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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.
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 wished for a quick Confederate victory.
The 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.
In 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.