Reply #115: It's a loan of money capital. You're playing word games.

[Hannah Bell]

"It may appear somewhat startling that the Confederates should be able to borrow money in
Europe while the Federal Government has been unable to obtain a shilling from that usually
liberal and enterprising quarter. But the ... risk ... of never being paid at all, in case the
South should be subdued and re-annexed ... is so slight that, of itself, it need not deter any
man from sharing in an 8 per cent loan."

(The Economist, March 21, 1863, p. 309)


In March 1863, the Southern Confederacy floated a £3,000,000 loan issue in Europe. This loan is
often called the “Erlanger Loan” after its underwriter, Emile Erlanger and Company of Paris. The list of subscribers included British members of parliament and peers of the realm, two editors of The Times and other notables (New York Times, December 9, 1865).1 The offering was five times over-subscribed and John Slidell, Confederate Commissioner in France, enthused at this apparent “financial recognition of our independence, emanating from a class proverbially cautious and little given to be influenced by sentiment or sympathy.”2 The 8% yield referred to by The Economist (March 21, 1863) derived from coupon payments of 7% paid semiannually combined with an offering price set 10% below the bonds’ face value.3

In order for the holder to be sure of obtaining the cheap cotton, the Confederacy had to either win its struggle for independence or at least force the North to sue for peace. While there was some hope that the Union government might honour these bonds even if the Confederacy were defeated, the considerable risk that they would not made the bonds highly sensitive to news of the progress of the U.S. Civil War.5