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,
Hon. William H. Seward, Secretary of State, &c.