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Q. How did the United States's European allies view the possibility of the American Civil War?Lincoln had an advantage over Douglas in the election4 Miller Presidential Election of 1860 by Tyler MillerAbraham Lincoln and the election of 1860Civil War Killed Total Casualties Fatalities Statistics DeadThe Civil War is Not Just For AmericansTL:DR: Most Americans think of the Civil War as a series of battles that mattered most to the U.S. Don H. Doyle’s book, The Cause of All Nations: an International History of the American Civil War shows that it also mattered a great deal worldwide. Europe by prominent intellectuals of the day saw the Civil War as far more than just internal strife between the Confederacy and the Union. They viewed it instead as an epic showdown between democracy and aristocracy. It was a matter of free versus slave labor, where the winners would decide how the capitalist world would progress in tandem with modernity.In many European minds, the United States was a model country to aspire to when thinking about progressive ideas such as liberty, equality, and self-rule. And with the Civil War, the U.S. seemed to offer to the rest of the world a literal battle between those values and rights.Just one week after Abraham Lincoln assumed office on March 4 1861, his Secretary of State William Seward’s initial foreign policy message to the rest of the world contained a firm warning: Any gesture of support to the South that could potentially weaken the Union’s position would be considered an act of war.The Union won the Civil War, Doyle explains, by executing both soft and hard elements of diplomacy with finesse and brilliant strategic thinking.Don H. Doyle’s book, The Cause of All Nations: an International History of the American Civil War, argue that contrary to conventional historical wisdom, the conflict mattered a great deal to Europe and the world at large. Doyle’s narrative takes us through the trajectory of the intellectual and diplomatic international debate that continually evolved as each stage of the Civil War progressed.Doyle turns his attention predominately to the public debate that was happening in Europe by prominent intellectuals of the day. These thinkers, writers and journalists saw the Civil War as far more than just internal strife between the Confederacy and the Union. They viewed it instead as an epic showdown between democracy and aristocracy. It was a matter of free versus slave labour, where the winners would decide how the capitalist world would progress in tandem with modernity.Before 1860 the United States had offered aspiring republicans around the globe a template for how a free, self-governing nation might live in peace and prosperity. And America, according to Doyle, though it was far from perfect, and had many flaws— not least because slavery at that stage was still legal in many states—thus automatically became, in many European minds, a model country to aspire to when thinking about progressive ideas such as liberty, equality, and self-rule. And with the Civil War, the U.S. seemed to offer to the rest of the world a literal battle between those values and rights.The phrase public diplomacy may not have become an official term in the popular press until World War I. But it was during the Civil War that deliberate, state-sponsored programs began attempting to influence the public mind abroad about American foreign policy.Abraham Lincoln - WikipediaJust one week after Abraham Lincoln assumed office on March 4 1861, he sent his Secretary of State, William Seward, a memo suggesting how he might fill what they anticipated to be four key diplomatic posts. Britain and France were crucial. As two leading naval powers in the world, both were heavily dependent on cotton from the South for their textile industries. Spain, despite being a feeble power, had colonies in Cuba and Puerto Rico, and thus remained a dangerous potential ally of the South. Mexico, meanwhile, remained crucial because of its seaports on the Gulf.Seward’s initial foreign policy message to the rest of the world contained a firm warning: Any gesture of support to the South that could potentially weaken the Union’s position would be considered an act of war.William H. Seward - WikipediaThe Union won the Civil War, Doyle explains, by executing both soft and hard elements of diplomacy with finesse and brilliant strategic thinking.Doyle’s greatest asset, as both a historian and writer, is his ability to patiently tell this story with color, verve, and flair, while also weighing in with his own expertise and commentary at crucial periods of the narrative. He explains how the American Civil War is often viewed as a military contest that was decided by major key battles. But propaganda and diplomacy would be equally as important as bombs and bullets in determining which side emerged victorious.For the first crucial months of the conflict, the Confederacy was able to set the terms of the debate by emphasizing its desire for national determination. Thus the story of free trade, and not slavery, became the narrative with which the South would attempt to legitimize its cause: desperately hoping to win the hearts and minds of the chattering classes back in Europe.Confederate President Jefferson DavisThe conflict, they told the wider world, was about the industrial North pushing an issue of protective tariffs, while the agrarian South wanted free trade with the Old World in Europe. To begin with, this seemed like a convincing argument. And momentarily, it looked to most observers that the South would win legal legitimacy as a respected nation of the world in due course.But both sides, Doyle reminds us, began the conflict denying that slavery was the fundamental issue at stake.While the U.S. president and commander in chief of the Union army, Abraham Lincoln, may have always held a deep antipathy to slavery, and even abhorred it on a personal level, it was not convenient for him to express those opinions in public when the war broke out.Lincoln swearing-in at the partially finished U.S. CapitolAnd so in his first inaugural address on March 4, 1861, Lincoln stated that he had no intention to interfere with slavery in those states where it already existed. Such a confusing moral position from the American president left many foreigner intellectuals and thinkers—who feature prominently in this book—with a number of key questions. They began to ask: Was this simply a civil war with a small domestic dispute about tariffs and territory? Or was there, behind the diplomatic quarreling and posturing, a noble issue at stake that really did concern the whole of humanity?However, the South’s fundamental principles regarding slavery had already been set in stone after Alexander H. Stephens, the vice president of the new nation, addressed the issue in his famous Cornerstone Speech in Savannah, Georgia, on March 21 1861. There he openly admitted that slavery was to be tantamount to the Confederacy’s ideology and economic position.Alexander H. Stephens - WikipediaLincoln during the early stage of the war was careful to eschew any passionate pleas about human freedom. Instead, he concentrated on ideas such as universal law, the Constitution, and the power of the Union.But if thousands of soldiers marched to Washington in the spring of 1861 to save the Union, what exactly did the concept they were fighting for mean to each of them, either collectively, or an individual basis?Hugh Brogan in the Penguin History of the USA claims that “this crucial question is seldom asked by American historians, and never answered satisfactorily.”Attempting to properly develop a feasible answer to this complex, but extremely necessary question, is one of the stronger characteristics that Doyle’s narrative possesses.And, as his thesis continually points out, the more intriguing answers actually came from foreigners, many who had never set foot in America themselves.Karl Marx, who was living as an exile in London at the time, wrote that “the struggle between the South and North is one concerned with the system of slavery and the system of free labor. It can only be ended by the victory of one system over the other.”Karl Marx - WikipediaWhile the French intellectual Agénor de Gasparin was the first notable European to publicly declare that, whatever Americans proclaimed about the Civil War, at the heart of it was the greatest moral issue of the 19th century: slavery.Other prominent pro-Union voices from abroad included John Bright, a British Quaker reformer, and Édouard de Laboulaye, an outspoken French republican.Agénor de Gasparin - WikipediaFor these writers and thinkers—whose wide-ranging political opinions fluctuated from far-left radical utopian thinking, to a more centered worldview that respected constitutional monarchies—America, and indeed the Civil War, embodied something greater than just a geographical landscape or territorial squabble. It was an opportunity, Doyle argues, to prominently declare, in an age of revolution, that democracy and the rule of law were concepts worth fighting and dying for.Eventually, in the summer of 1862, partly due to pressure from a diverse range of liberal foreigners who expected America to fight a war of liberty, Lincoln concluded that he must act against slavery to legitimize the Union cause. But it would be as commander of chief of the Union, and not as chief executive, Doyle points out, that Lincoln would proclaim emancipation.Even Marx referred to Lincoln’s September emancipation decree as “the most important document in American history since the establishment of the Union.”Doyle concludes his thesis with great flair and vigor in his penultimate chapter by giving the reader a number of excellent examples about how Lincoln cleverly used the written word to his advantage by speaking about the Civil War in universal terms.This enabled the American president to frame the war not just as a showdown between the Union and the Confederacy, but as a trial of democracy that had immense consequence for the world’s future.At his Gettysburg Address in November 1863, Lincoln used the simple, but extremely effective phrase “any nation so conceived”: thus imbuing America’s war not just with his fellow citizens, but for the entire of mankind.One of the two confirmed photos of Abraham Lincoln (sepia highlight) at Gettysburg, taken about noon, just after he arrived and some three hours before the speech. To Lincoln's right is his bodyguard, Ward Hill Lamon.Lincoln, like Winston Churchill during the Second World War in Britain, had an exceptional ability to craft speeches that crystallized his political rhetoric with a particular style of literary prose that was simultaneously charming, inspiring, heroic, and noble. But we also need to be careful to distinguish between the emotive connotations a politician’s words carry, and their actual significance in the world of Realpolitik. The old cliché that actions speak louder than words seems like the appropriate phrase to pay attention to here.Indeed, it is true that the Union’s triumph in the war sent an optimistic message to all radical reformers and keen democrats on both sides of the Atlantic at the time. Had the Confederacy triumphed, it might have meant, as Doyle suggests, a new birth of slavery, possibly throughout the Americas.But despite Doyle’s book ending on an optimistic high, readers should be warned to treat his narrative with just a slight dose of skepticism.Anyone looking for a more conclusive analysis of how Lincoln’s emancipation act actually played out for blacks in the United States after the war ended will really need to look elsewhere for answers.Doyle does give a brief mention at the start of the book about why the Civil Rights movement in the 1960s follows a direct trajectory from Civil War politics. But not much else follows the one sentence he dedicates to this subject. His failure to explore this in any detail whatsoever left me feeling slightly short-changed and disappointed, particularly considering how well the author firmly cements his argument up until this point of the book.Moreover, it’s common knowledge that blacks obtained far less economic power after emancipation, in the Reconstruction period, than Lincoln had initially foreseen.As John Keegan—who has a slightly less optimistic view on the Reconstruction period than Doyle—correctly points out in his book The American Civil War:The South had been beaten but had not been fundamentally changed. Anti-black feeling was a universal emotion and state localism was more powerful than loyalty to the Union. Almost none of the former Confederate States were under the government of men who accepted Congress’s desire for equality and the untrammelled rule of law.Most readers won’t need reminding just how horrific race relations played out for blacks in the United States in the 90-odd years from the Reconstruction Era to the Civil Rights movement; Jim Crow laws were simply a way of life in Southern states. And a subtle government-legislated system of race-based residential zoning ensured that American cities were continually drawn firmly along lines of color, especially in places like Chicago, New York, Miami, and Los Angeles.If Doyle’s book suffers from one minor flaw it is this: His thesis is severely restricted by his own myopic and optimistic view of American history.For example, he claims that:In the mid-nineteenth century, it appeared to many that the world was moving away from democracy and equality toward repressive government and the expansion of slavery. Far from being pushed off the world’s stage by human progress, slavery, aristocratic rule and imperialism seemed to be finding a new life and aggressive new defenders.Doyle seems to be suggesting here that in the aftermath of the American Civil War a political culture emerged where this all changed: whereby democratic values spread across the Atlantic to the imperial powers back in the Old World.Clearly this was not the case though. Imperialism was alive and kicking for the duration of the 19th century, throughout the Western World. And it got progressively worse. Any suggestion that the outcome of the American Civil War abetted this seems to me slightly naïve to say the least.At the Berlin Conference of 1884/85—the entire African continent was shared piecemeal amongst the imperial powers of Europe. If this isn’t a sign that imperialism was on the rise in the Western World, I really don’t know what is.The conference of BerlinIt’s also worth paying close attention to the common mythology of American democracy, versus the