At the start of the Civil War, a formal exchange system for prisoners of war was not arranged because President Lincoln did not recognize the Confederacy as having wartime rights. However, after the defeat of Union forces at the 1st Battle of Bull Run, with a large number of Union prisoners held by the Confederacy, the U.S. Congress requested that Lincoln take measures to effect an exchange.

The first government-sanctioned exchanges took place in February 1862, but it was not until July 22 that a formal cartel detailing the exchange system was agreed to by the two governments. Under this agreement, all prisoners were to be released-either exchanged or paroled-within 10 days of capture. An equivalency table was devised in which a certain number of enlisted men could be exchanged for an officer.

The system was bogged down by paperwork, and each side found reason to interrupt exchanges from time to time, but the cartel operated reasonably well until it broke down in the summer of 1863. By that time the federal government had begun to use black soldiers in its war effort. Refusing to recognize captured blacks as prisoners of war, the Confederacy reduced them to slave status and threatened to execute as insurrectionists the Union officers who had commanded them. A retaliatory threat by the Union prevented the Confederacy from carrying out any executions but did not restore the cartel. Several times later in the war, the Southern states needed soldiers and requested that the exchanges resume, but General Ulysses S. Grant, with plenty of Union soldiers, refused.