Distribution of Wealth: North vs. South

[cedarstripper]

Originally Posted by ole

Southern wealth was very much on paper and built on a shaky foundation. Diversification didn't yield as much as cotton -- no diversification of investments, no protection for the wealth. Without more slaves and new lands, the planter faced certain ruin. It's no wonder they were frightened.

Maybe things didn't always look shaky, though. This touches on an opinion that's been developing on its own in the back of my mind. I think it was Tim that a little while back wrote a post concerning the Panic of 1857, and how prices of commodities that much of the northern economy produced dropped and shipping rates plummeted, etc., while cotton prices and the South's economy were little affected. After years of being insulted by northerners as sinful and backwards, suddenly, as I think Tim wrote, it appeared to the South as though their way was indeed superior. If you can imagine the South in unison, turning their backsides toward the North Star and dropping their drawers kind of stuff.

Riding high on record crops (due to record acreage planted) multiplied by the most money cotton had ever brought, I believe the thought of dividing the Union now, for the first time, seemed possible. I think of a married couple, Yankee and Dixie, who have not been getting along. Dixie has been constantly insulted by Yankee when suddenly Dixie comes into a lot of money at the very same time Yankee gets cut back to part time at work. If Dixie and Yankee are deeply in love...no problem. But since they're not, for the first time, Dixie, with her pockets fuller than they've been in decades, can now seriously entertain the idea of ditching Yankee. DeBow's Review is full of articles during this timeframe assuring their southern readers not only that the South had more than the assets to secede, but that she would vow to build up that part of her commerce and infrastructure that she had left to the North to provide, and 'stick it to the man.' I can't imagine that the South could have played around with the idea of secession when cotton prices were rock bottom in the mid 1840s. I'm being mindful of the various anti-slavery issues that brought threats of secession even in 1856, but I can't help but think the good economic times the cotton belt felt in the second half of the 1850s helped supply the buzz that made secession talk palatable.

Anyway, I think we probably underestimate the role 1857-1860 played in empowering the South to secede.

Cedarstripper

[mobile_96]

Originally Posted by cedarstripper

.... but I can't help but think the good economic times the cotton belt felt in the second half of the 1850s helped supply the buzz that made secession talk palatable.
Anyway, I think we probably underestimate the role 1857-1860 played in empowering the South to secede.
Cedarstripper

Cedar, I agree with you here. The financial problems from the recession? in '57-'58 was compounded by a serious trade deficit during this period. IIRC, added to it was the loss of a federal gold shipment from Cal. caused by a shipwreck,(I think). Anyway, what saved everyone from going under was the large exports of cotton. This cotton trade also helped the recession to be ligher, and to recede quicker than expected. Something the Southern political leaders were well aware of. And they quickly grasped the Idea, that cotton had saved the US and they quickly embraced the idea that Cotton was King, and they had the power, thru Cotton, to control both England and the US. I saw this when I was working on my little project on "King Wheat".
Chuck

[cedarstripper]

Originally Posted by mobile_96

Anyway, what saved everyone from going under was the large exports of cotton. This cotton trade also helped the recession to be ligher, and to recede quicker than expected.

I don't want to get the thread off topic, but if you'll please elaborate with one more answer. With the end of the Crimean War came a decline in the European market for US exports of the types that could be produced in Europe. The type of trade we had grown accustomed to was suddenly gone along with its required shipping. Can you explain how cotton exports supplied a remedy to this?

Thanks
Cedarstripper

[mobile_96]

Originally Posted by cedarstripper

I don't want to get the thread off topic, but if you'll please elaborate with one more answer. With the end of the Crimean War came a decline in the European market for US exports of the types that could be produced in Europe. The type of trade we had grown accustomed to was suddenly gone along with its required shipping. Can you explain how cotton exports supplied a remedy to this? Thanks Cedarstripper

Raw cotton wasn't produced in Europe and was a major import for them. Finished cotton products weren't sold only to the the U.S, but thru out the world.
I do know that the % drop of exports was smaller than the % drop of imports. It was a cash flow problem, IIRC. Give me a bit of time and I'll see if I can re-locate the info I had. I thought it was in Nevin's but a quick glance produced nothing. I remember that it was the first time I'd ever seen a explanation of where King Cotton originated, and stuck with me.