kind of government that was actually envisioned when the republic was founded.America’s Civil War, Doyle tells us in the introductory chapter, “lies at the heart of the story Americans tells themselves about themselves.” And he concludes his book with a rather simplistic narrative that claims the conflict “shook the Atlantic world and decided the fate of slavery and democracy for the vast future that lay ahead.”But if we want to comprehend American history, in all of its complexity, we really do need to steer clear of this feel-good-narrative, and take a more critical approach.In his book The Democracy Project: A History, A Crisis, A Movement , the American anthropologist and radical thinker David Graeber attempts to dissect and analyse how the myth of democracy has firmly maintained political hegemony in the United States for over two centuries now.Graeber claims that neither the Declaration of Independence, nor the American Constitution, embody the democratic values that we are still today led to believe they do in popular political discourse. In fact, the model for the Constitution, says Graeber, was based on an autocratic form of government that dates back to antiquity: the Roman Republic.The Founding Fathers of the United States were very clear about what they were trying to achieve when they founded a Republic: setting up a democratic element of government along with aristocratic and monarchical principles. Where the president is a monarch, and the Senate is the aristocracy.Without understanding these basic fundamental principles that the United States was founded on, there is a danger of getting swept along into a tornado of American history that blinds and distorts. Scholars such as Doyle tend to get caught up in this without even consciously realizing it.It would be vituperative, incorrect, and naïve to deny the importance of the main argument that Doyle presents here, for the most part with extreme clarity, precision and skill: just what a Union win in the Civil War meant for the future of democracy in an international context during the middle of the 19th century.But unless we attempt to figure out exactly what democracy entails—does it simply mean freedom for a white-privileged-property-owning-elite?—then continually celebrating its cause may be a futile and self-defeating task.In an excellent collection of essays, published three years ago, entitled the Short American Century Postmortem—which for the most part are critical, rather than celebratory of American democracy over the 20th century—Andrew J. Bacevich, the book’s editor, speaks in the opening pages about why the task of critically assessing a considerable swath of U.S. history should not be to prop up American self-esteem.Bacevich reminds us that “before history can teach, it must challenge and even discomfit.”If Western historians aren’t able to face up to the grave prejudices that are contained in numerous epochs of American history, or to continually ask the question—just what is it American democracy has bequeathed to its citizens since the foundation of the United States?— grand metaphoric and poetic descriptions about a shining city resting upon a hill of divine global exceptionalism will remain nothing more than empty mawkish, sentimental, and jingoistic drivel.France and the American Civil War - WikipediaTL;DR: The Second French Empire remained officially neutral throughout the American Civil War and never recognized the Confederate States of America.The United States of America warned that recognition would mean war. France was reluctant to act without British collaboration, and the British rejected intervention. Emperor Napoleon III realized that a war with the US without allies "would spell disaster" for France. However, the textile industry needed cotton, and Napoleon had imperial ambitions in Mexico, which could be greatly aided by the Confederacy. At the same time, other French political leaders, such as Foreign Minister Édouard Thouvenel, supported the United States.United Kingdom and the American Civil War - WikipediaTL; DR: The United Kingdom of Great Britain and Ireland and the British Empire remained officially neutral throughout the American Civil War (1861–1865). It legally recognised the status of Confederate States of America, but never recognised it as a nation and neither signed a treaty with it nor exchanged ambassadors.However, top British officials debated intervention in the first 18 months. The elite tended to support the Confederacy, but ordinary people tended to support the United States of America. Large-scale trade continued in both directions, with the Union shipping grain to Britain, and Britain sent manufactured items and munitions. Immigration continued into the US, with Britons volunteering for its army. British trade with the Confederacy fell over 90% from the prewar period, with a small amount of cotton going to Britain and some munitions slipped in by numerous small blockade runners. They were operated and funded by British private interests, were legal under international law, caused no dispute between the US and the UK.The Confederate strategy for securing independence was based largely on the hope of military intervention by Britain and France, which never happened, as it probably would have caused war with the US. A serious diplomatic dispute erupted over the "Trent Affair" in late 1861 but was resolved peacefully after a few months. British intervention was likely only in co-operation with France, which had an imperialistic venture underway in Mexico. By early 1863, intervention was no longer seriously considered, as Britain turned its attention elsewhere, especially toward Russia and Greece.Confederate diplomats James Murray Mason (left, 1798–1871) and John Slidell (right, 1793–1871).A long-term issue was a British shipyard (John Laird and Sons) building two warships for the Confederacy, including the CSS Alabama, over vehement protests from the US. Known as the Alabama Claims, the controversy was resolved after the Civil War when the US was awarded $15.5 million in arbitration by an international tribunal for damages caused by the warships.The fact that British private interests operated blockade runners was not a cause of serious tension. In the end, British involvement did not significantly affect the outcome of the war.The U.S. diplomatic mission headed by Minister Charles Francis Adams, Sr., proved much more successful than the Confederate missions, which were never officially recognized by Britain.Europe and the American Civil WarTL;DR: Considering the course of the war as a whole, it must be said that Northern diplomacy was highly successful and that Southern diplomacy was a flat failure.Singularly enough, the one European country which showed a definite friendship for the Northern government was Czarist Russia.The open recognition, the active aid, the material and financial support which the South needed so greatly were never forthcoming. Europe refused to take a hand in America's quarrel. North and South were left to fight it out between themselves.The ruling classes in England and France sympathized strongly with the Confederacy since the South was, after all, an aristocracy.Neither the British nor the French people would go along with any policy that involved fighting to preserve slavery. But up to the fall of 1862 slavery was not an issue in the war. The Federal government had explicitly declared that it was fighting solely to save the Union.Jefferson Davis had named two distinguished Southerners, James M. Mason of Virginia and John Slidell of Louisiana, as commissioners to represent Confederate interests abroad, Mason in England and Slidell in France. They got out of Charleston, South Carolina, on a blockade-runner at the beginning of October and went via Nassau to Havana, where they took passage for England on the British mail steamer Trent. Precisely at this time U.S.S. San Jacinto was returning to the United States from a long tour of duty along the African coast. Captain Wilkes reasoned, Mason and Sidell were in effect Confederate dispatches, and he had a right to remove them. So on November 8, 1861, he steamed out into the Bahama Channel, fired twice across Trent's bows, sent a boat's crew aboard, collared the Confederate commissioners, and bore them off in triumph to the United States, where they were lodged in Fort Warren, in Boston Harbor. Wilkes was hailed as a national hero. Congress voted him its thanks, and Secretary of the Navy Gideon Welles, ordinarily a most cautious mortal, warmly commended him.But in England there was an uproar which almost brought on a war. The mere notion that Americans could halt a British ship on the high seas and remove lawful passengers was intolerable. Eleven thousand regular troops were sent to Canada, the British fleet was put on a war footing, and a sharp note was dispatched to the United States, demanding surrender of the prisoners and a prompt apology.It was touch and go for a while, because a good many brash Yankees were quite willing to fight the British, and the seizure of the Confederate commissioners had somehow seemed like a great victory. But Lincoln stuck to the policy of one war at a time, and after due deliberation the apology was made and the prisoners were released.During the late spring and early summer of 1862 Lincoln had come to see that he must broaden the base of the war. Union itself was not enough; the undying vitality and drive of Northern antislavery men must be brought into full, vigorous support of the war effort, and to bring this about the Northern government must officially declare itself against slavery via the Emancipation Proclamation.And in Europe the American Civil War had become something in which no western government dared to intervene. The government of Britain, France, or any other nation could play power politics as it chose, as long as the war meant nothing more than a government's attempt to put down a rebellion; but no government that had to pay the least attention to the sentiment of its own people could take sides against a government which was trying to destroy slavery.The Emancipation Proclamation had locked the Confederates in an anachronism which could not survive in the modern world.Along with this there went a much more prosaic material factor. Europe had had several years of short grain crops, and during the Civil War the North exported thousands of tons of grain-grain which could be produced in increasing quantities, despite the wartime manpower shortage, because the new reapers and binders were boosting farm productivity so sharply. Much as Great Britain needed American cotton, just now she needed American wheat even more. In a showdown she was not likely to do anything that would cut off that source of food.All of this did not mean that Secretary Seward had no more problems in his dealings with the world abroad. The recurring headache growing out of the British habit of building ships for the Confederate navy has already been noted.Napoleon III, Emperor of the French, who was a problem all by himself. Napoleon's government in many ways was quite cordial to the Confederates, and in the fall of 1862 Napoleon talked with Slidell and then proposed that France, England, and Russia Join in trying to bring about a six-month armistice. To Slidell the Emperor remarked that if the Northern government rejected this proposal, that might give good reason for recognition and perhaps even for active intervention. His real interest was in Mexico, where he took advantage of the war to create a French puppet state, installing the Hapsburg Maximilian as Emperor of Mexico in direct violation of the Monroe Doctrine.Singularly enough, the one European country which showed a definite friendship for the Northern government was Czarist Russia.Considering the course of the war as a whole, it must be said that Northern diplomacy was highly successful and that Southern diplomacy was a flat failure.The open recognition, the active aid, the material and financial support which the South needed so greatly were never forthcoming. Europe refused to take a hand in America's quarrel. North and South were left to fight it out between themselves.The Civil War (US History)Shotgun's Home of the American Civil WarEurope and the American Civil WarThe war had a direct bearing on the United States' foreign relations and the relations that were most important were those with the two dominant powers of Europe, England and France. Each country was a monarchy, and a monarchy does not ordinarily like to see a rebellion succeed in any land. (The example may prove contagious.) Yet the war had not progressed very far before it was clear that the ruling classes in each of these two countries sympathized strongly with the Confederacy-so strongly that with just a little prodding they might be moved to intervene and bring about Southern independence by force of arms. The South was, after all, an aristocracy, and the fact that it had a broad democratic base was easily overlooked at a distance of three thousand miles. Europe's aristocracies had never been happy about the prodigious success of the Yankee democracy. If the nation now broke into halves, proving that democracy did not contain the stuff of survival, the rulers of Europe would be well pleased.To be sure, the Southern nation was based on the institution of chattel slavery-a completely repugnant anachronism by the middle of the nineteenth century. Neither the British nor the French people would go along with any policy that involved fighting to preserve slavery. But up to the fall of 1862 slavery was not an issue in the war. The Federal government had explicitly declared that it was fighting solely to save the Union. If a Southern emissary wanted to convince Europeans that they could aid the South without thereby aiding slavery, he could prove his case by citing the words of the Federal President and Congress. As far as Europe was concerned, no moral issue was involved; the game of power politics could be played with a clear conscience.So it was played, and the threat of European intervention was real and immediate. Outright war with England nearly took place in the fall of 1861, when a hot-headed US. naval officer, Captain Charles Wilkes, undertook to twist the lion's tail and got more of a reaction than anyone was prepared for.Jefferson Davis had named two distinguished Southerners,James Murray Mason of Virginia and John Slidell of Louisiana, as commissioners to represent Confederate interests abroad, Mason in England and Slidell in France. They got out of Charleston, South Carolina, on a