Economic Cost of the Civil War.

[unionblue]

To All,

I was asked to help a nephew with his paper on the Civil War and ran down some interesting sites.

Economics of the Civil War.

http://www.eh.net/encyclopedia/artic...m.civil.war.us

Costs of the Civil War.

http://www2.sjsu.edu/faculty/watkins/costofcw.htm

What if the Union Had Bought Out The Confederacy Instead of Fighting?

http://www.gongol.com/research/economics/slavebuyout/

Sincerely,
Unionblue

[hoosier]

I see the second site lists an item labeled "Labor Costs Overcounted Because of Risk Premium."

What a mouthful!

Do we have any economists who can explain that in layman's terms?

[unionblue]

Hoosier,

That's why I began the thread, in the hopes someone could help explain a few thing!

I once heard a quote by Harry Truman, "If you laid all the economists in the country end-to-end, they would point in all directions!"

Sincerely,
Unionblue

[ole]

unionblue:
I thought it was, "they wouldn't reach a conclusion." Same thing, only different. By the way, thanks for those links. They're the reason I don't get much book-readin' done.

Ole

[whitworth]

One only need read the record of the annual expenditures made by the U.S. Congress during the Civil War, to understand that the Confederate leadership never knew what hit them.

[whitworth]

One fatally flaw the Confederate founding fathers never saw was U.S. deficit financing to fight the Civil War.
They buried the south with an ability to loan money.
By June 30, 1862, the U.S. collected 584 million dollars for the fiscal year. 530 million dollars was in loans of all kinds.

The Confederacy had their cotton, their slaves and their arrogance.

By 1863, the Confederate leadership found this was a different kind of war. It was a deficit financed modern industrial war. Bravery was only going so far.

[unionblue]

To All,

Found this passage on another Civil War forum.

"The federal budget in 1860 was around $60 million. Four million slaves were worth several billion, so it would have been a colossal investment by the standards of the time. Congressman Paul and the rest of us know now that it would been on a par with the cost of fighting the war - the national debt in 1865 was around $2.7 billion, almost all of it war-related, equivalent to about $700 per slave - but no one imagined that at the time. Even when the threat of war loomed, most people expected it to be short (and that their side would win).

There's also the question of whether the slaveowners want to sell, unless it was made mandatory, which might be difficult to get through Congress. Many people, ironically including the 1860s equivalents of Ron Paul, would not want the government imposing something like that, and others would oppose taking on debt for the purpose.

Nor did most white people (northerners included) back then want to share their communities with millions of free blacks, especially if they could vote; blacks were the majority in parts of the southe including a couple of states."

Comments?

Sincerely,
Unionblue

[trice]

To All,

Found this passage on another Civil War forum.

"The federal budget in 1860 was around $60 million. Four million slaves were worth several billion, so it would have been a colossal investment by the standards of the time. Congressman Paul and the rest of us know now that it would been on a par with the cost of fighting the war - the national debt in 1865 was around $2.7 billion, almost all of it war-related, equivalent to about $700 per slave - but no one imagined that at the time. Even when the threat of war loomed, most people expected it to be short (and that their side would win).

There's also the question of whether the slaveowners want to sell, unless it was made mandatory, which might be difficult to get through Congress. Many people, ironically including the 1860s equivalents of Ron Paul, would not want the government imposing something like that, and others would oppose taking on debt for the purpose.

Nor did most white people (northerners included) back then want to share their communities with millions of free blacks, especially if they could vote; blacks were the majority in parts of the southe including a couple of states."

Comments?

Sincerely,
Unionblue

I've seen people bring this type of information before, usually to argue that the nation would have been better off negotiating a bailout for slave-owners. You can quibble over figures (the 1860 budget was about 79 million, IIRR, and the average slave was probably not going to fetch more than $500, so instead of "several billion", think "no more than two billion"). I can agree that it might have been much "better" to do it that way, but I generally think it is misleading to go down this path as anything other than a fantasy exercise (enjoyable, but not very realistic).

Why? Because I have never seen any indication that there was any desire, even a weak one, on the part of the people of the slave states to be bought out.

Even with the war on and the Republicans in control, there were rumblings about the government's compensated emancipation in Washington, D. C. (at $300/head). Delaware flatly refused to accept an offer from Lincoln in a popular vote. None of the other Border states took advantage of feelers from the Republicans during the war, even when the handwriting was clearly on the wall and Emancipation was virtually inevitable.

So why go down this path? I see no serious proposals from the North to do it before the war. I see no demands from the South to have it done. I see no group actively agitating for it. In fact, we see quite the opposite, with groups agitating for the expansion of slavery into the territories, the enforcement of the fugitive slave laws, the acquisition of new slave territory (Mexico, Cuba, Central America, etc.) and the re-opening of the Atlantic Slave Trade. People seem more willing to fight a war over this than to see slavery end.

