The South African
Military History Society

Die Suid-Afrikaanse Krygshistoriese Vereniging

The Liverpool Spy Ring - and a fleet sunk by diplomacy

by Marjorie Dean

Most of us associate Liverpool, a northern English port city on the River Mersey facing out into the Irish Sea, with a soccer club that has a spectator stand named after a major battle in the Boer War, with the music of the Beatles, and possibly a very ugly building with two stonking great stone birds on top of it! However, during the American Civil War, fought between, 1861 and 1865, Liverpool was a field of Civil War conflict just as important as the major battle sites we all know about. Who won or lost in Liverpool was an important factor in deciding who won or lost in America. The whole story of how the Confederates tried to build up supplies of armed ships, arms and ammunition could keep us here fora very long time, but tonight I want to look at just one facet of the hugely complex operations that went on.

To understand why Liverpool was important to the American Civil War, we have to take a step back, and see what had happened in North America during the previous century and a half. There had been several wars fought on North American soil, including one referred to variously as the American War of Independence/American Revolutionary War. The eighteenth century was by and large, characterized in the Western hemisphere by European Imperial Wars, that spread their tentacles around the world. In very broad terms, the nations of northern Europe, mainly France and Britain, were battling it out in both America and India. It's a lot less disruptive to your own people to fight your wars thousands of miles away in somebody else's back yard!

By the mid 19th century, North America itself was divided, as Julius Caesar once so memorably put it, into three parts. (Mexico was considered to be Central America.) Canada was British-controlled and a possible back door to the United States, even if half its population spoke French, but a bit of a backwater, and not really worth bothering about too much, despite the war of 1813. The Southern states of the USA were also rather backward economically, dependant on a slave labour system to run the plantations of cotton, rice, sugar and tobacco, that were the backbone of their society. The South was emotionally and economically attached to Britain and France, which were the chief market for its goods. And it would be, from the start, the weaker protagonist in the coming Civil War struggle.

Then there was the North, what became the Union States, an emerging and booming economy, with plenty of European immigrants to develop the land, and set up the new industrial society that would come to dominate North America and make it a world superpower. The Northerners saw the Southern states as a real drag on their development into a truly independent nation, mostly polyglot European, but not particularly attached to Europe. The American Civil War can be seen as the one which established America just where it wanted to be. When World Wars 1 and 2 broke out, it took America several years to get involved, and then only when it felt itself threatened. By the end of the 20th century Europe was getting involved in warfare on America's coat tails.

But to our tale .... The Confederates were well aware of their dependence on Britain, and they made spirited attempts to get that country "on their side" even before hostilities officially broke out. They knew there was no chance Britain would get involved in actual fighting, but there was one area in which they thought they could count on the Brits - their Navy. Southern leaders knew they would be vulnerable to blockades; they knew their main markets, especially for cotton, were the Lancashire mills. Britain was a wealthy nation, and they thought they could count on old friend to see them through. One Southern General (Capers) noted that cotton was the great corrupter of the Civil War. "It made more damn rascals on both sides than anything else."

Lancashire mills were dependent on Southern cotton, and much of it was imported through the Liverpool-based Anglo/Confederate shipping and banking company of Fraser Trenholm and Company. They became almost the international banking arm of the Confederacy, as most southern exports of all kinds were channeled through them. The Confederate States of America created a modern naval force within a few years. More than sixty armoured vessels were begun at home; dozens of gunboats were built, and many more river and commercial craft were modified and armed. A vital component in this naval buildup was the willingness of several European nations to sell arms, equipment, and ships to the South.

The Confederacy used a loophole in British law, by contracting with ordinary British, (and later French and Swedish), business houses for ships, acting on behalf of the Confederate government. The vessels were designed as warships but left the building yards with no armament actually fitted. Once at sea under a British merchant captain, the ship would be met by another ship carrying guns, Confederate naval and marine officers, and a large crew. After transfer, the Confederate captain placed the ship under commission and recruited a crew from among both ships' companies. This process avoided restrictions posed by existing British neutrality law, by moving the actual outfitting outside British territory.