blockade-runner at the beginning of October and went via Nassau to Havana, where they took passage for England on the British mail steamer Trent.James Murray Mason - WikipediaPrecisely at this time U.S.S. San Jacinto was returning to the United States from a long tour of duty along the African coast. She put in at a Cuban port, looking for news of Confederate commerce raiders which were reported to be active in that vicinity, and there her commander, Captain Wilkes, heard about Mason and Slidell. He now worked out a novel interpretation of international law. A nation at war (it was generally agreed) had a right to stop and search a neutral merchant ship if it suspected that ship of carrying the enemy's dispatches. Mason and Slidell, Wilkes reasoned, were in effect Confederate dispatches, and he had a right to remove them. So on November 8, 1861, he steamed out into the Bahama Channel, fired twice across Trent's bows, sent a boat's crew aboard, collared the Confederate commissioners, and bore them off in triumph to the United States, where they were lodged in Fort Warren, in Boston Harbor. Wilkes was hailed as a national hero. Congress voted him its thanks, and Secretary of the Navy Gideon Welles, ordinarily a most cautious mortal, warmly commended him.But in England there was an uproar which almost brought on a war. The mere notion that Americans could halt a British ship on the high seas and remove lawful passengers was intolerable. Eleven thousand regular troops were sent to Canada, the British fleet was put on a war footing, and a sharp note was dispatched to the United States, demanding surrender of the prisoners and a prompt apology.John Slidell - WikipediaIf the general tempo of things had not been so feverish just then, experts on international law might have amused themselves by pointing out that the American and British governments had precisely reversed their traditional policies. In the Napoleonic wars British warships had exercised the right of search and seizure without restraint, stopping American merchant ships on the high seas to remove persons whom they suspected of being British subjects-doing, in fact, exactly what Wilkes had done with a slightly different object. The United States government had protested that this was improper and illegal, and the whole business had helped bring on the War of 1812. Now an American naval officer had done what British naval officers had done half a century earlier, and the British government was protesting in the same way the earlier American government had done. If anyone cared to make anything of it, the situation was somewhat ironic.It was touch and go for a while, because a good many brash Yankees were quite willing to fight the British, and the seizure of the Confederate commissioners had somehow seemed like a great victory. But Lincoln stuck to the policy of one war at a time, and after due deliberation the apology was made and the prisoners were released. The Trent incident was forgotten, and the final note was strangely anticlimactic. The transports bearing the British troops to Canada arrived off the American coast just after the release and apology. Secretary of State Seward offered, a little too graciously, to let the soldiers disembark on American soil for rapid transportation across Maine, but the British coldly rejected this unnecessary courtesy.The Trent affair had been symptomatic. The war had put a heavy strain on relations between the United States and Great Britain, and there would always be danger that some unexpected occurrence would bring on a war. Yet the two countries were fortunate in the character of their diplomats. The American Minister in London was Charles Francis Adams, and the British Minister in Washington was Lord Lyons, and these two had done all they could, in the absence of instructions from their governments, to keep the Trent business from getting out of hand. Even Secretary of State Seward, who earlier had shown a politician's weakness for making votes in America by defying the British, proved supple enough to retreat with good grace from an untenable position; and Earl Russell, the British Foreign Secretary, who had sent a very stiff note, nevertheless phrased it carefully so that Seward could make his retreat without too great difficulty.King Cotton Diplomacy was methods employed by the Confederacy during the war to withhold cotton from Europe to draw them into war,Much more serious was the situation that developed late in the summer of 1862. At that time, as far as any European could see, the Confederacy was beginning to look very much like a winner-a point which James Mason insistently pressed home with British officialdom. The Northern attempt to capture the Confederate capital had failed, Virginia's soil had been cleared of invaders, and in the East and West alike the Confederates were on the offensive. Minister Adams warned Seward that the British government might very soon offer to mediate the difficulty between North and South, which would be a polite but effective way of intimating that in the opinion of Great Britain, the quarrel had gone on long enough and ought to be ended-by giving the South what it wanted. Adams knew what he was talking about. Earl Russell had given Mason no encouragement whatever, but after news of the Second Battle of Bull Pun reached London, he and Lord Palmerston, the Prime Minister, agreed that along in late September or thereabouts there should be a cabinet meeting at which Prime Minister and Foreign Secretary would ask approval of the mediation proposal. (Implicit in all of this was the idea that if the Northern government should refuse to accept mediation, Britain would go ahead and recognize the Confederacy.) With a saving note of caution, Russell and Palmerston concluded not to bring the plan before the cabinet until they got further word about Lee's invasion of the North. If the Federals were beaten, then the proposal would go through; if Lee failed, then it might be well to wait a little longer before taking any action.William Ewart Gladstone - WikipediaOn October 7 the Chancellor of the Exchequer, William Ewart Gladstone , made a notable speech at Newcastle in which he remarked that no matter what one's opinion of slavery might be, facts had to be faced: "There is no doubt that Jefferson Davis and other leaders of the South have made an army; they are making, it appears, a navy; and they have made what is more than either-they have made a nation." He added, "We may anticipate with certainty the success of the Southern States so far as regards their separation from the North."Naturally enough, this raised a sensation. Gladstone explained that he had simply been expressing his own opinion rather than that of the government, and when Earl Russell saw the speech, he wrote Gladstone that he "went beyond the latitude which all speakers must be allowed." His lordship went on to say that he did not think the cabinet was prepared for recognition, but that it would meet very soon to discuss the project.In all of this there was less of actual hostility toward the North than is usually supposed. Palmerston and Russell were prepared to accept an accomplished fact, when and if such a fact became visible; if the Confederacy was definitely going to win, the fact ought to be admitted and the war ought to be ended. But they were not prepared to go further than that. Gladstone might commit his calculated indiscretion, the upper class might continue to hold the Confederates as sentimental favorites, and the London Times might thunder at intervals against the Northern government; but the British government itself tried to be scrupulously correct, and long before the war ended, ardent Southerners were complaining that the government's attitude had been consistently hostile to the Confederacy. Even the business of the British-built cruisers and ironclad rams did not alter this situation. Legally, vessels like the Alabama were simply fast merchant ships, given arms and a warlike character only after they had left English waters, and the government had no legal ground to prevent their construction and delivery. The famous rams themselves were technically built for French purchasers, and even though it was an open secret that they would ultimately go into the Confederate navy, there was never anything solid for the British authorities to put their teeth into. When the British government finally halted the deal and forced the builders to sell the rams to the British navy, it actually stretched the law very substantially. That it did this under a plain threat of war from the United States did not alter the fact that in the end the Confederacy could not get what it desperately wanted from Great Britain.Nor was the United States without active friends in England. Such reformers as John Bright and Richard Cobden spoke up vigorously in support of the Lincoln government, and even when the cotton shortage threw thousands of textile workers out of employment, the British working class remained consistently opposed to the Confederacy. But the decisive factor, in the fall of 1862 and increasingly thereafter, was the Battle of Antietam and what grew out of it.Antietam by itself showed that Lee's invasion was not going to bring that final, conclusive Confederate triumph which had been anticipated. The swift recession of the high Confederate tide was as visible in England as in America, and as the autumn wore away Palmerston and Russell concluded that it would not be advisable to bring the mediation-recognition program before the cabinet.Far more significant than Antietam, however, was the Emancipation Proclamation, which turned out to be one of the strangest and most important state papers ever issued by an American President.During the late spring and early summer of 1862 Lincoln had come to see that he must broaden the base of the war. Union itself was not enough; the undying vitality and drive of Northern antislavery men must be brought into full, vigorous support of the war effort, and to bring this about the Northern government must officially declare itself against slavery.The five page original document, held in the National Archives Building.Lincoln was preparing such a declaration even before McClellan's army left the Virginia Peninsula, but he could not issue it until the North had won a victory. (Seward pointed out that to issue it on the heels of a string of Northern defeats would make it look as if the government were despairingly crying for help rather than making a statement of principle.) Antietam gave Lincoln the victory he had to have, and on September 22 he issued the famous proclamation, the gist of which was that on January 1, 1863, all slaves held in a state or a part of a state which was in rebellion should be "then, thence-forward and forever free."Technically, the proclamation was almost absurd. It proclaimed freedom for all slaves in precisely those areas where the United States could not make its authority effective, and allowed slavery to continue in slave states which remained under Federal control. It was a statement of intent rather than a valid statute, and it was of doubtful legality; Lincoln had issued it as a war measure, basing it on his belief that the President's undefined "war powers" permitted him to do just about anything he chose to do in order to win the war, but the courts might not agree with him. Abolitionists felt that it did not go nearly far enough, and border-state people and many Northern Democrats felt that it went altogether too far. But in the end it changed the whole character of the war and, more than any other single thing, doomed the Confederacy to defeat.The Northern Government now was committed to a broader cause, with deep, mystic overtones; it was fighting for union and for human freedom as well, and the very nature of the Union for which it was fighting would be permanently deepened and enriched. A new meaning was given to Daniel Webster's famous "Liberty and Union, now and forever, one and inseparable"; the great Battle Hymn now rang out as an American Marseillaise, and Northerners who had wondered whether the war was quite worth its terrible cost heard, at last, the notes of the bugle that would never call retreat. A war goal with emotional power as direct and enduring as the Confederacy's own had at last been erected for all men to see.And in Europe the American Civil War had become something in which no western government dared to intervene. The government of Britain, France, or any other nation could play power politics as it chose, as long as the war meant nothing more than a government's attempt to put down a rebellion; but no government that had to pay the least attention to the sentiment of its own people could take sides against a government which was trying to destroy slavery. The British cabinet was never asked to consider the proposition which Palmerston and Russell had been talking about, and after 1862 the chance that Great Britain would decide in favor of the Confederacy became smaller and smaller and presently vanished entirely. The Emancipation Proclamation had locked the Confederates in an anachronism which could not survive in the modern world.Along with this there went a much more prosaic material factor. Europe had had several years of short grain crops, and during the Civil War the North exported thousands of tons of grain-grain which could be produced in increasing quantities, despite the wartime manpower shortage, because the new reapers and binders were boosting farm productivity so sharply. Much as Great Britain needed American cotton, just now she needed American wheat even more. In a showdown she was not likely to do anything that would cut off that source of food.All of this did not mean that Secretary Seward had no more problems in his dealings with the world abroad. The recurring headache growing out of the British habit of building ships for the Confederate navy has already been noted. There was also Napoleon III, Emperor of the French, who was a problem all by himself.Pierre-Paul Pecquet du Bellet, unofficial diplomatic agent of the Confederate States of America in FranceNapoleon's government in many ways was quite cordial to the Confederates, and in the fall of 1862 Napoleon talked with Slidell and then proposed that France, England, and Russia Join in trying to bring about a six-month armistice. To Slidell the Emperor remarked that if the Northern government rejected this proposal, that might give good reason for recognition and perhaps even for active intervention. Neither Britain nor Russia would go along with him, but early in 1863 