Northern Motives For War

[Wild_Rose]

Originally Posted by cedarstripper

Dear Rose,
Can you provide any instances of where such a type of traffic would have occurred or why you think European goods and cotton were bought and sold this way? And in your above scenario, how is the cotton grower paid for his cotton in the end since his compensation is now tied up in dutiable goods sitting in Northern ports, presumably consigned to northern merchants.

A few articles I've read has lead me to believe an exchange of commodities was not an uncommon way to sell cotton in the nineteenth century. I can't locate the specific information I'm looking for on the internet, but I happen to be going to the library today. Hopefully, something will turn up there.

I should have explained in my scenaraio that the planter probably didn't receive the actual goods. I expect this would all have been done through agents. The South is littered with old cotton exchange buildings where this commerce took place. There would have been no ship docked at a Northern port full of dutiable goods waiting for the Southern planter (seller of cotton) to deal with. This would have been sold to some merchant or speculator before leaving the foreign country it originated in.

I freely admit that I have little knowledge of nineteenth century foreign commerce. I have only received hints of such practices during research on this subject. I am still searching to prove my theory. If I prove myself wrong, I'll be happy to pass it on.

Originally Posted by cedarstripper

Big problem. This states that the duty was not included in the market price and was not passed on to the consumer. This is a departure from your earlier statements and a contradiction of the theory you advocate that the duty was passed on from consumer to employer till it reached the grower/exporter who could not pass it on. Can you reconcile this?

Not at all. What I've claimed in the past, and the theory I subscribe to is that of Milton and Rose Friedman:

"If tariffs are imposed on, say, textiles, that will add to output and employment in the domestic textile industry. However, foreign producers who no longer can sell their textiles in the United States earn fewer dollars. They will have less to spend in the United States. Exports will go down to balance decreased imports. Employment will go up in the textile industry, down in the export industries. And the shift of employment to less productive uses will reduce total output."

Also that of Wilson and Hogendorn:
. . . consumers . . . include the . . . price increases in their wage and salary demands. Everybody tries to pass the tax to someone else. The only group that is powerless to pass the costs on further are the exporters, who have to sell at world prices and swallow these costs. In essence, a tax on imports becomes a tax on exports.

There is also, Douglas A. Irwin, Department of Economics, Dartmouth College, who claims, “A tariff increases the domestic price of importable goods relative to exportable goods, but this positive effect for import-competing industries can be mitigated by a tariff-induced increase in the price of non-tradeable goods.


The Wilson/Hogendorn theory is probably what you are referring to and it certainly is one way that the Southern cotton planters suffered economically.

I'm not claiming an exchange of commodities is the only way or even the most often used way of selling cotton abroad. Further research should tell how common this practice was.

Originally Posted by cedarstripper

The cotton crop was sold or consigned to cotton factors, who may or may not have already had ownership of the crop as collateral for supplying the grower on credit throughout the year. This factor would sell the cotton in forward contracts to brokers or buyers, either domestic of foreign.

I've already stated that I believe these exchanges were made through agents or brokers. It still all came back to the grower.

Originally Posted by cedarstripper

These factors would supply the grower thoughout the year either directly through his merchandise, or with credit, typically at around 10%-12%. Having sold the cotton at the best contract price, the factor's interest was in buying his supplies wherever he could get the best prices on articles that would sell best to his market. This source was not necessarily in England and France. Certainly the shelves of southern mercantiles contained a combination of foreign, northern and local goods.
Factors and merchants would place their orders with jobbers, often in the northern ports, who would ship their goods as needed.

But we are specifically discussing exports. What domestic goods a broker marketed inside the U.S. is of no consequence. What he sold abroad as an export is our subject and that directly effected what the planter could expect to receive for his cotton.

Originally Posted by cedarstripper

Why did foreign goods typically not ship directly to southern ports? I contend that it was not because Southerners lacked the gene necessary to become merchants, and it matters none where the assorted merchant came from. Certainly what goods were sold there were distributed and sold by someone, and if they were in any great amounts, being supplied from warehouses in Charleston, Savanah, Mobile, New Orleans and Houston certainly would have beat Boston and New York. I contend the reason was that there was not enough concentration of market in most all southern ports to warrant a boatload of coffee, or of tea, or of silk manufactures. Better suited to their market were smaller packet cargoes of a mixture of goods, heavily of domestic origin. Since the Northeast did have the necessary concentration of market, the transportation lines, and was the source of so much of the domestic product, it makes perfect sense that she would evolve into the hub of US commerce.

Sounds good enough to me. The South was extremely rural in nature and whether it is a gene that makes a merchant or family traditions, the Southern people were farmers, although, probably because the Southern land and climate were most suitable for it. But, now I have to ask what your point is in relation to the subject of cotton exports and what difference to the end result does it make where the cotton was shipped from?

