In the summer of 1865, there was in Liverpool, and spread all over England, a substantial amount of Confederate property.Technically, it was of course by that time United States property, consisting of imported cotton, as well as munitions and supplies, that were already paid for, and had been destined to run the blockade. The majority of these transactions had been made by James D. Bulloch and Charles K. Prioleau.

The majority of the cotton was in the hands of Fraser & Trenholm, and immediately caught the attention of Thomas H. Dudley, the U.S. consul in Liverpool. Dudley, as during the war, did not confine his activities to Liverpool. Consuls from all over Great Britain, on the advice of the U.S. State Department, turned to Dudley for assistance. Some of the property, although in small amounts, was successfully claimed by the U.S., but by far the majority was held by the Fraser Trenholm Company, and became part of seemingly endless legal proceedings. Indeed they were still incomplete when Dudley left the Consulship in 1872.

In the late summer of 1865 Dudley sued Fraser Trenholm for recovery of the cotton that they still held for the Confedrate Government. Shortly afterwards Consul Morse, in London stepped in, and made a compromise agreement with Fraser Trenholm, which authorised them to sell ALL Confederate property in their hands, and to keep the first £150,000 ($750,000) of the proceeds, with the balance going to U.S. Government coffers

Dudley was furious, and protested that the deal was far too generous for the Liverpool firm. The deal was then repudiated by Secretary Seward, who then withdrew all powers from Consul Morse, and broadened Dudley`s responsibilities to cover the sale of all Confederate property in England.

The result of this change was protracted legal proceedings, that eventually bankrupted Fraser Trenholm, and cost the United States virtually all of the funds recovered. In hindsight, it is probable that the deal arranged by Morse, would have turned out most satisfactorily for all parties concerned.

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