12 to 20 cents a pound, transported to New York for 4 cents a pound, and sold for up to $1.89 a pound. One observer noted that the “mania for sudden fortunes in cotton” meant that “Every [Union] colonel, captain, or quartermaster is in secret partnership with some operator in cotton.”
The federal government was trying to buy low in the South (by price ceilings) and sell high in the North. It was theft, pure and simple. Military officers were cashing in on the deal. Northern citizens wanted in on the deal. This included Jews. The military deeply resented this intrusion into their economic territory. So, Grant and Sherman singled Jews out as the visible representatives of the competing trade.
This incident is representative of the resentment that middlemen who have been granted favors by the civil government show toward “unpatriotic” outsiders who attempt to squeeze into a controlled market by means of price competition. This reduces the profits of the favored few — “the chosen.”
For a defense of how Jewish businessmen view money and business, which upsets liberal intellectuals, whether Jews or gentiles, read Rabbi Daniel Lapin’s book, Thou Shall Prosper: Ten Commandments for Making Money (2002). Commandment 1: “Believe in the Dignity and Morality of Business.” The other nine are subordinate to this one.