Gen. Ulysses S. Grant took command of the Department of Tennessee on Oct. 25, 1862, and immediately started planning to capture Vicksburg, Miss., the principal remaining Confederate stronghold on the Mississippi River. In doing so, he came face to face with the dangerous consequences of a surprising fact of the Civil War: the semi-illicit trade in cotton between North and South. Northern merchants paid well, and often in gold, for the Southern crop; the Confederates then used that gold to buy new weapons, sometimes from clandestine suppliers in Northern or occupied cities like Cincinnati and Memphis. Grant soon found himself confronting rebel troops sustained by such trade, including cavalry armed with modern breech-loading carbines.
It's well known that British textile manufacturers relied heavily on Southern cotton for their raw materials, but the New England mills ranked second. Consequently, by the autumn of 1862 Northern “cotton speculators” were regularly infiltrating front lines seeking to acquire feedstock needed in Britain and New England. The year before Lincoln's election, the South accounted for 70 percent of American exports, the great majority of it cotton.