The war presented an opportunity to the European powers to intervene - especially in Britain, which deep in the national upper-class consciousness, somehow still regarded America as a "lost colony", and Abe Lincoln as a lucky hick lawyer. Foreign Minister Lord John Russell and Prime Minister Gladstone, felt that the secession of the southern states was "inevitable", and that Britain needed to ensure a successful outcome for the South, to maintain trade. Britain was banking on a divided North America being less of a challenge. Only a month after the outbreak of war, Britain had declared its neutrality and granted the South belligerent status. France, under the ambitious Napoleon III had followed suit. They were preparing to deal with two countries rather than one. Britain's aristocratic ruling class were very definitely for the South, whose ethos they thought they understood - Southerners were, after all, gentlemen!

Washington politicians realised they had to break the strong Confederate relationship with Britain in particular, to make it easier for them to defeat the South. To do this they had to find the right man to send to Britain, they had to have him in Liverpool, which was where the South had its best trade and political connections, and they had to keep it quiet! During the American Civil War, Liverpool was the unofficial home of the Confederate fleet; Liverpool in 1861 was a Confederate city - it even had a Confederate Club, and the unique local economy, dependant on cotton, tobacco and shipping, and with shipbuilding as a major industry, was far away from the political cauldron of London, where matters had to be dealt with in a more orthodox manner.

Liverpool was also by now home to James Bulloch, the Spymaster of the South, who had arrived in May of that year,( but he is altogether another story}, so things started shaping up for a few years of quite amazing espionage and derring-do.

Many factors kept the South from acquiring all of the ships that it was offered - or the vessels it most desired. Inexperienced diplomats, disorganization, widespread European popular opposition to slavery, uncertain credit, weak central economic planning, and competition from other ship buyers all prevented ships from reaching Confederate hands. But the greatest cause of the overall Confederate failure in Europe was the strenuous activity of the United States Department of State, particularly the consuls, a small group of dedicated government employees working abroad.

The man chosen by Washington to appoint in Liverpool was seemingly an unlikely choice - a 41 year old New Jersey Quaker lawyer named Thomas Haines Dudley. He was appointed as American Consul in Liverpool, a post he held from November 1861 to autumn 1872. Dudley had played a significant role in getting Abe Lincoln into the White House, and this plum, if potentially demanding, job was his reward. His boss, the US Minister to London, what today we would call an Ambassador, was Charles Francis Adams, but it was not long before Dudley established himself as the de facto head of Northern Intelligence in Britain. He was an ardent and active abolitionist, a career diplomat, and was to prove an excellent spymaster.

The South played almost immediately into his hands by licensing privateers, whereupon the North imposed a coastal blockade. And the South had not reckoned on the fervour and moral outrage of Middle England, British middle class abolitionists who had managed to get slavery abolished in their own country and its colonies in 1833. By the 1860's the political power of the British industrial middle class was rising rapidly. And by the middle of 1862, the shortage of cotton for Lancashire mills was beginning to take effect.

On his arrival in Liverpool, Dudley found himself in the middle of a crisis. A British ship, the Trent had been intercepted by the Northern blockade. On board were two Confederate diplomats, en route to France to buy ships. They were removed as "contraband", and ended up in jail in Boston. This was a clear violation of international law as it then stood. Britain demanded an apology - and sent troops to Canada. Much fuss, and the jailed diplomats were released. But Liverpool was still a confederate stronghold, and the South had already managed to get warships on the stocks at local shipyards. Dudley wrote that "the people of this place ... seem to be becoming every day more and more enlisted in the service of the Confederacy."

Dudley's first move was to get information about all warships under construction for the Confederacy, and find out what ships had been chartered as privateers. To do this he set up a network of spies, mostly shipyard workers, and a few Northern sympathizers. This was quite a usual practice during the Civil War, for diplomats of both sides stationed in Europe. Consuls in Europe utilized a range of informants that included abolitionists, dockyard thugs, prostitutes, shipyard apprentices, members of the clergy, watermen, dock masters, unemployed mariners, and Lloyd's Register inspectors. (Among the most valuable materials gathered were "intercepted letters and papers" given, purchased, and stolen by consuls and their agents. Union Consuls gathered and collated all sorts of information in reports to Washington and to each other, including their estimates of the value and trustworthiness of various sources of information.) They usually sent reports containing intelligence information back to Lincoln's right hand man, Secretary Seward in Washington, who distributed it where needed. Much of the resulting evidence of un-neutral acts was passed on to Minister Adams in London, who then remonstrated officially with the British government, the most frequent offender. Dudley employed professional private detectives and paid informers, and also worked closely with local police. It did not take long to get the information he wanted, relay it back to Washington, and this resulted in the capture of many of these ships by the northern navy.