Originally Posted by cedarstripper

Your argument rests on a two way street of southern cotton going to Europe and European goods coming to the US, and you conclude that ultimately, the cotton grower is responsible for most of this trade and the revenue generated from it. But I think you need to broaden your view to include domestic commerce and world commerce. If England is to buy $10 million in cotton, you say, she must sell the US, or more precisely, the South $10 million in her exports. Not true.

That is an incorrect assessment of my argument. I think if England purchases $10 million in cotton she is going to have to sell the finished goods somewhere, not necessaraily to the South. The U.S. was a major customer, but as for how much the U.S. purchased from England in ratio to how much cotton England purchased from the U.S., I haven't even looked at that. Perhaps you have those numbers, I'd have to look it up. Are you claiming there was a U.S./Great Britain trade deficit with Great Britain on the losing end?

Originally Posted by cedarstripper

A negative trade imbalance with the US may be more than offset by a positive trade imbalance with other countries (or British colonies). And the bulk of foreign goods imported into the US can be bought heavily in the North, using funds gotten by selling their agricultural and finished goods to the South. I don't mean to imply that this system is limited to three parties either. Add in the rest of surface of the Earth and I think you now have a more accurate picture of international and domestic commerce. And its one that fits nicely with the actual antebellum shipping and trade patterns.

Well, I reckon that is a pretty picture you have painted, but a couple of things trouble me. A number of economic scholars are telling it a bit differently. Who to believe?

Secondly, I'm not concerned with the surface of the Earth. I'm only concerned with the Unites States and her foreign trade to the extent that it concerned Southern cotton.

Anyway, I'm headed to the library. It's a rather small library, but fairly well shelved. Perhaps I can find the information I'm looking for.

Regards,
Rose

[cedarstripper]

Dear Rose,

Originally Posted by Wild_Rose

I should have explained in my scenaraio that the planter probably didn't receive the actual goods. I expect this would all have been done through agents.

I'm sincerely trying to understand you. You had stated earlier that you expected the planter to receive goods instead of cash, but now you state that he didn't actually receive the goods. How was he paid for his cotton?

The South is littered with old cotton exchange buildings where this commerce took place.

Every cotton exchange I find didn't start operations until after the Civil War, typically in the 1870s. The same is true for futures trading. Do you know of any that operated before?

There would have been no ship docked at a Northern port full of dutiable goods waiting for the Southern planter (seller of cotton) to deal with. This would have been sold to some merchant or speculator before leaving the foreign country it originated in.

Then exactly what about this commerce can be regarded as a "commodity exchange"?

But we are specifically discussing exports. What domestic goods a broker marketed inside the U.S. is of no consequence. What he sold abroad as an export is our subject and that directly effected what the planter could expect to receive for his cotton.

You are stating that what a cotton exporter sold abroad directly affected what he could get for his cotton. Well, if it regarded how much was sold, that statement would have some truth to it. But your recent argument has been based on not just exports, but on an alleged reliance of their price being based on US imports from those countries buying the cotton.

Your argument has gone something like this: A cotton grower sells $10,000 worth of cotton in exchange for $10,000 worth of British goods. But in order to import those goods, a heavy duty must be paid on them, lets say 30%. This effectively reduces the cotton growers sale by 30%, or $3000. He can only bring back $7000 worth of imports because he has to pay the $3000 duty on entry thru Customs so that these goods can sell at market price. Therefore, the consumer does not pay the duty - it has already been paid by the US cotton grower/exporter. He pays it regardless of who buys the goods. Is that correct so far?

On top of that, since Liverpool has lost 50% of her American sales, she cannot afford to buy much cotton, and so her buying price is necessarily reduced and the planter takes in further on the chin. Is that pretty close?

Sounds good enough to me. The South was extremely rural in nature and whether it is a gene that makes a merchant or family traditions, the Southern people were farmers, although, probably because the Southern land and climate were most suitable for it.

I say southern people, just like northern people, held all kinds of occupations. Where there were carpenters and blacksmiths needed, people became carpenters and blacksmiths. Same goes for every other occupation, from sawyers to hookers.....and merchants. Nature abhors a vaccumm.

That is an incorrect assessment of my argument. I think if England purchases $10 million in cotton she is going to have to sell the finished goods somewhere, not necessaraily to the South. The U.S. was a major customer, but as for how much the U.S. purchased from England in ratio to how much cotton England purchased from the U.S., I haven't even looked at that. Perhaps you have those numbers, I'd have to look it up. Are you claiming there was a U.S./Great Britain trade deficit with Great Britain on the losing end?

In 1856, the US exported to England $152,561,957 in domestic goods, and $1,157,560 in foreign goods, and $83,739,091 in specie and bullion. We imported $118,045,544 from her. In that same year, we exported to foreign countries other than England: $152,369,742 of domestic goods, $13,409,221 in foreign goods, and $7,782,234 in specie and bullion. We imported from foreign countries other than England $187,056,335 worth of goods.

