Economic Condition of South Carolina in 1860

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Dixie
#61
Traditionally, the Southern economy was considered non-capitalistic and pre-bourgeoise; a pre-industrialized economy that struggled to thrive due to the lack of incentives imposed by slave labor, the absence of a legal framework that stimulated the emergence of capitalism and a backward, agriculture-based economy. Eugene Genoese.
According to Genovese, slaveholders “were pre-capitalist aristocrats imbued with an antibourgeois spirit with values and mores which subordinated the drive for profit to honor, luxury, ease accomplishment, and family.” In other words, the South was an inefficient economy where the entrepreneurial search for profits typical of capitalist economies was mostly secondary.
Instead, a quasi-aristocratic class (the planters) acted like medieval landowners more concerned about their culture of honor, power and appearances than maximizing profits.
This analysis was challenged by the publication in 1974 of the controversial work Time On the Cross : The Economics of American Slavery. The authors, Nobel-awarded economist Robert W. Fogel and economic historian Stanley L. Engerman, applied novel econometric techniques to the study of slavery. In a nutshell, Fogel and Engerman (F&E) concluded that: i) slavery was economically profitable; ii) slave labor was more efficient than free labor; iii) planters behaved as modern entrepreneurs in a capitalist economy; and iv) the South was not as underdeveloped as it had been suggested in comparison with the North. In short, F&E suggested that the Southern economy was mostly capitalistic despite being largely based on slave labor. To what extent are these conclusions accurate?
F&E’s claim that slave labor was more efficient than free labor was contested by Stanford’s economic historian Gavin Wright. According to Wright, “the apparent efficiency of slave labor [was due to the] extraordinary growth of world demand for cotton between 1820–1860”
The idealized view of slaveholders as modern entrepreneurs conveyed by F&E is deeply misleading, if not fictitious. Planters did not take advantage of many valuable investment opportunities due to their narrow, reactionary mentality. As pointed out by economic historians Fred Bateman and Thomas Weiss, slaveholders failed to invest capital in industry even though “profits from southern manufacturing were high enough to have made investment in industry a rational choice by planters”
What prevented planters from allocating part of their profits in industrial activities? Essentially, two reasons: first, as stated above, their commitment to an intensively conservative ideology based on values like hierarchy, tradition and honor; second, their deep hatred towards the values represented by liberal democracy and capitalism, which were thought to jeopardize the traditional Southern way of life.
As shown above, F&E’s thesis on the capitalistic nature of the South’s economic system seems very difficult to maintain. It cannot be denied that the South incorporated certain aspects of capitalism due to the fact that its economy largely depended on the demand for cotton that came from several parts of the world. However, the South lagged behind the North in terms of urbanization and economic and social development precisely because market capitalism did not seep through the channels of the Southern economy. The Peculiar Institution was, without doubt, the main cause of the economic, political and social backwardness in the Antebellum South.
https://medium.com/@luispablodelaho...he-antebellum-south-capitalistic-447f958a9321
 

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jgoodguy

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#62
Traditionally, the Southern economy was considered non-capitalistic and pre-bourgeoise; a pre-industrialized economy that struggled to thrive due to the lack of incentives imposed by slave labor, the absence of a legal framework that stimulated the emergence of capitalism and a backward, agriculture-based economy. Eugene Genoese.
According to Genovese, slaveholders “were pre-capitalist aristocrats imbued with an antibourgeois spirit with values and mores which subordinated the drive for profit to honor, luxury, ease accomplishment, and family.” In other words, the South was an inefficient economy where the entrepreneurial search for profits typical of capitalist economies was mostly secondary.
Instead, a quasi-aristocratic class (the planters) acted like medieval landowners more concerned about their culture of honor, power and appearances than maximizing profits.
This analysis was challenged by the publication in 1974 of the controversial work Time On the Cross : The Economics of American Slavery. The authors, Nobel-awarded economist Robert W. Fogel and economic historian Stanley L. Engerman, applied novel econometric techniques to the study of slavery. In a nutshell, Fogel and Engerman (F&E) concluded that: i) slavery was economically profitable; ii) slave labor was more efficient than free labor; iii) planters behaved as modern entrepreneurs in a capitalist economy; and iv) the South was not as underdeveloped as it had been suggested in comparison with the North. In short, F&E suggested that the Southern economy was mostly capitalistic despite being largely based on slave labor. To what extent are these conclusions accurate?
F&E’s claim that slave labor was more efficient than free labor was contested by Stanford’s economic historian Gavin Wright. According to Wright, “the apparent efficiency of slave labor [was due to the] extraordinary growth of world demand for cotton between 1820–1860”
The idealized view of slaveholders as modern entrepreneurs conveyed by F&E is deeply misleading, if not fictitious. Planters did not take advantage of many valuable investment opportunities due to their narrow, reactionary mentality. As pointed out by economic historians Fred Bateman and Thomas Weiss, slaveholders failed to invest capital in industry even though “profits from southern manufacturing were high enough to have made investment in industry a rational choice by planters”
What prevented planters from allocating part of their profits in industrial activities? Essentially, two reasons: first, as stated above, their commitment to an intensively conservative ideology based on values like hierarchy, tradition and honor; second, their deep hatred towards the values represented by liberal democracy and capitalism, which were thought to jeopardize the traditional Southern way of life.
As shown above, F&E’s thesis on the capitalistic nature of the South’s economic system seems very difficult to maintain. It cannot be denied that the South incorporated certain aspects of capitalism due to the fact that its economy largely depended on the demand for cotton that came from several parts of the world. However, the South lagged behind the North in terms of urbanization and economic and social development precisely because market capitalism did not seep through the channels of the Southern economy. The Peculiar Institution was, without doubt, the main cause of the economic, political and social backwardness in the Antebellum South.
https://medium.com/@luispablodelaho...he-antebellum-south-capitalistic-447f958a9321
Good points. I'd add that Cotton was so profitable, that it drove out other forms of investment. Why take a chance on a factory, for example, when investing in land, cotton seeds and slaves were almost a sure thing. Sans cotton, slavery would like have been diminished greatly.
 