However Dudley did not have things all his own way. He found himself up against the Confederate spy boss in Britain, the aforementioned James Dunwoody Bulloch. Bulloch was just as efficient and determined as Dudley, and his job was to get ships for the Confederates. Dudley was under orders to stop him, but to begin with Liverpool was Bulloch's town. The spy war was on!

In Britain, Lord Palmerston was now Prime minister, and his government had by now hastily reinstated the Foreign Enlistment Act of 1819. This prohibited British nationals from enlistment in foreign armies, or from "fitting out and equipping" vessels in Britain for war purposes - unless approved by government. And British ships could not violate the blockade of any nation which was not at war with Britain. However, the wording was, in the typical British way, perhaps rather deliberately, vague, and it had been honoured more in the breach than in the observance.

Dudley had found out that a steam-powered gunboat was under construction in a Liverpool shipyard, destined for the Confederate navy. All the details were sent to Washington. So Dudley's first serious diplomatic task was to get Palmerston and his government to enforce their own law. That, however was not at all straightforward, and Dudley and Adams found themselves mired in the complexities of the British legal and parliamentary system. Various government departments had different responsibilities, including the customs collector at Liverpool- who turned out eventually to have been a Confederate agent all during the duration of the war! The ship, the Greta, was allowed to escape, unarmed, with a British crew. As such it arrived in the British West Indies, and despite loud protestations from Washington, was released, whereupon it was met by a southern ship, armed, and loaded with munitions, being then renamed the Florida. Sailing under the Confederate flag, it had a long and successful career hunting Northern ships. One up to the South!

Dudley's spy network learned of another ship being built. This was the "Enrica", more famous as the "Alabama", and despite a long and hard fought legal duel, between Dudley on one side and Bulloch and the British on the other, she also escaped. She sailed under the command of a champion of slavery, one Raphael Semmes. Another Confederate triumph! These two ships wreaked havoc among Union shipping. But now Dudley had uncovered just how Confederate ships were getting away; he even had a spy on board the Alabama.

He knew his key weapon against the South was the enforcement of the British Foreign Enlistment Act, and began the battle to enforce this, as the keels of two much more formidable warships had by now been laid down. They were being built in the famous Lairds shipyards, as Vessels 294 and 295. Bulloch had, in July 1862, signed a contract with Lairds to build in their Birkenhead yards, two ironclad, steam-powered warships for the Confederates, with more firepower and armour than anything the Union side yet had, at a cost of 93,750 each. The deal was signed as if between the shipyard and a private merchant, with the two ships being ostensibly "merchant men". For armament, both ships had a pair of revolving turrets, each of which was to house two large bore guns. But the vessel's most ominous features were the protruding massive "rams", made of solid iron, which jutted out 7 feet beyond the prow and would easily hole the Union's older wooden ships. The plan was that these would be used to break the Northern blockade, sail up the Potomac to Washington, and destroy the Federal Navy Yard at Portsmouth, New Hampshire. Following long and secret negotiations between Bulloch and the Laird brothers, it was finally agreed that two vessels were to be constructed and delivered by April 1863. Despite the fact that no ordnance was to be fitted to either vessel, while both ships were under construction their true purpose must have been painfully obvious to even the most ignorant bystander.

Constructed side by side, vessels no. 294 and 295 were of the design now referred to as Monitors. Despite the fact that this type of design was now being used more and more commonly by the Union, these ships were to be the next generation of ironclad. Designated as "rams", they were designed for both strength and speed. Each had a length of 230 feet, a beam of 42 feet, and a fully loaded draught of 15 feet. The deck was designed to be a mere 6 feet above the water line. The ship's outer surfaces were teak over iron, finished with armour plate to a depth of 5.5 inches. Quite literally, providing they did not stray into deep water, they were set to become the most powerful battle squadron as yet seen on any ocean. Understandably, Federal observers in Birkenhead became more than a little unsettled at the prospect.