Tim

[CChartreux]

Hi Union


I'm not sure I understand the context of the comments. Is this related to 'buying out' slavery or something to that effect?

IMHO, if the South agreed to end slavery, then the smart way to do it (with the more desirable economic impact) would be to grandfather out slavery over a period of 25 years (or whatever).

But - it's going to be a tough row to hoe to get the South to agree with that. IMHO, if this were simply an economic issue, it's a 'no-brainer' - but, the problem is that is isn't just an economic issue. That's why - to me anyway - all the economic theory in the world isn't going to alter the fact that slaves got put into that position in the first place for a reason (i.e., they were viewed as inferior). Kind of weird dynamic there insofar as the whole economic infrastructure happens to be tied to a belief that's clearly inconsistent with the more enlightened ideas of equality.

Going out on a limb here - and not intending to pooh-pooh the idea of an economic analysis of the war, but the idea that this war could have been avoided by clever economic solutions doesn't admit to the underlying racism that put blacks in that place to begin with. One of the assumptions in the links above is that 'slavery should be gotten rid of' or something to that effect. It's a flawed assumption, in my view, because it minimizes how ingrained the notion of inferiority was (even among northerners). Er....so what the heck does all this mean....

I think it means that while the economic issues are rather easy to tease out of this whole thing - IMHO, the underlying currents in the Civil War are really social - not economic. I can't believe I said that out loud - because there would have been a time when I would have said all of this is about money and the economy. Except the phenomenon of abolition in the aftermath of the Age of Enlightenment would seem to trump beyond (ultimately) whatever financial and economic gain slavery might have provided. In the end, people just couldn't stand slavery anymore and wanted to put an end to it...regardless of its economic impact. To me, then, that's a social driver; and, in the end, it prevailed over economic interests (not just the economic interests of the South either, but the economic interests of the U.S. as a whole given that cotton was 57% of exports).

Okay - sorry I went into all that and seemed drift around. Getting back on point, however, I would tend to disagree that the end of slavery should be at a particular 'point' rather than a 'line'. The 'soft landing' would have been grandfathering slavery out over time.





CC

[cw1865]

So why go down this path? I see no serious proposals from the North to do it before the war. I see no demands from the South to have it done. I see no group actively agitating for it. In fact, we see quite the opposite, with groups agitating for the expansion of slavery into the territories, the enforcement of the fugitive slave laws, the acquisition of new slave territory (Mexico, Cuba, Central America, etc.) and the re-opening of the Atlantic Slave Trade. People seem more willing to fight a war over this than to see slavery end.

I agree very much. If you look at the economic value of the slaves, the value is in excess of $2billion with some estimates as high as $4billion with a Federal budget in the area of $70-$80 million. In 1860, the Federal government simply does not have the ability to pull it off.

Its still an interesting analysis in the abstract for the very reason that the end result of the war (which we will simply define as an end of slavery and a preservation of the union) could have been purchased far more cheaply (even disregarding the human cost of the war). If you handed Lincoln and Davis a history book from after the war in 1860, both would have to be idiots not to go down the compensated emancipation path because both sides would be better off (of course it creates some ancillary EQUITY issues, ie. slaveholders being compensated by non-slaveholding taxpayers)

For me personally, the economics of dispute resolution is an extremely interesting topic. I cannot tell you how many times I've been involved in legal disputes where the dispute winds up becoming about 'attorney's fees' instead of the amount that was at stake. In essence this typically is the result of individual obstinance, but winds up being quite a burden on all involved.

The recent problems in Georgia (the Asian one) with respect to South Ossetia and the Russian invasion can be analyzed from this viewpoint. The US supports Georgian territorial integrity and the Russians supported the Ossetian claims. Right or wrong, the Russians did invade after the Georgian military asserted control in the region. I would suggest that an economic solution could've been had, particularly considering the relatively small population of the region. Georgia and the individual inhabitants could have been paid to voluntarily cede the region and relocate (in such a manner that they would actually be happy to do so), or the reverse could have been done with the Ossetians.

[trice]

I agree very much. If you look at the economic value of the slaves, the value is in excess of $2billion with some estimates as high as $4billion with a Federal budget in the area of $70-$80 million. In 1860, the Federal government simply does not have the ability to pull it off.
...

Yep. You simply could not have convinced "the North" to make the payment without putting them through a war first. You could not have convinced "the South" to take the money, to give up the slaves and their "way of life" without putting them through a war first. It wasn't going to happen.

That leaves aside the question of what a "fair price" would be.

The proverbial "prime field hand" went for about $500 in Delaware (where selling a slave out of state was illegal and had been for decades). Slavery just wasn't all that profitable in Delaware and there were very few slaves there -- and still they refused to take Lincoln's buyout offer.

