its actual operations can only be surmised. During the entire war the notion that the CSA possessed a most efficient engine of war in its monopoly of cotton (the "King Cotton" idea) buoyed up the hopes of the Confederates. The government in Richmond strained every effort to induce the great powers of Europe to recognize the Confederacy as a nation (see Cotton diplomacy). It also—more successfully—secured individual foreigners' financial recognition of the Confederate States by effecting a foreign loan based on cotton. This favorite notion went into practice in the spring of 1863. The French banking house of Erlanger & Company undertook to float a loan of $3,000,000, redeemable after the war in cotton at the rate of sixpence a pound. According to one source, Baron Rothschild informed W. W. Murphy, American consul-general in Frankfort, that "all Germany condemned this act of lending money to establish a slaveholding government, and so great was public opinion against it that Erlanger and Company dare not offer it on the Frankfort bourse". As cotton at the time was selling at nearly four times that figure, and would presumably be quoted far above sixpence long after the establishment of peace, the bonds offered strong attractions to those speculatively inclined and in sympathy with the Confederate cause. The Confederate agents mismanaged the placing of the bonds in Europe, but notwithstanding, a considerable sum was secured from the public and used for the purchase of naval and military stores. This was aided in part by the (incorrect) assumption of some investors that, even should the Confederacy lose the war, the United States government would honor and redeem the bonds. However, at the close of the war the re-established Federal authorities ignored these foreign bonds, like all the other bonds of the Confederate government, or of state governments under the Confederacy. Long term weaknesses By 1863, after two years of warfare, the North was finally fully mobilizing its economy, while the Southern economy had peaked and was waning. General William T. Sherman, an acute observer of the war, had predicted this development even before Sumter, telling a rebel acquaintance in late 1860: The North can make a steam-engine, locomotive or railway car; hardly a yard of cloth or a pair of shoes can you make. You are rushing into war with one of the most powerful, ingeniously mechanical and determined people on earth—right at your doors. You