We have to remember that international telegraphy was in its infancy, and communications were, at best, slow. Mail travelled on scheduled steamship routes. This method limited both Union and Confederate communications severely, requiring a minimum of about three weeks for a reply across the Atlantic and limited the frequency of trans-Atlantic messages to about two or three times a week, each taking over a week to reach Washington via New York. The letters had then to be read, copied, and passed on to the Navy Department and then to the relevant blockading fleets. Letters to the Confederate leadership in Richmond took longer, going on British steamers by way of Halifax, Havana, Nassau, or Bermuda.

Some consular stations used the telegraph for important messages to speed the process, but they might be intercepted or copied en route on commercial telegraph services. Coded messages for sensitive information became common. Despite its utility, the expense of telegraph communication led the Union State Department to severely limit its use. Consuls also sometimes communicated directly with the Union Navy when time was too short for information to be transmitted through Washington. On several occasions Samuel Whiting, the consul in Nassau, sped communications by hiring a swift pilot schooner to carry messages directly to the naval station at Key West, but his entreaties to the State Department failed to produce a despatch boat for his use.

The Confederates also had a smaller ship on the stocks in Birkenhead, a raider named the Alexandra. Dudley's spies provided him with all the details, and he sent them off to Washington, leading to his first success. Alexandra was built by William C. Miller as a gift to the Confederacy from their "bankers", Fraser Trenholm & Company. As such she would have joined a few other Confederate vessels built as contributions to the war effort by British citizens, and not part of the regular procurement programme. Consul Dudley gathered information directly, hired experienced legal counsel, and prepared a case based on his experience of the British legal system. Minister Adams used Dudley's information to force the British government to bring court proceedings that, while failing to seize the ship, ultimately so delayed Alexandra that the gunboat was never placed in service. A complicated legal argument, proving that the Alexandra was, in fact, a warship, resulted in it being detained by the board of Customs on April 4, 1863. The information provided by Dudley's spy ring was well used to put together a strong campaign in Britain against the South.

And by now the North was beginning to get the upper hand on the battlefields.

The Alexandra case and its resulting newspaper coverage also brought considerable attention from a wider public to Confederate operations going on in Great Britain, and to the inadequate British neutrality laws. This attention forced the government to take decisive action to enforce neutral behaviour upon its citizens during later crises: policy prevailed over law. The loss of the gunboat did little real damage to Confederate plans, but the legal precedent and close attention devoted to Confederate purchasing permanently hindered Southern procurement not only in Britain but in Europe.

The intended use of the Lairds Rams could not be hidden or misdirected. Due to their ram bows, the ships were dangerous weapons platforms even before guns were mounted. In locations around Europe, Union consuls gathered depositions and other evidence sufficient to prove the Rams' connection with the Confederate government. In Liverpool, Dudley dogged Bulloch, employing private detectives, sympathetic sea captains, knowledgeable attorneys, and Confederate turncoats. He obtained copies of Confederate correspondence and internal Laird documents to gain knowledge of Bulloch's every move. The Union's London consul, Freeman H. Morse, managed to induce a young London mechanic to get a job in the Laird shipyards with a promise of a recommendation to a U.S. shipbuilder. (The boy's mother eventually found out and stopped the spying by threatening to expose him and the U.S. government's role in his activities.) In London, Minister Adams once again ably presented Dudley's evidence and explained the U.S. government's view that release of the ironclad rams might be considered an Act of War.

But work on the Laird rams was still continuing, so Dudley's intelligence network alerted both British and American sympathizers to the danger. This was not difficult as both the Florida and the Alabama were in full cry on the high seas. Now the Union Congress reacted - by authorizing President Lincoln in March 1863 to create Northern privateers. At last British shipping was under threat.

A few weeks later, Dudley's Liverpool operations were discreetly increased - he now had Washington's full official and financial backing. A two-man diplomatic mission arrived in London. Some US$l0 million was allocated in government bonds to be used as security for a loan of 1 million from the British bank Baring Brothers to purchase secretly any warships being built for the South in any shipyard in Britain. Ambassador Adams was kept in the dark about the mission's true purpose. Dudley, however knew exactly what was going on, and even managed to get a bit more cash to increase his own spy network. However the secret leaked out, and the true facts of the American delegation were published in the London Times. So the project was abandoned, but Dudley now got far more support from Washington than ever before, being given almost unlimited power to operate in Liverpool and the north of England. The Emancipation proclamation however, had changed attitudes in England, and public pressure on Palmerston to enforce neutrality laws against the Southern States increased. The Foreign Enlistment Act was debated again in parliament early in 1863, and the Alabama story was raked up again. But the South was losing popular support.