The same proverbial "prime field hand" went for about $1500 in New Orleans, in the height of the season (which means after the harvests were sold and the planters were in town, flush with cash, to attend the auctions). Slavery was very profitable in the Delta and bottomlands of the Mississippi.

But if you are talking about all slaves, relatively few qualify as "prime field hands" or the equivalent. Lots of old men and women in there, lots of little kids, lots of broken down or just not quite so young anymore. Why imagine a high price for each, or even that the nation should pay a full price for each to free them? Why not a simple payment to encourage them, instead of a full-price purchase? Maybe $300/head? Maybe less?

Also -- since the northern states had gotten rid of the slaves themselves without any Federal payment -- do they have a claim here? Should the Feds be paying NJ, PA, and NY former slaveowners for what they did decades before? Why should Southerners expect Federal charity when Northerners didn't get any? At one point, payments to take care of freed slave children made up 40% of the NJ state budget -- what was "the South" willing to bear as their share of the cost here, seperate from the Federal burden?

Tim

[cw1865]

But if you are talking about all slaves, relatively few qualify as "prime field hands" or the equivalent. Lots of old men and women in there, lots of little kids, lots of broken down or just not quite so young anymore. Why imagine a high price for each, or even that the nation should pay a full price for each to free them? Why not a simple payment to encourage them, instead of a full-price purchase? Maybe $300/head? Maybe less?

Well you are encountering the problem of valuing something in gross when the constituent parts are of different value. Its simply not the same as valuing a consistent, homogenous commodity (ie. gold). Even in the case of gold, the value fluctuates over time. You could say the same for slaves, the value for which should be dependent on the price of cotton.

Also -- since the northern states had gotten rid of the slaves themselves without any Federal payment -- do they have a claim here?

I would suggest that in the context of a compensated emancipation scheme? No, because the entire concept is about paying people to relinquish a legal right (or a disputed one). Plus there is the entire concept of the present value of money. When people make investment decisions (in this case the 'investment' is a slave of course), they do so based on the present value of the expected future cash flows. Assuming arguendo that those cash flows are fixed (and in reality they aren't of course!), the ****her out that you go the less valuable that particular cash flow is. So, if you're buying a slave in 1820, and you're investment horizon is forty years, the cash flow in 1860 is virtually worthless (FROM THE PERSPECTIVE OF 1820).

Should the Feds be paying NJ, PA, and NY former slaveowners for what they did decades before?

It would also depend on the individual circumstances of those particular slaveowners. Did they manumit? Were they going to manumit? Did they sell South to circumvent the emancipation?

Why should Southerners expect Federal charity when Northerners didn't get any?

Ah, there is the equitable rub. In the context of the Civil War, the slaveowners would be infinitely better off than what occured as a result of the war, but that doesn't make it a zero-sum game, the North would also have been a lot better off because in the context of this 'thought experiment' the cost of compromising is far less than the cost to compel.

At one point, payments to take care of freed slave children made up 40% of the NJ state budget -- what was "the South" willing to bear as their share of the cost here, seperate from the Federal burden?

Naturally the procedural difficulties of implementing the plan would be infinitely complex because you have many unforseen consequences. If the children are freed and are orphans, the children ought to have been taken care of in accordance with how white orphans were taken care of. By the standard of the day that probably wasn't very good.

I don't suggest that the 'commoditization' of disputes is the end all of dispute resolution. It isn't, but where the parties to a dispute recognize the situation where it could be applied to each others advantage, it probably should be utilized.

[trice]

I would suggest that in the context of a compensated emancipation scheme? No, because the entire concept is about paying people to relinquish a legal right (or a disputed one)

Hmm. Good point. They really didn't have a legal claim in that sense. of course, we're really talking political arm-twisting here to get things done, so what might happen is different than a legal right.

It would also depend on the individual circumstances of those particular slaveowners. Did they manumit? Were they going to manumit? Did they sell South to circumvent the emancipation?

Talking about PA-NY-NJ (the gradual emancipation states), it appears some did and most didn't. Within a few years, all three found it necessary to pass laws to prevent slaves from being sold out of state. I would guess the delay was somewhat deliberate, to allow a gap of a few years so masters could dispose of slaves out-of-state.

In NJ, the state came up with a great scheme for slaveowners. (NJ politics were not much different then than they are now.) A master would free his infants and small children, making them wards of the state. The county agent would then place them back with the master (surprise!) to ensure foster care -- qualifying the master for a monthly fee to care for the child until he was 21 (IIRR). The master got paid, and when the kid was old enough he could do work for the master. Pretty sweet, and this is what grew to be 40% of the state budget in those days.

Tim

[cw1865]

Hmm. Good point. They really didn't have a legal claim in that sense. of course, we're really talking political arm-twisting here to get things done, so what might happen is different than a legal right.