Napoleon had the French Minister at Washington suggest to Seward that there ought to be a meeting of Northern and Southern representatives to see whether the war might not be brought to a close. Seward politely but firmly rejected this suggestion, and the Congress, much less politely, formally resolved that any foreign government which made such proposals was thereby committing an unfriendly act. Whether Napoleon really expected anything to come of his suggestion is a question; probably he strongly wanted a Southern victory but was afraid to do anything definite without British support. His real interest was in Mexico, where he took advantage of the war to create a French puppet state, installing the Hapsburg Maximilian as Emperor of Mexico in direct violation of the Monroe Doctrine. Propped up by French troops, Maximilian managed to hang on to his shaky throne for several years, and if his control over the country had been firmer, Napoleon would probably have given the Confederacy, from that base, more active support. Shortly after Appomattox the Federal government sent Phil Sheridan and 50,000 veterans to the Mexican border in blunt warning, Seward filed a formal protest against the occupation, and Napoleon withdrew his soldiers. When the French troops left, the Mexicans regained control, and Maximilian was deposed and executed.Napoleon III - WikipediaSingularly enough, the one European country which showed a definite friendship for the Northern government was Czarist Russia. In the fall of 1863 two Russian fleets entered American waters, one in the Atlantic and one in the Pacific. They put into New York and San Francisco harbors and spent the winter there, and the average Northerner expressed both surprise and delight over the visit, assuming that the Russian Czar was taking this means of warning England and France that if they made war in support of the South, he would help the North. Since pure altruism is seldom or never visible in any country's foreign relations, the business was not quite that simple. Russia at the time was in some danger of getting into a war with England and France, for reasons totally unconnected with the Civil War in America; to avoid the risk of having his fleets icebound in Russian ports, the Czar simply had them winter in American harbors. If war should come, they would be admirably placed to raid British and French commerce. For many years most Americans believed that for some inexplicable reason of his own the Czar had sent the fleets simply to show his friendship for America.Considering the course of the war as a whole, it must be said that Northern diplomacy was highly successful and that Southern diplomacy was a flat failure. At the time, most Northerners bitterly resented what they considered the unfriendly attitude of Britain and France, but neither country did much that would give the South any real nourishment. The British commerce raiders were indeed expensive nuisances to the North, and the famous "Alabama claims" after the war were prosecuted with vigor; but cruisers like the Alabama might have ranged the seas for a generation without ever compelling the North to give up the struggle. The open recognition, the active aid, the material and financial support which the South needed so greatly were never forthcoming. Europe refused to take a hand in America's quarrel. North and South were left to fight it out between themselves.Source: The American Heritage New History of the Civil War, (Part of Chapter 6)WarTalk.com - CivilWarWiki.net - WarBetweenTheStatesRadio.comCopyright © 1997 - 2014, The American Civil War Home Page.France and the American Civil War - WikipediaThe Battle of the Kearsarge and the Alabama, by Édouard Manet, depicting the Union victory at the Battle of Cherbourg (1864).The Second French Empire remained officially neutral throughout the American Civil War and never recognized the Confederate States of America . The United States of America warned that recognition would mean war. France was reluctant to act without British collaboration, and the British rejected intervention.Emperor Napoleon III realized that a war with the US without allies "would spell disaster" for France.However, the textile industry needed cotton, and Napoleon had imperial ambitions in Mexico, which could be greatly aided by the Confederacy. At the same time, other French political leaders, such as Foreign Minister Édouard Thouvenel, supported the United States.Public opinionPhilippe and his brother Robert d'Orléans served as officers for the Union.The 22 political newspapers in Paris reflected the range of French public opinion. Their position on the war was determined by their political values regarding democracy, Napoleon III, and their prediction of the ultimate outcome. Issues such as slavery; the Trent affair, which involved Britain; and the economic impact on the French cotton industry did not influence the editors. Their positions on the war determined their responses to such issues.The Confederacy was supported by Conservative supporters of Napoleon III, Bourbon legitimists, and Roman Catholic interests. The Union had the support of republicans and Orléanists (those who wanted a descendant of Louis Philippe on the throne).Between 1861 and 1865, the Union blockade cut off most cotton supplies to French textile mills, causing the famine du coton (cotton famine). Mills in Alsace, Nord-Pas-de-Calais, and Normandy saw prices of cotton double by 1862 and were forced to lay off many workers. As a result, many French industrialists and politicians were wished a quick Confederate victory.Government policyThe French government considered the American war a relatively minor issue while France was engaged in multiple diplomatic endeavors in Europe and around the world. Emperor Napoleon III was interested in Central America for trade and plans of a transoceanic canal. He knew that the US strongly opposed and the Confederacy tolerated his plan to create a new empire in Mexico, where his troops landed in December 1861.William L. Dayton, the American minister to France, met the French Foreign Minister, Édouard Thouvenel, who was pro-Union and was influential in dampening Napoleon’s initial inclination towards diplomatic recognition of Confederate independence. However, Thouvenel resigned from office in 1862. The possibility of war with the US opened up the risk of a war with Prussia like the one in 1870.The Confederate delegate in Paris, John Slidell, was not officially received. However, he made offers to Napoleon III that in exchange for French recognition of the Confederate States and naval help sent to break the blockade, the Confederacy would sell raw cotton to France.Count Walewski and Eugène Rouher agreed with him, but British disapproval and especially the Union capture of New Orleans in spring 1862 led French diplomacy to oppose the plan. In 1864, Napoleon III sent his confidant, the Philadelphian Thomas W. Evans, as an unofficial diplomat to Lincoln and US Secretary of State William H. Seward. Evans convinced Napoleon that Southern defeat was impending.Slidell succeeded in negotiating a loan of $15,000,000 from Frédéric Émile d'Erlanger and other French capitalists. The money was used to buy ironclad warships as well as military supplies that came in by blockade runners.WarshipsIn keeping with its official neutrality, the French government blocked the sale of the ironclad CSS Stonewall prior to delivery to the Confederacy in February 1864 and resold the ship to the Royal Danish Navy, renamed the Stærkodder (after the mythical hero Starkad). The ship left Bordeaux on its shakedown cruise with a Danish crew in June 1864. However, the Danes refused to accept the ship because of price disagreements with the shipbuilder, L'Arman. L'Arman subsequently secretly resold the ship by January 1865 to the Confederacy while it was still at sea.France regained normal diplomatic relations with the US in 1866, and withdrew its troops from Mexico because of the increasing financial drain; Napoleon III's puppet emperor there was subsequently defeated and executed.United Kingdom and the American Civil War - WikipediaThe United Kingdom of Great Britain and Ireland and the British Empire remained officially neutral throughout the American Civil War (1861–1865). It legally recognised the status of Confederate States of America but never recognised it as a nation and neither signed a treaty with it nor exchanged ambassadors. However, top British officials debated intervention in the first 18 months. The elite tended to support the Confederacy, but ordinary people tended to support the United States of America. Large-scale trade continued in both directions, with the Union shipping grain to Britain, and Britain sent manufactured items and munitions. Immigration continued into the US, with Britons volunteering for its army. British trade with the Confederacy fell over 90% from the prewar period, with a small amount of cotton going to Britain and some munitions slipped in by numerous small blockade runners. They were operated and funded by British private interests, were legal under international law, caused no dispute between the US and the UK.The Confederate strategy for securing independence was based largely on the hope of military intervention by Britain and France, which never happened, as it probably would have caused war with the US. A serious diplomatic dispute erupted over the "Trent Affair" in late 1861 but was resolved peacefully after a few months. British intervention was likely only in co-operation with France, which had an imperialistic venture underway in Mexico. By early 1863, intervention was no longer seriously considered, as Britain turned its attention elsewhere, especially toward Russia and Greece.A long-term issue was a British shipyard (John Laird and Sons) building two warships for the Confederacy, including the CSS Alabama, over vehement protests from the US. Known as the Alabama Claims, the controversy was resolved after the Civil War when the US was awarded $15.5 million in arbitration by an international tribunal for damages caused by the warships.The fact that British private interests operated blockade runners was not a cause of serious tension. In the end, British involvement did not significantly affect the outcome of the war.The U.S. diplomatic mission headed by Minister Charles Francis Adams, Sr., proved much more successful than the Confederate missions, which were never officially recognized by Britain.Confederate policiesThe Confederacy, such as President Jefferson Davis, believed from the beginning in "King Cotton": British dependence on cotton for its large textile industry would lead to diplomatic recognition and mediation or military intervention. The Confederates had not sent out agents ahead of time to ascertain if the King Cotton policy would be effective. Instead, by popular demand, not government action, shipments of cotton to Europe were ended in spring 1861. When the Confederate diplomats arrived, they tried to convince British leaders that the US naval blockade was an illegal paper blockade.Jefferson Davis - WikipediaHistorian Charles Hubbard writes:"Davis left foreign policy to others in government and, rather than developing an aggressive diplomatic effort, tended to expect events to accomplish diplomatic objectives. The new president was committed to the notion that cotton would secure recognition and legitimacy from the powers of Europe. The men Davis selected as secretary of state and emissaries to Europe were chosen for political and personal reasons – not for their diplomatic potential. This was due, in part, to the belief that cotton could accomplish the Confederate objectives with little help from Confederate diplomats."Hubbard added that Davis's policy was stubborn and coercive. The King Cotton strategy was resisted by the Europeans. Secretary of War Judah Benjaminand Secretary of the Treasury Christopher Memminger warned that cotton should be immediately exported to build up foreign credits.Union policiesU.S. Secretary of State William H. Seward (c. 1850)British Prime Minister Lord PalmerstonThe Union’s main goal in foreign affairs was to maintain friendly relations and large-scale trade with the world and to prevent any official recognition of the Confederacy by any country, especially Britain. Other concerns included preventing the Confederacy from buying foreign-made warships; gaining European support for policies against slavery; and attracting immigrant laborers, farmers and soldiers. There had been continuous improvement in Anglo-American relations throughout the 1850s. The issues of Oregon, Texas, and the Canada–US border had all been resolved, and trade was brisk. Secretary of State William H. Seward, the primary architect of American foreign policy during the war, intended to maintain the policy principles that had served the country well since the American Revolution: "non-intervention by the United States in the affairs of other countries and resistance to foreign intervention in the affairs of the United States and other countries in this hemisphere."British policiesEven before the war, British Prime Minister Viscount Palmerston urged a policy of neutrality. His international concerns were centred in Europe, where he had to watch both Napoleon III’s ambitions in Europe and Otto von Bismarck's rise in Prussia. During the Civil War, British reactions to American events were shaped by past British policies and their own national interests, both strategically and economically. In the Western Hemisphere, as relations with the United States improved, Britain had become cautious about confronting the US over issues in Central America. As a naval power, Britain had a long record of insisting that neutral nations abide by its blockades, a perspective that led from the earliest days of the war to de facto support for the Union blockade and frustration in the South.Diplomatic observers were suspicious of British motives. The Russian Minister in Washington, Eduard de Stoeckl, noted, "The Cabinet of London is watching attentively the internal dissensions of the Union and awaits the result with an impatience which it has difficulty in disguising.”" De Stoeckl advised his government that Britain would recognize the Confederacy at its earliest opportunity. Cassius Clay, the United States Minister in Russia, stated, "I saw at a glance where the feeling of England was. They hoped for our ruin! They are jealous of our power. They care neither for the South nor the North. They hate both."Lincoln appointed Charles Francis Adams, Sr., as minister to Britain. An important part