Such had been the confidences between Northern and Southern merchants, that, for years previous to the war, the former had been in the habit of selling the latter goods on a whole year's credit This was necessitated, in part, from the fact that planters had got behind in their finances, and were compelled to pledge their next year's crops for their present year's supplies; but it was owing much more to the fact that confidence, very great confidence, had become established between the Northern and the Southern merchant. This confidence, and consequent long credit, resulted in the fact that, when the war actually commenced, the merchants and planters of the South owed the merchants and cotton factors of the North the enormous sum of two hundred millions of dollars.
Some part of this debt would probably have been paid had the Southern merchant and planter been left to his own free choice; but the governmental and military authorities of the South, with a view to cripple the North and strengthen themselves, had a law passed so early in the contest as May 21st, 1861, prohibiting all debtors owing money to Northern creditors from paying them, and requiring the payment of the amount into the Confederate treasury, either in specie or treasury notes, for which they were to receive a certificate of the payment bearing interest and redeemable at the close of the war. How much of the sum due the North was ever paid into the Confederate treasury is not known, but probably a very small proportion of the whole amount. The Government having virtually repudiated the claim towards the one to whom the debt was actually due, it was not unnatural that the merchant should repudiate it towards the Government, and when asked the question how much he owed the merchants of New York, Philadelphia, or Boston, his answer was, "Nothing at all," nor was the creditor or any one else present to dispute his answer. In this way at least one hundred and ninety of the two hundred millions due the North escaped payment altogether, while even the ten millions which we suppose to have been paid into the Confederate treasury were absorbed by English capitalists and others like the mist of a summer morning.