Well, I reckon that is a pretty picture you have painted, but a couple of things trouble me. A number of economic scholars are telling it a bit differently. Who to believe?

Who are they, and how do they characterize Us / Europe trade?

Secondly, I'm not concerned with the surface of the Earth. I'm only concerned with the Unites States and her foreign trade to the extent that it concerned Southern cotton.

But that trade did not just lay in that reciprocal channel. Neil works for the US Postal Service, but he doesn't just buy stamps. He buys groceries and cars and reenactment gear, and those businesses in turn all mail things. You can't determine how British goods and cotton prices were affected by each other as if they only bought and sold to each other.

Cedarstripper

[Wild_Rose]

Originally Posted by cedarstripper

Dear Rose,

I'm sincerely trying to understand you. You had stated earlier that you expected the planter to receive goods instead of cash, but now you state that he didn't actually receive the goods. How was he paid for his cotton?

If you don't know how an exchange of commodities works I would suggest doing some research. I don't don't think I could explain it very well. As I've already said, I don't know much about economics and I'm learning far more than I need to know.

But as to how the planter got paid for his cotton, it would be by the merchant or other agent that purchased the goods traded for the cotton. Or at least that is how someone would get paid. If the planter had an arrangement with a factor, it would be the factor taking the risk, but any losses would still come back to the planter eventually.

Originally Posted by cedarstripper

Every cotton exchange I find didn't start operations until after the Civil War, typically in the 1870s. The same is true for futures trading. Do you know of any that operated before?
Then exactly what about this commerce can be regarded as a "commodity exchange"?

Actually, the same picture is beginning to emerge for me, too. But, are you suggesting that a cotton exchange facility had to be operational before an exchange of commodities could be arranged? I don't see why since it was simply a more organized way to do business, but I'm still open to the possibility that exchanges of commodities didn't take place until after the war.

Originally Posted by cedarstripper

You are stating that what a cotton exporter sold abroad directly affected what he could get for his cotton. Well, if it regarded how much was sold, that statement would have some truth to it.

High tariffs = less foreign imports.
Less foreign imports = less foreign dollars spent on cotton exports.

Originally Posted by cedarstripper

But your recent argument has been based on not just exports, but on an alleged reliance of their price being based on US imports from those countries buying the cotton.

Less demand would drive the price down. The U.S. was Britain's largest base of foreign customers for finished cotton goods.

Originally Posted by cedarstripper

Your argument has gone something like this: A cotton grower sells $10,000 worth of cotton in exchange for $10,000 worth of British goods. But in order to import those goods, a heavy duty must be paid on them, lets say 30%. This effectively reduces the cotton growers sale by 30%, or $3000. He can only bring back $7000 worth of imports because he has to pay the $3000 duty on entry thru Customs so that these goods can sell at market price. Therefore, the consumer does not pay the duty - it has already been paid by the US cotton grower/exporter. He pays it regardless of who buys the goods. Is that correct so far?

Somewhat. Your scenario left the seller of the cotton with $10,000 worth of merchandise he must spend $3,000 on to bring into the country and hope the market held for him to pass the cost and the added tariff on to the merchant, who would have to pass on to the consumer. It was a balancing act that may or may not work to the seller's advantage. It was a bit more risky than obtaining cash for the cotton, but cash would naturally be less than the $10,000 since the risk factor was removed. It's the same today. The more risk the higher the stakes and the lower the risks the lower the stakes.

Originally Posted by cedarstripper

On top of that, since Liverpool has lost 50% of her American sales, she cannot afford to buy much cotton, and so her buying price is necessarily reduced and the planter takes in further on the chin. Is that pretty close?

How did she lose 50% of her sales? This is your scenario but if she lost a percentage of her sales then it would follow that she would be forced to purchase less cotton.

Originally Posted by cedarstripper

I say southern people, just like northern people, held all kinds of occupations. Where there were carpenters and blacksmiths needed, people became carpenters and blacksmiths. Same goes for every other occupation, from sawyers to hookers.....and merchants. Nature abhors a vaccumm.

I think it's fairly well accepted that the antebellum South was agricultural and the antebellum North was industrial. This, of course, is not absolute, but it is a general rule.

Originally Posted by cedarstripper

In 1856, the US exported to England $152,561,957 in domestic goods, and $1,157,560 in foreign goods, and $83,739,091 in specie and bullion. We imported $118,045,544 from her. In that same year, we exported to foreign countries other than England: $152,369,742 of domestic goods, $13,409,221 in foreign goods, and $7,782,234 in specie and bullion. We imported from foreign countries other than England $187,056,335 worth of goods.

