Mr. Dayton to Mr. Seward, March 13, 1863

Mr. Dayton to Mr.
Seward

Sir: From information, received through
different sources, I am inclined to believe that arrangements have been
made with the house of Erlanger & Co., Frankfort, for a loan to the
confederates of £3,000,000, to be secured by a pledge of cotton to an
extent vastly disproportionate to the amount of the loan. This house of
Erlanger is a German Jew house, having its principal place of business
at Frankfort, with branches or agencies at other points, one of which is
here. This branch, I learn, is in charge of the so of the head of the
house at Frankfort. I am informed by Mr. Murphy, our consul general at
Frankfort, that it is said there that the cotton which is to be
hypothecated is to be collected in the interior of the country, or, if
possible, placed in the hands of the French consul at Richmond. If the
latter should be done it would be in the hope, as he truly says, of
dragging the French government into a recognition of the affair, and
making its protection a kind of security for the loan. * * * * * *

I have been somewhat doubtful whether it would be wise, at present, to
speak of these reports to Mr. Drouyn de l’Huys, though, if a favorable
opportunity occur, I shall do so. If the loan should be made, it would
probably be made in the name of the German house, and not quoted on the
French bourse. I understand that no loan can be quoted there without the
authority of this government.

I am, sir, your obedient servant,