of his mission was to make clear to the British that the war was strictly an internal insurrection and afforded the Confederacy no rights under international law. Any movement by Britain to recognizing the Confederacy officially would be considered an unfriendly act toward the US. Seward's instructions to Adams included the suggestion that it should be made clear to Britain that a nation with widely-scattered possessions, as well as a homeland that included Scotland and Ireland, should be very wary of "set[ting] a dangerous precedent."Lord Lyons was appointed as the British minister to the United States in April 1859. An Oxford graduate, he had two decades of diplomatic experience before being given the American post. Lyons, like many British leaders, had reservations about Seward and shared them freely in his correspondence, which was widely circulated within the British government.As early as January 7, 1861, well before the Lincoln administration had even assumed office, Lyons wrote to British Foreign Secretary Lord Russell about Seward:I cannot help fearing that he will be a dangerous foreign minister. His view of the relations between the United States and Britain had always been that they are a good material to make political capital of.... I do not think Mr. Seward would contemplate actually going to war with us, but he would be well disposed to play the old game of seeking popularity here by displaying violence toward us.Despite his distrust of Seward, throughout 1861, Lyons maintained a "calm and measured" diplomacy that contributed to a peaceful resolution to the Trent crisis.SlaveryThe Confederate States came into existence after seven of the fifteen slave states seceded because of the election of Republican President Lincoln, whose party committed to the containment of slavery geographically and the weakening of slaveowners' political power. Slavery was the cornerstone of the South's plantation economy, although it was repugnant to the moral sensibilities of most people in Britain, which had abolished slavery in its Empire in 1833. Until the Fall of 1862, the immediate end of slavery was not an issue in the war; in fact, some Union states (Kentucky, Maryland, Missouri, Delaware, and what became West Virginia) allowed slavery. In 1861, Missouri had sought to extradite an escaped slave from Canada to face trial for a murder committed in his flight for which some in Britain falsely believed the punishment was to be burned alive.Lincoln's Emancipation Proclamation, announced in preliminary form in September 1862, made ending slavery an objective of the war and caused European intervention on the side of the South to be unpopular. However, some British leaders expected it would cause a large scale race war that might need foreign intervention. Pro-Southern leaders in Britain then spoke of mediation, which they understood to mean the independence of the Confederacy and the continuation of slavery.Trent AffairOutright war between the United States and United Kingdom was a possibility in the fall of 1861, when a US naval officer, Captain Charles Wilkes, took control of a British mail ship and seized two Confederate diplomats. Confederate President Jefferson Davis had named James M. Mason and John Slidellas commissioners to represent Confederate interests abroad; Mason was en route to England and Slidell to France. They slipped out of Charleston, South Carolina, on a blockade runner at the beginning of October and went via the British Bahamas to Spanish Havana, where they took passage for England on the British mail steamer Trent.USS San Jacinto had put in at a port in Cuba, looking for news of Confederate agents who were reported to be active in that vicinity. Wilkes received word of Mason and Slidell's presence. It was generally then agreed that a nation at war had the right to stop and search a neutral merchant ship if it suspected that ship of carrying the enemy's dispatches. Mason and Slidell, Wilkes reasoned, were in effect Confederate dispatches and so he had the right to remove them. On November 8, 1861, he steamed out into the Bahama Channel, fired twice across the bow of the Trent’, sent a boat's crew aboard, seized the Confederate commissioners, and bore them off in triumph to the US, where they were held prisoner in Boston. Wilkes was hailed as a national hero.The violation of British neutral rights triggered an uproar in Britain. Britain sent 11,000 troops to Canada, the British fleet was put on a war footing, with plans to capture New York City if war broke out, and a sharp note was dispatched to Washington to demand return of the prisoners and an apology. Lincoln, concerned about Britain entering the war, ignored anti-British sentiment and issued what the British interpreted as an apology, without apologizing, and ordered the prisoners to be released.War was unlikely in any event, as the United States was providing Britain with over 40% of its wheat ("corn") imports during the war years, and suspension would have caused severe disruption to its food supply. Britain imported about 25-30% of its grain, and poor crops in 1861 and 1862 in France made Britain even more dependent on shiploads from New York City. Furthermore, British banks and financial institutions in the City of London had financed many projects such as railways in the US. There were fears that war would result in enormous financial losses as investments were lost and loans defaulted on.Britain's shortage of cotton was partially made up by imports from India and Egypt by 1863.The Trent Affair led to the Lyons-Seward Treaty of 1862, an agreement to clamp down hard on the Atlantic slave trade by using the US Navy and the Royal Navy.Possibility of recognizing ConfederacyThe possibility of recognizing the Confederacy came to the fore late in the summer of 1862. At that time, as far as any European could see, the war seemed to be a stalemate. The US attempt to capture the Confederate capital had failed, and in the east and west alike, the Confederates were on the offensive. Charles Francis Adams, Sr., warned Washington that the British government might very soon offer to mediate the difficulty between North and South, which would be a polite but effective way of intimating that in the opinion of Britain, the fight had gone on long enough and should be ended by giving the South what it wanted. Recognition, as Adams warned, risked all-out war with the United States. War would involve an invasion of Canada, a full-scale American attack on British shipping interests worldwide, an end to American grain shipments that were providing a large part of the British food supply, and an end to British sales of machinery and supplies to the US.The British leadership, however, thought that if the Union armies were decisively defeated, the US might soften its position and accept mediation.Earl Russell, British Foreign Secretary, had given Mason no encouragement, but after news of the Second Battle of Bull Run reached London in early September, Palmerston agreed that in late September, there could be a cabinet meeting at which Palmerston and Russell would ask approval of the mediation proposal. Then, Russell and Palmerston decided not to bring the plan before the cabinet until they got further word about Lee's invasion of the North. If the Northerners were beaten, the proposal would go through; if Lee failed, it might be well to wait a little longer before taking any action.The British working-class population, most notably the British cotton workers who suffered the Lancashire Cotton Famine, remained consistently opposed to the Confederacy. A resolution of support was passed by the inhabitants of Manchester and sent to Lincoln. His letter of reply has become famous:I know and deeply deplore the sufferings which the working people of Manchester and in all Europe are called to endure in this crisis. It has been often and studiously represented that the attempt to overthrow this Government which was built on the foundation of human rights, and to substitute for it one which should rest exclusively on the basis of slavery, was likely to obtain the favor of Europe.Through the action of disloyal citizens, the working people of Europe have been subjected to a severe trial for the purpose of forcing their sanction to that attempt. Under the circumstances I cannot but regard your decisive utterances on the question as an instance of sublime Christian heroism which has not been surpassed in any age or in any country. It is indeed an energetic and re-inspiring assurance of the inherent truth and of the ultimate and universal triumph of justice, humanity and freedom.I hail this interchange of sentiments, therefore, as an augury that, whatever else may happen, whatever misfortune may befall your country or my own, the peace and friendship which now exists between the two nations will be, as it shall be my desire to make them, perpetual.—Abraham Lincoln, 19 January 1863There is now a statue of Lincoln in Manchester, with an extract from his letter carved on the plinth.Lincoln became a hero amongst the British working class with progressive views. His portrait, often alongside that of Garibaldi, adorned many parlour walls. One can still be seen in the boyhood home of David Lloyd George, now part of the Lloyd George Museum.The decisive factor, in the fall of 1862 and increasingly thereafter was the Battle of Antietam and what grew out of it. Lee's invasion was a failure at Antietam, and he barely escaped back to Virginia. It was now obvious that no final, conclusive Confederate triumph could be anticipated. The swift recession of the high Confederate tide was as visible in Britain as in America, and in the end, Palmerston and Russell dropped any notion of bringing a mediation-recognition program before the cabinet.Emancipation ProclamationDuring the late spring and early summer of 1862, Lincoln had come to see that he must broaden the base of the war. The Union itself was not enough; the undying vitality and drive of Northern anti-slavery men must be brought into full, vigorous support of the war effort and so the United States chose to declare itself officially against slavery. The Lincoln administration believed that slavery was the basis of the Confederate economy and leadership class and that victory required its destruction. Lincoln had drafted a plan and waited for a battlefield victory to announce it. The Battle of Antietam gave Lincoln victory, and on September 22, he gave the Confederacy 100 days notice to return to the Union or else on January 1, 1863, all slaves held in areas in rebellion would be free.William Ewart Gladstone, the Chancellor of the Exchequer and a senior Liberal leader was friendly toward slavery; his family had grown wealthy through the ownership of slaves in the West Indies.He strongly spoke out for Confederate independence. When the Emancipation Proclamation was announced, he tried to make the counterargument that an independent Confederacy would do a better job of freeing the slaves than an invading northern army would. He warned that a race war was imminent and would justify British intervention.Emancipation also alarmed the British Foreign Secretary Lord John Russell, who expected a bloody slave uprising. The question then would be British intervention on humanitarian grounds. However, there was no slave uprising and no race war. The advice of the war minister against going to war with United States, and the tide of British public opinion, convinced the cabinet to take no action.Once the war with the US began, the best hope for the survival of the Confederacy was military intervention by Britain and France. The US realized that as well and made it clear that recognition of the Confederacy meant war and the end of food shipments into Britain. The Confederates who had believed in "King Cotton" (Britain had to support the Confederacy to obtain cotton for its industries) were proven wrong. Britain, in fact, had ample stores of cotton in 1861 and depended much more on grain from the US.During its existence, the Confederate government sent repeated delegations to Europe; historians do not give them high marks for diplomatic skills. James M. Mason was sent to London as Confederate minister to Queen Victoria, and John Slidell was sent to Paris as minister to Napoleon III. Both were able to obtain private meetings with high British and French officials, but they failed to secure official recognition for the Confederacy. Britain and the US were at sword's point during the Trent Affair in late 1861. Mason and Slidell had been illegally seized from a British ship by an American warship. Queen Victoria's husband, Prince Albert, helped calm the situation, and Lincoln released Mason and Slidell and so the episode was no help to the Confederacy.Throughout the early years of the war, British foreign secretary Lord Russell, Napoleon III, and, to a lesser extent, British Prime Minister Lord Palmerston, explored the risks and advantages of recognition of the Confederacy or at least offering a mediation. Recognition meant certain war with the US, loss of American grain, loss of exports, loss of investments in American securities, potential invasion of Canada and other North American colonies, higher taxes, and a threat to the British merchant marine with little to gain in return. Many party leaders and the general public wanted no war with such high costs and meager benefits. Recognition was considered following the Second Battle of Manassas, when the British government was preparing to mediate in the conflict, but the Union victory at the Battle of Antietam and Lincoln's Emancipation Proclamation, combined with internal opposition, caused the government to back away.Battle of Antietam - WikipediaIn 1863, the Confederacy expelled all foreign consuls (all of them British or French diplomats) for advising their subjects to refuse to serve in combat against the US.Throughout the war, all European powers adopted a policy of neutrality, meeting informally with Confederate diplomats but withholding diplomatic recognition. None ever sent an ambassador or official delegation to Richmond. However, they applied principles of international law and recognized both sides sides as belligerents. Canada allowed both Confederate and Union agents to work openly within its borders.Postwar adjustments and Alabama claimsNortherners were outraged at British tolerance of non-neutral acts, especially the building of warships. The United States demanded vast reparations for the damages caused by British-built commerce raiders, especially CSS Alabama, which Palmerston bluntly refused to pay.The dispute continued for years after the war. After Palmerston's death, Prime Minister Gladstone agreed to include the US war claims in treaty discussions on other pending issues, such as fishing rights and border disputes. In 1872, pursuant to the resultant Treaty of Washington, an international arbitration board awarded $15,500,000 to the US, and the British apologized for the destruction caused by the British-built Confederate ships but admitted no guilt.Long-term impactThe Union victory emboldened the forces in Britain that demanded more democracy and public input into the political system. The resulting Reform Act 1867 enfranchised the urban male working class in England and Wales and weakened the upper-class landed gentry, who identified more with the Southern planters. Influential commentators included Walter Bagehot, Thomas Carlyle, John Stuart Mill, and Anthony Trollope.Works of Karl Marx and Frederick Engels 1861Writings on the U.S. Civil War