Ok. I'm taking your word for it. So England was, by far, our largest singlular trade partner.

Originally Posted by cedarstripper

Who are they, and how do they characterize Us / Europe trade?

I don't have time tonight to chase down all theories that disagree with yours. Can't you just accept that not all economists agree with each other and they don't all agree with you?

Originally Posted by cedarstripper

But that trade did not just lay in that reciprocal channel. Neil works for the US Postal Service, but he doesn't just buy stamps. He buys groceries and cars and reenactment gear, and those businesses in turn all mail things. You can't determine how British goods and cotton prices were affected by each other as if they only bought and sold to each other.

Cedarstripper

The Southern states furnished the cotton and Britain's largest foreign finished cotton goods sales was to the U.S.. The higher the tariff, the less British imports. The less British imports, the less cotton exports.

Now, unless the post office is selling more than 50% of their stamps to Neil, you are right. If Neil reduces his stamp purchases to say...20% of the post office's total stamp sales and reduces his mailings by a similar percentage, the post office is going to feel the pinch.

This is all probably moot since I now believe, as you do, that commodities exchanges probably became more popular after the transcontinental telegraph. That doesn't alter the fact that the protectionist tariff did the hurt Southern cotton economy. It's just a theory I wanted to explore and some of my reading prompted me to look into this. I still plan to explore a little further if I can find the material.

I didn't come up with anything, of too much interest, at the library today, however, I located a book that I've ordered. It seems that historians haven't had a lot to say about the trade practices of the antebellum cotton grower except for in the most general descriptions. There is little to be found on the internet and my library had next to zip on it. Cotton exchanges... nothing much to speak of except that they now make wonderfully, quaint malls and hotels.

Rose

[whitworth]

When you attempt to take that much land out of the United States, you get a war.
All the other arguments are irrelevant!

[Wild_Rose]

Originally Posted by whitworth

When you attempt to take that much land out of the United States, you get a war.
All the other arguments are irrelevant!

Whitworth, the United States is not an entity of it's own. It is the collective combination of several states which allow the federal government certain governmental powers and the Union does not own the states, it's the other way around. You speak as if the individual states surrendered themselves totally and irrevokably to the Union. History tells us differently. I'm afraid there are other arguments that are very relevant.

Regards,
Rose

[william42]

Rose, hi. Just so I'm clear, are you saying that state government trumps federal in cases such as secession? Thanks.

Terry

[FSPowers]

After reading this thread, I have a few ideas:

1. It seems the main focus of the North was the preservation of the Union.

2. The aboultion of slavery did not become the focus until President Lincoln made it the focus. Remember, he did not believe he had any power to end slavery when the war started. It took the 13th Amendment to finally end it.

3. Possibly many Southerners wanted slavery to end, but on their own terms, not at the points of US Army bayonets.

4. Many Southerners preceived a threat from tarrifs, either actual or imaginary, as well as from the new Republican administration. When one sees a threat to their way of life, they may fight for it, however either noble or misguided.

I submit that there are too many issues involved to focus on just one.


Just a few thoughts. (My opinions are my own.)

[william42]

Hi Rose. My post 76 above - Please disregard. I just remembered there's a whole thread devoted to the subject of secession, right here on this forum. Everything I wanted to say has been eloquently expressed by others already. I don't wanna go there again.

Terry

[milhistbuff1]

FS, et al,
FS, I agree, unlike the intranational conflicts in Europe which tended to have at most 3 dominant root causes, ethnicity, religion and social class being the most popular combo, is totally opposite the US Civil war experience, as you said. While tarriffs might be dominant enough an issue to set someone in Columbia or Charleston SC off on the path to war, it would take a threat to states rights for someone in Norfolk Va just as preservation of the union and the bounty were a few of the many reasons that were decisive in driving the north, depending on population demographics ie immigrant population or not, country or city etc.
Respectfully,
Matt

[Wild_Rose]

FS, those are some very good points. One additional thing I'd like to point out is that one very basic difference in the North and South, that (I believe) accounted for the major part of sectionalism, was their basic view on the role of the federal government.

The North believed in a strong, centralized government involved in the building of trade and industry.

The South believed in minimal central government and state sovereignty. Southerners generally thought of themselves as Virginian's, Texan's, North and South Carolinians, etc., first and as Union citizens, second.

It is not surprising that Southern people would spring into action to defend their state and her rights as they percieved those rights to be.

I think it can be summed up by saying that, in general, the Northern states saw themselves as belonging to the Union, while the Southern states believed the Union belonged to the states. I'm generalizing, of course, but I believe that is an accurate assessment.

I also believe this basic, yet huge, difference would have had to be settled in some way at some point in time. Had it not been under the circumstances of the War Between the States, I believe it would have taken some other form at some other time. This is my opinion only.

Regards,
Rose