General Benjamin Butler's New Orleans Occupation Marked by Systematic Corruption and Cotton Trade Profiteering

After Union naval forces under David G. Farragut capture New Orleans in spring 1862, General Benjamin F. Butler is appointed military governor of the occupied city, beginning one of the most controversial and corrupt episodes of the Civil War. Butler’s brief tenure becomes notorious for alleged systematic corruption involving bank and mansion looting, rigged cotton auctions, and illicit trade with Confederates. Butler sends military expeditions into the Louisiana countryside with no military purpose beyond confiscating cotton from residents presumed disloyal. Once brought to New Orleans, the cotton is sold in manipulated auctions where Butler family interests acquire it at bargain prices while proceeds are officially held for “just claimants” to maintain proper appearances. Butler’s brother Andrew operates a lucrative trade in cattle, sugar, cotton, and other Confederate commodities, reportedly making between $500,000 and $2 million from such enterprises. Butler is charged “apparently with justice” with corruption in conniving at and sharing profits from illicit Confederate trade carried on by his brother in New Orleans and his brother-in-law in the Department of Virginia and North Carolina while Butler commands those regions.

Butler earns the nickname “Spoons Butler” primarily from an incident where he seizes a 38-piece silverware set from a New Orleans woman attempting to cross Union lines with a pass permitting only the clothing she wears. He feuds with foreign consuls and city officials while allegedly looting gold and valuables from city banks and mansions, and controversially hangs local gambler William Mumford for hauling down the U.S. flag. Many Northerners and Southerners believe that wherever Butler goes, corruption follows, though his cunning prevents direct proof of personal enrichment. His associates and family members directly profit enormously from the trading, with Butler maintaining that contraband trading is necessary to obtain supplies—though the profits for those around him are spectacular. Historian Ludwell Johnson writes that Butler’s “name became almost a synonym for contraband trade, with all its undertones of corruption and treason,” while New York governor Edwin Morgan tells political operative Thurlow Weed that the trade is fraudulent enough “to destroy any administration at any other time.”

The Butler episode exemplifies kakistocracy through military occupation converted into profit-extraction opportunity. Butler’s appointment rewards political connections rather than integrity—he is a Massachusetts politician and early Lincoln supporter whose military competence and ethical standards matter less than his political value. The cotton trade corruption demonstrates how military authority combined with commercial opportunity enables systematic wealth transfer from occupied populations to occupying officials and their associates. Butler’s operation reveals the structure of high-level corruption: the principal maintains plausible deniability while family members and close associates conduct the actual trading, profits flow to the network, and official justifications (obtaining supplies, punishing disloyalty) provide cover for enrichment. The enormous profits—potentially millions for Andrew Butler alone—from trading with the enemy illustrate how war creates opportunities for those with access to extract wealth while prolonging conflict. Butler’s escape from consequences despite widespread corruption allegations shows how political connections and the difficulty of proving direct involvement protect corrupt officials, setting patterns for military occupation profiteering that extend beyond the Civil War era.