The General Data Protection Regulation (GDPR) is a broad set of regulations that dictate how a company handles the personal data of citizens within the European Union. Articles 33 and 34 of the GDPR outlines the requirements to notify both a supervisory authority and affected data subjects in the event of a data breach.While the details of what an organization needs to report in the event of a breach is defined within the legislation, when to report a data breach and which authority you should report the incident to are not as clear. Do you know when your organization should report a data breach, what you need to report, and where to report it to stay GDPR compliant?When to report a data breach under GDPRAccording to the GDPR legislation, an organization must report a data breach to a data protection authority (DPA), also known as a supervisory authority (SA), if there an incident “leading to the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to, personal data” that leads to a potential risk to people’s rights and freedoms. The European Data Protection Supervisor (EUDPS) advice notes that while not every information security incident is a personal data breach, every personal data breach is an information security incident.If the breach could result in “loss of control over their personal data or limitation of rights, discrimination, identity theft or fraud, financial loss, unauthorized reversal of pseudonymisation, damage to reputation, loss of confidentiality of personal data protected by professional secrecy or any other significant economic or social disadvantage to the natural person concerned,” as listed in Recital 85 of GDPR, a company is required to report the incident.Events listed by the EDPS that could count include:A customer database that has been lost or stolen (including lost on removable storage such as USB sticks)The only copy of a set of personal data has been encrypted by ransomware or has been encrypted by the controller using a key that is no longer in its possessionData is deleted either accidentally or by an unauthorized personA distributed denial of service (DDoS) attack renders personal data temporarily unavailable if access to that data is critical — for example, in a hospital.Failure to notify a data protection authority of a breach can result of a fine of €10 million ($11.3 million) or 2 percent of a company’s global turnover.An example where a company would not be required to inform a DPA listed by the EDPS would be “a brief power outage lasting several minutes at a controller’s call centre, meaning customers are unable to call the controller and access their records.” If a company decides that a breach does not fall under the requirements to notify a DPA of the breach, it is still required to inform its data protection officer (DPO) and formally document the breach.The UK ICO provides a self-assessment service to gauge whether a company needs to report an incident.Where to report a breach under GDPROnce an organization has decided that it is required to report a breach, it should contact the relevant DPA. Which DPA an organization should report a breach to depends on the organization: if a company only operates in one country or all data collection, processing and decision-making around that data is done locally, then the local DPA is the only one you need to inform.If data is traveling across borders, the DPA of the country in which decisions around processing that data are made should be informed (known as a leading supervisory authority, or LSA). For example, if an organization’s European headquarters is in London but an incident occurs in Germany where the data is processed, the breach should be reported to the UK ICO, as that’s where decisions around the data are made. However, if decision-making about data is split among different locations — say London for employee data and France for customer data — then the UK ICO would be the LSA for incidents around employee data and the French CNIL would be the LSA for those involving employee information.If a company has no official established presence within in the EU but still suffers an incident involving EU citizen data, it must, according to EU advice, “deal with local supervisory authorities in every Member State they are active in.” The International Association of Privacy Professionals (IAPP) provides a list of all the EU DPAs and includes links to relevant forms or contact details for each.Organizations that have suffered an incident are required to notify a DPA within 72 hours of becoming aware of the breach. There is the caveat of “where feasible” in the wording, but companies will be required to provide reasoning for the delay. If an organization isn’t able to provide all the required details immediately, they can inform the DPA in stages and provide more details to the authority as they become known.What to report under the GDPROrganizations reporting an incident will need to answer a series of questions about the breach including:When the breach happenedWhen and how it was discoveredCategories of personal data included in the breachSize of the breach both in terms of records lost and people affectedPossible impact on data subjects as a result of the breachImpact on the organization’s ability to provide services to usersRecovery timeWhether affected citizens have been informedActions the company is taking or will take to remediate and prevent such an incident in the future.Most DPAs have breach notification forms on their sites that provide a template on how to report an incident.Companies must also inform those affected by the breach. If there is a “high risk” of affecting individuals’ rights and freedoms, the EDPS notes organizations must inform those individuals “without undue delay.” When informing people affected by an incident, organizations are required to “describe the nature of the personal data breach as well as recommendations for the natural person concerned to mitigate potential adverse effects,” according to the EDPS.Depending on your industry, reporting an incident under the GDPR may well mean you are required to report the incident under other data protection regulations such as HIPAA, PIPEDA or eIDAS. The US National Conference of State Legislatures (NCSL) provides a state-by-state list of breach notification legislation.Breach notifications are challengingA Freedom of Information Act request by Redscan found that prior to GDPR, companies took an average of 21 days to report a breach to the UK ICO, with one company taking 142 days. Ninety-three percent did not specify the impact of the breach or did not know the impact at the time it was reported.A report released by the EDPS in February 2019 showed it had received a total of 64,600 breach notifications since GDPR came into effect in May 2018. An average of 250 self-reported data breaches between June and October 2017 were submitted to the ICO, according to numbers shown to CSO. The equivalent months of 2018 after the GDPR came into effect saw an average of 1,400 per month.However, it seems that GDPR’s breach notifications are still daunting for companies. an Experian and Ponemon report into data breach resolution found that just over half of organizations believe the effectiveness of their data breach response plans is “very high,” yet less than 30 percent of companies surveyed said they had a high ability to comply with the GDPR’s data breach notification rules.“One of the easiest things is notifying the DPA within 72 hours,” says Michael Bruemmer, vice president of Experian’s Data Breach Resolution group. “I think [the lack of confidence in GDPR-compliant notification] is more lack of awareness than lack of understanding. It doesn't say you have to have all your forensics done. It doesn't say you have to notify consumers at that point in time. It doesn't say that you have to have absolutely everything, 'T's crossed and 'I's dotted. It just means you need to make sure that you are announcing 'We think we've had a breach; we're at this stage in our process; we're going to conclude it by we think this time; and if it is a breach we will notify.'”In the face of unsurety, many companies are taking a “report everything” approach to complying with the notification requirements. Speaking at the CBI Cyber Security: Business Insight conference in September 2018, the UK's deputy information commissioner James Dipple-Johnstone highlighted how the ICO is facing an issue of “over-reporting” by companies: “We have been receiving around 500 calls a week to our breach reporting line since May 25,” he said, “and roughly a third of these are from organizations who, after a discussion with our officers, decide that their breach doesn’t meet our reporting threshold.”Prepare for those 72 hoursThe best way to ensure compliance with data breach notification requirements, whether under GDPR or any other regulation, is to plan ahead. Understand what you need to report to whom, work those requirements into any incident response plans you have, and test them regularly.“It's not good enough just to have a plan and check the boxes,” says Experian’s Bruemmer. “You need to understand what data you have, how it's protected. You need to have a plan in place and practice that plan, rehearse it, update it on a quarterly basis, and have tabletop exercises and make it as realistic of an exercise as possible. It's no different than if you put it in in the same category of as a firedrill. The business continuity and disaster recovery folks understand that, but that hasn't necessarily made its way all the way into cyber security, planning and responding to a breach.”

How to Choose the Best Legal Structure for Your Business – Pros & ConsAre you thinking about turning your latest idea into a business venture? You’ll need to do a lot of work to get off the ground. The Small Business Administration‘s 10-point checklist for budding entrepreneurs is a great place to start. It ticks off a list of crucial to-dos for anyone in the early stages of business formation:Brainstorm and write your business planLook for assistance and training in your industry or area of expertiseChoose a business location (domicile and physical location, if you’re not working out of a home office or coworking space)Find startup financing for your small businessDetermine your company’s legal structure and set up your business with Rocket LawyerRegister your business name (“Doing Business As”)Get a tax identification number and ensure you’re in compliance with local, state, and federal tax regulationsGet a business license and permits, if requiredLearn your obligations vis-a-vis hiring employees, including responsibilities under the Fair Labor Standards Act and what to do if an employee files an FLSA complaint against youFind local assistance from the SBA and local business resourcesWas I in charge at the SBA, I’d add another point: Keep looking for ways to reduce your small business expenses. That’s more of an ongoing obligation, but its importance is impossible to overstate, and it’s never too early to get started.In any event, number five on that list (determining your company’s legal structure) is crucial, with plenty of pitfalls to avoid. Let’s look at the most common business structures available to U.S.-based entrepreneurs – and a handful of less-common structures too. You’ll learn the basic attributes, advantages, and disadvantages of each structure. Afterward, you’ll be able to properly assess which option is right for you.Sole ProprietorshipA sole proprietorship (sole prop) is the simplest and least formal business structure available to U.S. business owners. By definition, it’s also the least conducive to growth. All sole props share some essential attributes:Single Owner and Operator: A sole prop is owned and operated by one person only. Sole proprietors are free to hire employees and retain contractors, but they can’t add partners or issue stock to shareholders. If you want to bring new owners into the fold or sell equity in exchange for funding, you need to reorganize it as a partnership or corporation.No Formal Incorporation: Sole proprietorships aren’t formally incorporated as corporations or organized as partnerships. Sole props that do business under a fictitious name, rather than the operator’s name, typically register those names with state authorities. (These names are known as “Doing Business As” names, or DBAs.) If your sole prop does business under your name, you don’t need to register a DBA.Tax Identification: If you’re your sole prop’s only employee, you can file taxes using your own Social Security number. If you hire employees, you’ll need to get an Employment Identification Number (EIN) from the IRS. This costs nothing and takes only a few minutes.Separate Finances: Sole prop owners aren’t legally obligated to maintain a wall of separation between their personal and business finances. However, it’s highly advisable that you do so, for multiple reasons: to determine that your business is profitable, to keep track of your income and expenses for tax purposes, and to provide potential creditors with a precise accounting of your company’s finances. Set up a business bank account and apply for a small business credit card. Route all income to the former and use the latter for business expenses only. This kills two birds with one stone: keeping your business finances separate while building credit.Pass-Through Taxation: Sole props do not file taxes separately from their operators. As the owner of a sole prop, you’ll attach Schedule C or Schedule C-EZ (Form 1040) to your personal tax return. If your enterprise was profitable during the tax year, you’ll likely be liable