So Bulloch went off to France, where he hoped the South would find a more sympathetic government. He tried to arrange that the Rams would technically become the property of the Egyptian government, as El Tousson and El Monassir. They had been launched and were being fitted out for sea in Liverpool's Albert Dock, while the finishing touches prior to launch had been made at Lairds. However the scheme was unmasked and Napoleon III backed down in the face of Union threats.

On September 5, Ambassador Adams sent a note to Lord Russell declaring that if the British government allowed the Rams to escape "it would be superfluous for me to point out to your lordship that this is war." The Americans held their breath, and awaited a reply - which came from Lord Palmerston. He said the matter was still under consideration, which Dudley took to mean the British government was about to back down. Adams agreed. Russell was looking for a way to save face.

From Washington, Secretary Seward coordinated the action by mail and telegraph to stop the Rams' delivery. In Britain, both Rams were seized before completion to prevent them from slipping out of the country.

Seriously under pressure from the threat of war with the Union, on October 8, Russell ordered the seizure of the first Ram, which was now ready to sail. The cabinet approved his decision after the fact, and the ship was detained. On the night of Thursday October 8th 1863, the Royal Navy warship HMS Goshawk dropped anchor near to the El Tousson, while H MS Liverpool did likewise near to the dock still containing the El Monassir. Two days later on October 10th, both vessels were officially impounded by British Customs. So as to prevent a repetition of a similar set of events that had preceded the clandestine sailing of the CSS Alabama when she too had been technically impounded, Royal Navy personnel were put aboard the two ironclads.

Caught in an awkward gap between domestic law and foreign policy, the British government ultimately "bought" the laird Rams itself. Following their seizure, the British Government tried to placate the Confederates, (just in case the now seemingly inevitable outcome of the war proved to be wrong) by compensating them to the tune of 180,000. Both vessels were eventually turned over to the Royal Navy, and commissioned as HMS Scorpion and HMS Wivern. They were never used in the role for which they had been designed, and proved to be poor ocean-going vessels. (Both ended up being scrapped - in the United States.) But their construction did lead to a major change in British warship building design, and sparked a string of events that would lead to the emergence of the Dreadnought series of vessels some forty years later.

Brilliant cooperation between the three main branches of the State Department had prevented two potentially dangerous warships from reaching the Confederate navy. The threat of war between Britain and the Union had been averted. Subsequent Union victories on the battlefield meant that foreign intervention on the side of the Confederacy became increasingly unlikely.

Dudley's spy network was so efficient that nothing the Confederates did in Britain escaped his notice. He had perfected the art of covert operations, and because he operated in Liverpool, was able to keep the whole operation separate from the activities of the London legation, which could have been embarrassing for both Adams and Lincoln. Not only did Dudley spy on the Confederates, he spied on his own spies to ensure he had no double agents. In true James Bond style, he went out himself, incognito, prowled the dockyards and shipyards and investigated Confederate disinformation attempts.

Dudley also used his diplomatic status to openly advocate his cause and disseminate Union propaganda. By late 1862, the stoppage of the supply of cotton from the South to Britain and France was being felt in British industrial cities, and unemployment was rising. This situation led to much debate in political circles. After the Union defeat at the second Battle of Bull Run / Manassas in August 1862, Palmerston, Russell and Gladstone felt it was time to intervene. However, the wily Lincoln waited until after the Union victory at Antietam in September 1862 to issue his Emancipation Proclamation. As James McPherson puts it in his seminal book on the War, " Lincoln had embraced emancipation both as a way to weaken the Confederacy by depriving it of slave labour, and as a sweeping expansion of Union war aims ... the North would fight to give the Union a 'new birth liberty'." He even organized black regiments to "mark the transformation of a war to preserve the union into a revolution to overthrow the old order". Slavery was already a lost cause in Europe, and Lincoln would use that fact most adroitly.

Over the following months British public opinion turned against the South, although it did little to change the mindset of the political elite, who were very afraid of a slave insurrection followed by a race war in America. Prime Minister Palmerston introduced a proposal to recognize the South, with the French, in November 1862. The Cabinet turned it down, partly as a result of an intense propaganda campaign waged by Dudley and Adams in England, in which they published Northern pamphlets and sent them to every Member of Parliament.

