In the meantime this same recourse to cotton had occurred to the authorities at Richmond and a plan formulated by which cotton should be purchased by the Government, stored, and certificates issued to be sold abroad, the purchaser being assured of “all facilities of shipment.”  Spence was to be the authorized agent for the sale of these “cotton certificates,” but before any reached him various special agents of the Confederacy had arrived in England by December, 1862, with such certificates in their possession and had disposed of some of them, calling them “cotton warrants.”  The difficulties which might arise from separate action in the market were at once perceived and following a conference with Mason all cotton obligations were turned to Fraser, Trenholm & Company.  Spence now had in his hands the “money bonds” but no further attempt was made to dispose of these since the “cotton warrants” were considered a better means of raising funds.

It is no doubt true that since all of these efforts involved a governmental guarantee the various “certificates” or “warrants” partook of the nature of a government bond.  Yet up to this point the Richmond authorities, after the first failure to sell “money bonds” abroad were not keen to attempt anything that could be stamped as a foreign “government loan.”  Their idea was rather that a certain part of the produce of the South was being set aside as the property of those who in England should extend credit to the South.  The sole purpose of these earlier operations was to provide funds for Southern agents.  By July, 1862, Bullock had exhausted his earlier credit of a million dollars.  The L60,000 loan secured through Lindsay then tided over an emergency demand and this had been followed by a development on similar lines of the “cotton certificates” and “warrants” which by December, 1862, had secured, through Spence’s agency, an additional million dollars or thereabouts.  Mason was strongly recommending further expansion of this method and had the utmost confidence in Spence.  Now, however, there was broached to the authorities in Richmond a proposal for the definite floating in Europe of a specified “cotton loan.”

This proposal came through Slidell at Paris and was made by the well-established firm of Erlanger & Company.  First approached by this company in September, 1862, Slidell consulted Mason but found the latter strongly committed to his own plans with Spence[1051].  But Slidell persisted and Mason gave way[1052].  Representatives of Erlanger proceeded to Richmond and proposed a loan of twenty-five million dollars; they were surprised to find the Confederate Government disinclined to the idea of a foreign loan, and the final agreement, cut to fifteen millions, was largely made because of the argument advanced that as a result powerful influences would thus be brought to the support of the South[1053].  The contract was signed at Richmond, January 28, 1863, and legalized by a secret