for self-employment tax. You’ll report self-employment income and calculate self-employment tax on Schedule SE (Form 1040). If you expect to owe more than $1,000 in tax after subtracting any withholding taxes, and if your withholding taxes comprise less than 90% of the taxes you expect to owe in the current tax year or 100% of the prior tax year’s tax obligation, you’ll need to make quarterly estimated tax payments. For more detail about this and all tax questions, consult our Tax Guide or a tax advisor.Pros of a Sole ProprietorshipSimplicity. It’s super easy to set up a sole proprietorship. You don’t need to file articles of incorporation, draft an operating agreement, or make public financial disclosures. In many cases, you don’t even need to register a company name. You should keep a precise accounting of your business finances, but that’s not legally required.No Double Taxation. Sole props are taxed on a pass-through basis, meaning your business income is combined with nonbusiness income for tax purposes. Your sole prop doesn’t pay taxes on business income that then passes through to you as taxable personal income, a circumstance known as double taxation. If you sell taxable goods or services, you may be required to register with the appropriate tax authorities and pay local and state sales tax.Cons of a Sole ProprietorshipPersonal Liability for Business Debts and Obligations. The glaring disadvantage of a sole proprietorship is the operator’s personal liability for any debts or obligations incurred by the business. For instance, if you purchase equipment on credit, then hit a rough patch, and find yourself unable to meet the vendor’s payment terms, the vendor may have the right to seize your personal assets (including your personal bank account, house, and car) to satisfy the debt. Shareholders in incorporated entities aren’t personally liable for business debts.Reticent Lenders. Unless your sole proprietorship has substantial assets to put up as collateral, it’s not likely to qualify for loans from traditional lenders. This is especially true for newer entities and owners with spotty personal credit. You may have more luck with nontraditional online lenders, many of which market to sole props and smaller corporations. The devil’s often in the details, however – these loans typically come with high-interest rates and unfavorable terms. You’re better off relying on personal savings, loans from family and friends, and other nontraditional startup financing options.Potential for Greater Tax Liability. Sole props are taxed on a pass-through basis. When they’re profitable, they increase their owners’ total taxable income. A big enough increase in your taxable income bumps you into a higher tax bracket and raises your marginal rate, reducing your take-home pay proportionally. While this sounds like a good problem to have, it’s not ideal for sole proprietors who operate their businesses for side income and rely on salaries or hourly wages for the bulk of their income. Neither is it ideal for sole prop owners who set aside substantial fractions of their business income to finance equipment, inventory, or unexpected purchases.PartnershipThink of a partnership as a multimember sole proprietorship. The Small Business Administration describes partnerships as “a single business where two or more people share ownership” and “each partner contributes to all aspects of the business, including money, property, labor or skill,” while sharing “in the profits and losses of the business.” Like sole proprietors, partners are by default personally liable for partnership debts and obligations.Like sole proprietorships, partnerships are informal. “Generally, partnerships do not require any filings with state agencies,” says Shawn Toor, a business law attorney with Seattle-based Williams Kastner. “A partnership can be formed merely by the act of two or more people agreeing to carry on business and share in the profits and ownership control.”Partnership AgreementsMost partnerships are controlled by contracts known as partnership agreements. Partnership agreements govern matters like:The partnership’s legal name and DBA nameThe partnership’s term – either time-limited or in perpetuityGeneral-purpose of the partnership – the business activities in which it’ll engageInitial contributions of each partner, such as cash and property, and the installment schedule on which those contributions will be madeProcedures for future contributions to the partnershipProcedures for admission of new partnersProcedures for distribution of profits and losses to each partner, including frequency and proportionalityManagement duties of each partnerVoting procedures – which matters require a vote and the number or proportion of votes needed to decide in favorProcedures for the sale or transfer of a partnership interest (buy-sell agreements)Procedures for the expulsion of a partnerProcedures for continuing or dissolving the partnership upon the death of a partner – often included in buy-sell agreementsProcedures for dispute resolution, such as mediation or arbitrationYou can find generic partnership agreement templates online and modify them to your partnership’s needs. However, these templates frequently leave out important eventualities that could affect your interest in the partnership – or the partnership’s very existence – going forward. For instance, a carelessly drafted partnership agreement could allow one partner to unilaterally bind the entire partnership, possibly against the other partners’ wishes.It’s therefore highly advisable to retain an attorney to draw up a customized partnership agreement on your behalf. If your budget doesn’t allow for this at the outset, revisit the situation as soon as possible. Your partner(s) should be amenable to creating a customized partnership agreement to protect their own interests.There are three main types of partnerships. You’ll designate which type of partnership you’ve chosen in the partnership agreement.General PartnershipA general partnership is the most common and straightforward type of partnership. Typically, general partners share equally in the partnership’s profits and liabilities, take on equitable duties, and have equal voting rights. The partnership agreement controls situations in which partners’ interests and duties diverge. For instance, many partnerships assign executive duties to a single managing partner. Others dole out profit shares according to seniority, with longer-serving partners taking a greater share of the entity’s net income.Limited PartnershipA limited partnership (LP), also known as a limited liability partnership, allows for a class of “limited partners” who essentially function as passive investors in the venture. Limited partners have little or no influence on the partnership’s decision-making processes and day-to-day management activities. They are not personally liable for the partnership’s debts or obligations. And they receive profit or loss shares proportional to their interest, which is usually smaller than that of general partners.LPs are more complicated than general partnerships. They are suitable for larger, capital-intensive ventures that attract lots of investors – not so much for small, two- or three-person ventures, which are easier to manage through general partnerships.On the bright side, they’re more discreet than traditional corporations. “The LP agreement is typically a privately signed document,” says Jason Powell, a corporate law attorney at Missoula, Montana-based Bjornson Jones Mungas, PLLC. “[LP agreements are] usually not recorded or available to the public, which allows for anonymity if desired.”Joint VentureA joint venture is a time- and scope-limited general partnership. It’s ideal for one-off projects that require pooled resources, such as commercial real estate development. Partners in a joint venture can convert the enterprise into a traditional general partnership by amending the partnership agreement.Pros of a PartnershipPooled Resources and Shared Responsibilities. Unlike sole proprietors, partners can pool resources without seeking outside investors or taking on debt. They can also share day-to-day management and executive decision-making responsibilities commensurate with their credentials and abilities.No Formal Incorporation Required. Unlike corporations, partnerships aren’t required to file articles of incorporation. For a variety of reasons, most partnerships are governed by written, legally binding partnership agreements to which all partners consent, but these agreements don’t have to be reviewed by or filed with local or state authorities.No Double Taxation. Partnership income is taxed on a pass-through basis. Partnership income is reported on Schedule K-1 (Form 1065), which the partnership must furnish to each partner by the annual deadline. Each partner adds his or her share of the partnership income, as reported on Schedule K-1, to his or her personal income from other sources.Flexible Time Horizon. Partnerships do not necessarily exist in perpetuity. If you need to pool your resources with other investors for a single project or venture, but have no wish to associate with them once the project is completed, you can create a joint venture specifically for that purpose. When the project wraps up, the partnership dissolves, and you and your partners part ways.Cons of a PartnershipPersonal Liability for Business Obligations. As with sole props, the greatest disadvantage of a partnership is personal liability for business debts and obligations. Your share of liability is proportional to your interest in the partnership – if you own 30% of the partnership, you’re responsible for 30% of its liabilities.Potential for Greater Tax Liability. Like sole prop income, partnership income is treated as personal income. If your partnership is profitable, your personal income will increase, potentially raising your marginal tax rate, increasing your overall tax burden, and reducing your usable cash on hand.Requires a Formal Agreement. Though partnerships don’t require formal articles of incorporation, virtually all are governed by partnership agreements. These contracts can be quite complex, and while it’s possible to modify a serviceable template at low cost, it’s expensive to hire an attorney to draft a customized agreement that accounts for the widest possible range of eventualities.Dependent on Human Relationships. Successful partnerships depend on amicable relations between the partners – at least, between general partners. A falling out among partners, for whatever reason, can cripple or destroy an otherwise successful partnership. Before entering into a long-term partnership (as opposed to a joint venture), consider your relations with the other partners carefully and ask yourself whether you can see yourself working with them for years to come. If you’re not sure, think twice.Shared Decision-Making Processes. Successful partnerships also depend on a consensus-driven decision-making process, especially when only two or three partners are involved. If you’re not comfortable talking through decisions with your collaborators, a closely held partnership may not be the best fit.Corporation (C-Corp)A corporation, sometimes known as a C corporation or C-corp, is defined by the Small Business Administration as “an independent legal entity owned by shareholders.”“Creating a corporation is like creating a human being,” says Toor. “Corporations can be sued, sue others, hold property, [and exist within] a partnership.”According to the SBA, “the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.” Compared with sole proprietorships and partnerships, whose members are held personally liable for business debts and activities, this is a major advantage for corporate shareholders.C-corps are subject to greater regulation than partnerships and sole proprietorships. In addition to onerous incorporation requirements, C-corps face ongoing regulatory burdens, such as the requirement that they hold annual shareholder and director meetings. If you’re running a small enterprise with limited overhead, incorporation could be more trouble than it’s worth. Here’s a look at the basic initial and ongoing steps you’ll need to take to set up a C-corp.Incorporation RequirementsCorporations must be formally incorporated with state business authorities, typically the Secretary of State office or equivalent. This requires drawing up and filing articles of incorporation, which include basic information about the entity:Company name and DBARegistered addressName and address of registered agent who handles official correspondenceThe company’s business activities or purposeNames of directors and offersInformation about the issuance of corporate stock, including share count and par valueLimitation of liability (indemnification) of officers and directorsDuration of incorporationDissolution proceduresAdoption of corporate bylaws (operating agreement), if extantYou can find low-cost articles of incorporation templates online. However, as with partnership agreement templates, cookie-cutter articles of incorporation aren’t ideal. It’s better to spend more on custom-drafted articles of incorporation that account for a wider range of eventualities specific to your company.Corporate Operating AgreementsIn addition to articles of incorporation, which are required by law, most corporations are governed by operating agreements or bylaws. These documents spell out in detail the way the corporation is to be governed. Like partnership agreements, they’re not mandated by law, but they’re highly encouraged.Corporate Tax ObligationsUnlike sole props and partnerships, C-corps are not pass-through entities. For tax purposes, they are treated as legally separate entities from their shareholders. They pay federal, state, and sometimes local income tax at corporate rates, which are different than personal income tax rates. They are also subject to different credits and deductions than individual filers. Check with the IRS for more information about corporate tax obligations, including forms required to file.Pros of a CorporationLimited Liability for Owners. As long as the corporate veil is preserved, meaning shareholder and business assets are kept strictly separate (not commingled), C-corp shareholders are not personally liable for the entity’s debts and obligations. They aren’t required to personally guarantee loans or purchases made on credit, and their personal assets can’t be seized to satisfy creditor claims.Easier to Generate Capital. Corporations can raise capital by selling shares of stock (equity). Partnerships