Meanwhile the Florida and Alabama continued their depredations at sea, until the Alabama was sunk by the USS Kearsage off the coast of France on June 19 1864. The Florida was captured on October 4 1864 in Brazil by the US warship Wachussett. There were more Confederate ships allowed to escape from the east coast of England in the last year of the war, but they could do little to affect the final outcome. British courts overturned on technical grounds an earlier decision to detain the Alexandra, but in Scotland the Confederate ironclads Pampero and Warrior were prevented from leaving the Clyde.

Back in Liverpool, Dudley had interviews with captains of ships sunk by the Alabama and Florida, and built up a huge dossier of information, to be used for claims against the British government after the war was over. The claims were finally presented to an international tribunal meeting in Geneva on December 15 1871. Six month later, the British government agreed to a settlement of the Alabama claims for US$15,5 million as settlement for the damage done to Union shipping by a ship built in Britain.

Did Dudley's painstaking and meticulous fact-finding and spy ring make a difference? Almost certainly it kept Britain from officially backing the South, along with France. The South was on its own, and in many ways its fate was decided, according to American historian Philip Oren van Stern, 'on the high seas and in the foreign ministries of Europe'. The support it had relied on from overseas did not come, and it lost the war. The new post-war country of the United States of America emerged to become the dominant power of the following century.

And what happened to Dudley? He stayed on a consul in Liverpool until 1872, although his health had been broken by the strain of his wartime work. But his knowledge of Confederate assets in Britain was too valuable for the Americans to lose. After the battles have been fought, come the money men - as ever! Dudley claimed all Confederate ships that had sought shelter in British ports, and sold off all the Confederate assets he could lay his hands on. He sued for and won, Southern cotton that had been stockpiled in England, and was instrumental in winning the aforementioned drawn-out Alabama compensation case in Geneva.

Bad relations between Britain and the USA continued for some years, especially over Canadian issues and with flames fanned by Irish Fenians. Minister Adams remained as Ambassador until April 1868. The outbreak of the Franco-Prussian war forced Britain to seek an accommodation with the United States, and the Treaty of Washington was signed on May 8 1871, with ways to deal with all outstanding matters through diplomatic and legal arbitration - which took place in Geneva, as outlined already.

Dudley left his post in Liverpool with great honour. He returned to New Jersey, and built a large house near his boyhood home in Camden, became a prominent member of the New Jersey bar and carried on his political support of the Republican Party. He entertained President Grant at his new home and became a member of the new American corporate elite. He was involved in the development of railways and mines, served on the boards of many companies, including the People's Gaslight Company of New Jersey and was the first vice president of the American Protective Tariff League. He never forgave the British for their collusion with the confederacy. He died on the morning of April 15 1893, of a massive heart attack, arriving at Broad Street Station in Philadelphia. His home, Dudley Grange, and his estate were left to his hometown. The house became the public library, but burned down in 1980. The estate is now a national park.

And what of his adversary Bulloch? He had chased around France and the Far East still trying to get ships for the Confederate Navy, but by the time the war was drawing to a conclusion that was a well nigh impossible task. After the war, Bulloch remained in Liverpool, where he lived with his daughter and son in law. He remained connected with maritime activities and became director of the Liverpool Nautical College. In 1883, he published his memoirs, "The Secret Service of the Confederate States in Europe" or "How the Confederate Cruisers Were Equipped." He lived to see his nephew, Theodore Roosevelt, become Vice President, but died in Liverpool in January 1901, eight months before Theodore Roosevelt became President following the assassination of President McKinley. He left most of his estate to his famous nephew.

And Lincoln? He was assassinated in Ford's Theater in Washington in April 1865. His assassin was John Wilkes Booth, a Shakespearean actor, whose father, also an actor, called Junius Booth, was born in .... Liverpool! It's also worth noting that the first shot of the Civil War was fired by a cannon made at Lydia Anne Street, Liverpool. And the very last act of the war was Captain Waddell of the CCS Shenandoah, walking up the steps of Liverpool Town Hall surrendering his vessel to the Lord Mayor, after sailing 'home' from Alaska to surrender.

Coincidence is a strange thing.

Curtain raiser address to SAMHS Jhb branch in June 2014

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