[unionblue]

To All,

Hope this pertains to the central idea of this thread.

From the book, The Slavery Debates, 1952-1990, by Robert W. Fogel:

Dissecting the Myth of an Impoverished South

Did the struggle against slavery decisively reshape American civilization? The weight of evidence brought to light during the slavery debates clearly indicates that it did, but not because it rescued an impoverished, economically stagnating region from the clutches of an economically bankrupt planter class. Cliometric research has revealed that the planter class was thriving during the last two decades of the antebellum era and was every bit as prosperous as the rich of the North, although the source of wealth of the two plutocracies differed. The North's wealthiest 1 percent in 1860 were mainly urban merchants and manufacturers whose businesses were based on wage labor, while in the South the top 1 percent were mainly rural planters whose businesses were based on slave labor. The Southern plutocrats were considerably richer on average than their Northern counterparts, by a factor of roughly two to one. Indeed, nearly two out of every three males in the United States with wealth of $100,000 or more (the super rich of the era) lived in the South in 1860.

The big planters of the cotton belt were generally consolidating their economic positions during the late antebellum era. Between 1850 and 1860 the real wealth of the typical gang-system planter increased by 70 percent. Rather than gradually slipping from its economic dominance, this class was overthrown by the Civil War, which led to the destruction or loss of two-thirds of its wealth. By 1870 Southerners no longer predominated among the nation's super rich; four out of every five of the super rich were now Northerners. So it was not the vagaries of the market or other economic events but military defeat that moved the scepter of wealth from the agrarian South to the industrializing North.

If we treat the North and South as separate nations and rank them among the countries of the world, the South would stand as the fourth most prosperous nation of the world in 1860. The South was more prosperous than France, Germany, Denmark, or any of the countries of Europe except England. The South was not only advanced by antebellum standards but also by relatively recent standards. Indeed, a country as advanced as Italy did not achieve the Southern level of per capita income until the eve of World War II.

The last point underscores the dubious nature of attempts to classify the South as a "colonial dependency." The South's large purchases of manufactured goods from the North made it no more of a colonial dependency than did the North's heavy purchases of rails from Great Britain. The true colonial dependencies, countries such as India and Mexico, had less than one-tenth the per capita income of the South in 1860....

Far from stagnating, the per capita income of the South grew at an average annual rate of 1.7 percent from 1840 to 1860. This rate of growth was not only a third higher than that enjoyed by the North but quite high by historical standards. Only a handful of countries have been able to sustain long-term growth rates substantially in excess of that achieved by the antebellum South between 1840 and 1860.

And one last observation made by the book:

Far from being incompatible, the economies of the two regions (North and South) were closely tied to each other by intricate webs of trade and commerce. The South was a prime market for the products of the North's rapidly expanding manufacturing sector, especially textiles, shoes, iron, and steel. Indeed, mass-produced clothing for slaves accounted for a significant share of the output of Northern textile mills. Among the products that the South supplied to the North were raw cotton, tobacco, refined sugar, and molasses. Both regions experienced a two-way flow of capital and commercial services. Southern planters invested in railroads north of the Mason-Dixon Line, and northern capital helped to finance southern commerce and plantations. Most of the businessmen of each region saw the businesses of the other region less as threats to their own interests than as partners in advancing a common prosperity. When antislavery militants sought to promote political coalitions hostile to the South, many Northern merchants and factory owners counseled compromise.

Sincerely,
Unionblue

[trice]

Originally Posted by unionblue

To All,

Hope this pertains to the central idea of this thread.