that wish to raise funds without taking on debt must take on new partners or compel additional contributions from existing partners. Sole proprietors are even more constrained – they need to dip into their personal savings, borrow against tax-advantaged accounts, ask friends and family members for loans, or pursue other less-than-ideal options.Greater Legitimacy. For better or worse, incorporated entities appear more legitimate to lenders, vendors, and potential customers. This legitimacy can open lucrative doors: loans approved at more favorable terms, discounts or favorable credit arrangements on big-ticket equipment or inventory purchases, and greater credence from sales prospects. For ambitious companies hoping to raise funds from venture capitalists or private equity firms, the C-corp is the gold standard. I spoke with Bryan Clayton, CEO of Nashville-based GreenPal, about his initial choice to incorporate locally as an LLC. “[Incorporating as an LLC] was quick and easy and cheap. We figured it was the best way to get our company up and rolling,” he says. “What we didn’t realize is that an LLC is a no-go for institutional investors. Any outside investors such as private equity, angel investors, or venture capitalists will insist that your company be a…C-corp.” Clayton adds that the incorporation domicile is important too: “Delaware has an abundance of case law that is favorable to corporate structure, investors, and board members,” he says, “and is [therefore] generally accepted as the standard by the investor community.”Built-In Incentives for Employees. Equity is a powerful incentive for current and prospective employees. Corporations frequently reward performance, longevity, and other value-adds with stock or stock options, attracting high-quality employees and incentivizing them to stick around. In partnerships, the possibility of making partners is a comparable incentive, but it’s not practical to offer that carrot to hundreds or thousands of associates. Corporations can offer stock to any employee they like.Cons of a CorporationPotential Tax Disadvantages. C-corps’ shareholder distributions are effectively taxed twice: once at the corporate level, before distributions are made, and again as personal income on shareholders’ personal tax returns. Though corporate income tax rates tend to be lower than individual income tax rates, and most corporations use generous deductions and credits to reduce their tax burdens, that’s not always enough to offset the effects of double taxation.Expensive and Cumbersome to Form. C-corps are expensive and cumbersome to form. Proper incorporation requires substantial legal and financial assistance, especially in heavily regulated industries.Greater Regulatory Burden. Even privately held corporations are subject to greater regulatory burdens than partnerships and sole proprietorships. If insulation from personal liability and greater capital-generation potential don’t outweigh these considerations, look to a lower-key business structure.Lots of Potential Stakeholders. Larger corporations can have hundreds or thousands of individual voting shareholders, all of whom need to be kept informed about the company’s activities and given a voice in the company’s direction. This requires a tremendous investment of financial and human resources. Even in more closely held corporations with tens of voting shareholders, the potential for disagreement is greater than in general partnerships, which usually involve only a handful of egos. As countless clashes between publicly traded firms’ boards and activist investors attest, larger shareholders can cause a lot of trouble when they’re determined to throw their weight around.S Corporation (S-Corp)An S corporation, also known as an S-corp, is a special type of incorporated entity that’s ideal for small to midsize businesses. Like C-corp owners, S-corp owners and shareholders are insulated from personal liability for business debts, obligations, and actions. Unlike C-corps, S-corps are pass-through entities. Their income isn’t subject to corporate income tax – it passes through as distributions to shareholders, who then pay personal income tax at an appropriate rate (usually lower than rates on wage income).Incorporating and operating an S-corp is an intensive process. Like C-corps, S-corps require articles of incorporation filed with the appropriate authorities, as well as annual shareholder meetings. Operating agreements are also strongly encouraged.S-corps have a few noteworthy twists:S Corporation Election: After incorporating, all shareholders must sign and file IRS Form 2553. Known as a Subchapter S election, this establishes the corporation as a pass-through entity subject to certain restrictions. The Subchapter S election must be made within two months and 15 days of the beginning of the tax year to which it applies, or anytime before the beginning of the tax year.Shareholder Compensation: S-corp shareholders who also work as employees – for instance, owner-operators or executives with ownership stakes – must take “reasonable compensation” (salary taxed as wage income) in addition to their profit distributions.Shareholder Restrictions: By law, S-corps can have only 100 shareholders. The potential pool of shareholders is restrictive as well: S-corp shareholders must be U.S. citizens and (in most cases) human beings. With rare exceptions, S-corps can’t be owned by other businesses or legal structures, such as trusts.Stock Restrictions: Unlike C-corps, which can issue common and preferred shares, S-corps can only issue common stock. Common shares represent equity stakes and confer voting rights, widening the pool of shareholders with sway over the company’s decision-making processes.Uneven State Tax Treatment: According to the Small Business Administration, S-corps are treated uniformly under the federal tax code, but they’re subject to varying treatments at the state level. While most states recognize S-corps as pass-through entities, some (such as New York and New Jersey) tax S-corps’ profits and shareholders’ income from said profits. If you live in a state that treats S-corps differently than the federal government, you may need to file an additional state form.This blog post from Wyoming LLC Attorney has more on the differences between S-corps and C-corps – it’s required reading for entrepreneurs deciding between the two.Pros of an S CorporationLimited Liability for Owners. Like C-corps, S-corps limit shareholder liability. As an S-corp shareholder, you’re not required to personally guarantee loans made to the business or expose personal assets to creditor seizure.No Double Taxation. Like sole proprietorships, S-corps are pass-through entities. Unlike C-corps, S-corps are not subject to corporate income tax. By extension, S-corp shareholders are permitted to deduct their firms’ losses, if any, from their personal income. “Most businesses initially lose money,” says Toor. “S-Corps may help lessen the blow of operating at a loss [because] S-Corp shareholders can deduct corporate losses on their personal tax returns.”Easier to Raise Capital. As corporations, S-corps can raise capital by selling stock. Though they’re permitted to issue common stock only, they still have more flexibility to raise capital on favorable terms than sole proprietorships and partnerships.Greater Legitimacy. Like C-corps, S-corps are incorporated entities, with all the legitimacy that entails. However, S-corps aren’t ideal for institutional investors, so you may need to reincorporate down the line before seeking outside equity funding.Cons of an S CorporationSize of Ownership Class Is Limited. S-corps can’t have more than 100 individual (human) shareholders. If you need to raise lots of capital from a wide investor pool, C-corp status is a better fit.Potentially Expensive to Incorporate and Operate. Like C-corps, S-corps are expensive and cumbersome to incorporate. They have high ongoing operating costs and burdens, such as the annual shareholder meeting requirement. And S-corp shareholders have to worry about another wrinkle: the annual Subchapter S election. C-corp shareholders can disregard that one.Reasonable Compensation Requirements. Since wage income is taxed at a higher rate than the “reasonable compensation” requirement, this raises S-corp shareholder-employees overall tax burden.Greater Record-Keeping and Regulatory Burden. Like C-corps, S-corps have greater record-keeping and regulatory burdens than sole props and partnerships. If the costs of increased compliance outweigh the benefits, a simpler structure is probably right for you.Shareholders Must Be U.S. Citizens. S-corp shareholders must be U.S. citizens. If you’d like to start a business with noncitizens living in the U.S. on visas, you need to choose another structure.Limited Liability Company (LLC)Extant only since 1977, the limited liability company (LLC) model is the newest common business structure available to U.S. business owners. By some measures, it’s the most flexible.“LLCs are hybrids between corporations and a partnership,” says Toor. “LLC members have the same rights and limited liability of shareholders in a corporation, and LLCs themselves have the added benefit of being treated like a partnership for tax treatment.”Tax TreatmentAccording to the IRS, LLCs can be classified as corporations, partnerships, or sole proprietorships (disregarded entities) for tax purposes. The classification depends on the number of members (shareholders) and those members’ stated preferences (elections).By default, one-member (single-member) LLCs are treated as disregarded entities, with pass-through business income recorded on members’ personal tax returns (Schedule C or C-EZ). Single-member LLCs can file taxes using members’ Social Security numbers – no EINs required.LLCs with two or more members are treated as partnerships, regardless of the number of members. However, any LLC – including single-member LLCs – can elect to be treated as a corporation for tax purposes. And even disregarded entities are treated as separate corporate entities for certain tax purposes, such as employment and excise taxes.Filing and Regulatory RequirementsLike C-corps and S-corps, LLCs are required by law to file articles of incorporation with the appropriate state authorities. Operating agreements are strongly encouraged as well. According to the SBA, state law often leaves LLCs vulnerable to member losses – for instance, when a member dies or resigns from a multimember LLC, the LLC dissolves, and the remaining members must elect to form a new LLC if they wish to remain in business together. Capable business attorneys can draft detailed operating agreements that account for common (and not-so-common) eventualities like this.Going forward, LLCs’ regulatory burdens are lighter than S-corps’ or C-corps’. “The main difference between an LLC and S corporation is operational flexibility,” says Brian Thompson, a Chicago-based CPA, and business attorney. “LLCs are not subject to the requirement of an annual shareholders’ meeting or annual directors’ meeting.”By watching this video anyone can get the idea of forming an LLC for their small business.Pros of an LLCLimited Liability for Owners. Like S-corp and C-corp shareholders, LLC members are not personally liable for the enterprise’s debts and obligations.Lower Regulatory Requirements. Compared with S-corps and C-corps, LLCs have more manageable regulatory requirements. While articles of incorporation are required and operating agreements strongly encouraged, ongoing record-keeping and reporting requirements aren’t as onerous.Can Avoid Double Taxation. As pass-through entities, LLCs aren’t subject to corporate income tax.Can Request S-Corp Status for Tax Purposes. Like C-corps, LLCs can request S-corp status by filing a Subchapter S election within the first two months and 15 days of the tax year. Depending on the entity owners’ duties and employee status, this can lead to a more favorable tax situation for shareholders. For more information about how a Subchapter S election could affect your LLC’s tax status and your personal tax liability (state and federal), consult a local tax advisor.Shareholders Can Be Non-U.S. Citizens. Non-U.S. citizens can be shareholders in LLCs. This is an important advantage over S-corps, whose shareholder ranks are closed to noncitizens.Corporations and Other Entities Can Be Shareholders. Unlike S-corps, LLCs don’t restrict membership to human beings. Corporations, trusts, partnerships, and other legal entities can own shares in LLCs. This is a crucial consideration for more complex ventures, which frequently utilize LLC subsidiaries to manage financial and legal risk.Cons of an LLCMembers Are Considered Self-Employed. For tax purposes, LLC members are considered self-employed. Like sole proprietors, they’re on the hook for self-employment tax – the employer’s share of Medicare and Social Security tax.Potential for Greater Tax Liability. If your LLC income is taxed on a pass-through basis, you can avoid double taxation. However, if the enterprise is profitable, you may still find yourself subject to a higher marginal rate and greater overall tax burden.Final WordMost new U.S. enterprises choose one of these five common business structures. I’ve included a lot of information about each here, but if you’re serious about launching a business and need firm guidance on the right structure for your needs, I’d recommend speaking with a business attorney.And, one more thing. There’s a sixth type of business structure not mentioned here: the cooperative.According to the Small Business Administration, a cooperative “is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.”Cooperatives are more commonplace than many consumers realize, especially in the food business. Hundreds of thousands of U.S. consumers regularly shop at grocery cooperatives – member-owned grocery stores that often specialize in organic or natural foods. Millions purchase food products from massive agricultural cooperatives, often without realizing it. Land O’Lakes, a popular consumer dairy brand, is a multibillion-dollar cooperative. Though less recognizable to the average grocery shopper, CHS is even larger, more diversified, and more influential.All that said, starting a cooperative is very difficult. I’ve been personally involved with two cooperatives and can attest firsthand to the sheer amount of manpower and force of will necessary to get one off the ground. In certain circumstances, a cooperative may be the best business structure for your needs, but it’s not a one- or two-person project.