The problem with this method of dispute resolution is that if you stretch it TOO far, it becomes a precedent for out and out blackmail. I would suggest that both sides would at least need to have what the law would call 'colorable merit'

Of course in the context of slaveholders they have little claim to 'equity' in our minds, but there are instances where I think this doctrine could be applied in actual real world scenarios.

The number 1 scenario where I think it applies best is in the case where ethnic miniorities resort to violence to throw off the yoke of rule from an ethnic majority - this is obviously a consistent theme through the history of the 20th century in particular and even today. Many of the conflicts today have their 'core' in this problem. Of course to a certain extent the problem is 'intractable' because both sides to the dispute can say 'Hey, I was born here.'

[whitworth]

of giving up the economic opportunities of owning slaves. Over the long period, slaves as a matter of long-term income, far exceeded the sales value in a given year.

The Economist who thought it cheaper to buy the slaves in 1860, probably has never read the legal document of the Confederate States -The Constitution of the Confederate States.

The ownership of slaves was a guaranteed right of the citizens of the Confederate States. The Confederate states were not interested in selling all their slaves. That's why they seceded.

[larry_cockerham]

The Forrest brothers, slave dealers with few if any peers, had closed up shop by 1859 as I recall. The market was down. Times were changing rapidly before the war. The mechanical cotton picker was on the horizon. Yes, plantation owners could afford 'em. Some of the rich folks both north and south who needed domestic labor because they were too lazy to take out the trash were the folks who were slower to change.

[trice]

The Forrest brothers, slave dealers with few if any peers, had closed up shop by 1859 as I recall. The market was down. Times were changing rapidly before the war. The mechanical cotton picker was on the horizon. Yes, plantation owners could afford 'em. Some of the rich folks both north and south who needed domestic labor because they were too lazy to take out the trash were the folks who were slower to change.

I'm a believer in automation replacing slave labor over time, but in 1860 the mechanical cotton picker was no more than a dim gleam in a few people's eyes. The first attempt was made in 1850, but the first real one was produced in 1889 by the Price Campbell Cotton Picker Corporation, and not much happened with that until International Harvester bought the patents in 1924. Mechanical coton pickers did not become truly successful until 1943, and they started to go mainstream in the 1950s.

Similar for tobacco pickers, BTW; it took a long time.

When cheap automation can replace cheap labor, there really is an impact. I saw a graph once mapping the decline of employment of domestic servants against the introduction of the vacumn cleaner and the washing machine. No one who saw it would doubt what caused the decline.

Tim

[larry_cockerham]

I'm a believer in automation replacing slave labor over time, but in 1860 the mechanical cotton picker was no more than a dim gleam in a few people's eyes. The first attempt was made in 1850, but the first real one was produced in 1889 by the Price Campbell Cotton Picker Corporation, and not much happened with that until International Harvester bought the patents in 1924. Mechanical coton pickers did not become truly successful until 1943, and they started to go mainstream in the 1950s.

Similar for tobacco pickers, BTW; it took a long time.

When cheap automation can replace cheap labor, there really is an impact. I saw a graph once mapping the decline of employment of domestic servants against the introduction of the vacumn cleaner and the washing machine. No one who saw it would doubt what caused the decline.

Tim

Do you happen to know WHY the Forrest brothers hung up their shingle? Had the profits from cotton and railroad transport become more attractive than the slave markets? A guiding hand from Mrs. Forrest? Just curious.

[Scribe]

The Forrest brothers, slave dealers with few if any peers, had closed up shop by 1859 as I recall. The market was down. Times were changing rapidly before the war..

If the the antebellum market for slaves was down why was there a considerable push in the slave south to bring back the international slave trade?

The mechanical cotton picker was on the horizon.

A viable working mechanical cotton picker did not make its appearance in the south until the mid-1940s. The herbicides that ended the need for cotton choppin were not available until the 1950s-60s.

That's a **** distant horizon for a slave.

[trice]

Do you happen to know WHY the Forrest brothers hung up their shingle? Had the profits from cotton and railroad transport become more attractive than the slave markets? A guiding hand from Mrs. Forrest? Just curious.

By 1858 he owned two plantations downriver, above Vicksburg, somewhere near Goodrich Landing, and he resigned as Alderman to move to the plantations in eraly 1859. He was back soon enough. I can't say I know the reasons, but always guessed much like you: that now that he was rich, he was making an effort at respectability.

Tim

[ole]

Mechanical labor-saving devices were not going to soon replace the field hand. These guys (and I'm not talking about the guy that had one or two and treated them as well as he treated his own family) were as interested in social position as they were in making money. You didn't get to be sassity without land and slaves to work it.

Which all goes to the observation that the slave-society was so deeply a part of Southern custom that picking on manumission or compensated abolition amount to nibbling.

Ole