first of a series of "produce loans." The Treasury was authorized
to issue eight percent bonds, to fall due in twenty years, and
to sell them for specie or to exchange them for produce or
manufactured articles. In the course of the remaining months of
1861 there were exchanged for these bonds great quantities of
produce including some 400,000 bales of cotton.

In spite of the distress of the planters, however, the illusion
of King Cotton's power does not seem to have been seriously
impaired during 1861. In fact, strange as it now seems, the frame
of mind of the leaders appears to have been proof, that year,
against alarm over the blockade. For two reasons, the Confederacy
regarded the blockade at first as a blessing in disguise. It was
counted on to act as a protective tariff in stimulating
manufactures; and at the same time the South expected
interruption of the flow of cotton towards Europe to make England
feel her dependence upon the Confederacy. In this way there would
be exerted an economic coercion which would compel intervention.
Such reasoning lay behind a law passed in May forbidding the
export of cotton except through the seaports of the Confederacy.
Similar laws were enacted by the States. During the summer, many
cotton factors joined in advising the planters to hold their
cotton until the blockade broke down. In the autumn, the Governor
of Louisiana forbade the export of cotton from New Orleans. So
unshakeable was the illusion in 1861, that King Cotton had
England in his grip! The illusion died hard. Throughout 1862, and
even in 1863, the newspapers published appeals to the planters to
give up growing cotton for a time, and even to destroy what they
had, so as to coerce the obdurate Englishmen.