From the book, The Slavery Debates, 1952-1990, by Robert W. Fogel:

Dissecting the Myth of an Impoverished South

Did the struggle against slavery decisively reshape American civilization? The weight of evidence brought to light during the slavery debates clearly indicates that it did, but not because it rescued an impoverished, economically stagnating region from the clutches of an economically bankrupt planter class. Cliometric research has revealed that the planter class was thriving during the last two decades of the antebellum era and was every bit as prosperous as the rich of the North, although the source of wealth of the two plutocracies differed. The North's wealthiest 1 percent in 1860 were mainly urban merchants and manufacturers whose businesses were based on wage labor, while in the South the top 1 percent were mainly rural planters whose businesses were based on slave labor. The Southern plutocrats were considerably richer on average than their Northern counterparts, by a factor of roughly two to one. Indeed, nearly two out of every three males in the United States with wealth of $100,000 or more (the super rich of the era) lived in the South in 1860.

Two comments:

1) I heard about 20 years ago that the state with the highest percentage of millionaires was Idaho. Why Idaho? Because big farms require lots of land and lots of equipment, which meant lots of value in assets. That does not necessarily mean that the millionaires had a lot of disposable cash on hand. I think the "rich" plantation owners of the South in 1860 might have often been short on cash, but rich in land and slaves.

2) The North had a large middle class, not as large a percentage as today, but the South seems to have little in the way of a middle class. I saw a note once that Charleston in 1860 had almost none, because the planter class used to "loan" skilled slaves to one another for jobs -- no need to pay high wages to skilled craftsmen when you could barter slave labor back and forth. This is one of the reasons Charleston had such draconian slave tag laws; the local non-rich whites had a strong resentment against this practice.

Regards,
Tim

[samgrant]

I'm just now reading David Donald's Lincoln, and this course of discussion prompts me to give as an example one of the reasons Kentuckians (and others?) left the slave states for those non-slave states such as Ohio, Indiana, and Illinois.

Lincoln's father in particular, as a mostly unskilled person who needed manual labor to make a living, could not compete with slave labor.

Many of them moved north, not because they disapproved of slavery on a moral basis, but on a personal economic basis.

[cedarstripper]

Originally Posted by samgrant

I'm just now reading David Donald's Lincoln, and this course of discussion prompts me to give as an example one of the reasons Kentuckians (and others?) left the slave states for those non-slave states such as Ohio, Indiana, and Illinois.

IIRC, Donald also noted that Lincoln's dad could never win in a legal battle against planters for the title to their land.....so rather than try, it was abandoned and off they went.

Cedarstripper

[unionblue]

Trice, ceaderstripper, and samgrant,

Thank you for your comments.

It has often been said by those who represent the Southern viewpoint, that slavery could have never moved North, that it was an unsuitable institution because of climate, etc.

Trice has pointed out to me that plantation owners were rich, not so much in 'disposeable cash', but in land and slaves, and often loaned ourt their slaves to one another and for other skilled tasks in towns and such to other whites to pay for services rendered.

Perhaps this was the threat that had most Northern white men in a tizzy with the fear of slavery being made legal throughout the Union. Not that there would be vast plantations established for crops and such, but that slave labor for other tasks would be available and drive free whites out of an ever shrinking job market.

As samgrant and ceaderstripper have pointed out, a free white could hardly take on a plantation owner head-on nor could he compete with slave labor and support his family.

Sincerely,
Unionblue

[larry_cockerham]

Originally Posted by unionblue

a free white could hardly take on a plantation owner head-on nor could he compete with slave labor and support his family.

Sincerely,
Unionblue

Your argument recently is well stated as usual, but a bit out of focus in some respects. Several folks have left the impression that large slave owners where evident all across the south. That simply wasn't the case. Earlier it has been stated that the number of slaves owned by a particular holder was in porportion to the size of his or her landholdings and and the need for additional labor. I suspect that is essentially true. In particular the rice planters around Charleston and the cotton kings further west grew extremely wealthy in dollars as well as land and labor. That has also been stated many times. The rich folks, rich by any standard, sent their kids to Harvard and Yale, literally. (That's how they lose them funny accents.) The fuzzy focus part comes when you compare the totals of the individuals who were in this category to the vast majority of southerners who owned, let's say, 50 acres or usually far less. These, as we have said many times, were the guys fighting the war, not the fat guy with the rice falling out of his pockets.