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#63
The cotton boom was based on the ability of cotton growers to follow an easy formula to duplicate. Economic busts happen because the conditions of demand v supply change before the suppliers realize it.
The threat to cotton and slavery was that demand conditions would change, while the British began to diversify the supply. The secessionists could hide this threat from southern farmers by arguing about the political threat posed by the Republicans.
There was no escape from the first threat, and secession does not solve the problem. So the political ploy of secession solves a mainly made up problem.
 
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#64
Good points. I'd add that Cotton was so profitable, that it drove out other forms of investment. Why take a chance on a factory, for example, when investing in land, cotton seeds and slaves were almost a sure thing. Sans cotton, slavery would like have been diminished greatly.
It even drove out other forms of farming. People who did not like cotton farming and reliance on slavery left to go west. While cotton fever was spreading across the Gulf states, other people were leaving.
 

jgoodguy

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#65
Traditionally, the Southern economy was considered non-capitalistic and pre-bourgeoise; a pre-industrialized economy that struggled to thrive due to the lack of incentives imposed by slave labor, the absence of a legal framework that stimulated the emergence of capitalism and a backward, agriculture-based economy. Eugene Genoese.
According to Genovese, slaveholders “were pre-capitalist aristocrats imbued with an antibourgeois spirit with values and mores which subordinated the drive for profit to honor, luxury, ease accomplishment, and family.” In other words, the South was an inefficient economy where the entrepreneurial search for profits typical of capitalist economies was mostly secondary.
Instead, a quasi-aristocratic class (the planters) acted like medieval landowners more concerned about their culture of honor, power and appearances than maximizing profits.
This analysis was challenged by the publication in 1974 of the controversial work Time On the Cross : The Economics of American Slavery. The authors, Nobel-awarded economist Robert W. Fogel and economic historian Stanley L. Engerman, applied novel econometric techniques to the study of slavery. In a nutshell, Fogel and Engerman (F&E) concluded that: i) slavery was economically profitable; ii) slave labor was more efficient than free labor; iii) planters behaved as modern entrepreneurs in a capitalist economy; and iv) the South was not as underdeveloped as it had been suggested in comparison with the North. In short, F&E suggested that the Southern economy was mostly capitalistic despite being largely based on slave labor. To what extent are these conclusions accurate?
F&E’s claim that slave labor was more efficient than free labor was contested by Stanford’s economic historian Gavin Wright. According to Wright, “the apparent efficiency of slave labor [was due to the] extraordinary growth of world demand for cotton between 1820–1860”
The idealized view of slaveholders as modern entrepreneurs conveyed by F&E is deeply misleading, if not fictitious. Planters did not take advantage of many valuable investment opportunities due to their narrow, reactionary mentality. As pointed out by economic historians Fred Bateman and Thomas Weiss, slaveholders failed to invest capital in industry even though “profits from southern manufacturing were high enough to have made investment in industry a rational choice by planters”
What prevented planters from allocating part of their profits in industrial activities? Essentially, two reasons: first, as stated above, their commitment to an intensively conservative ideology based on values like hierarchy, tradition and honor; second, their deep hatred towards the values represented by liberal democracy and capitalism, which were thought to jeopardize the traditional Southern way of life.
As shown above, F&E’s thesis on the capitalistic nature of the South’s economic system seems very difficult to maintain. It cannot be denied that the South incorporated certain aspects of capitalism due to the fact that its economy largely depended on the demand for cotton that came from several parts of the world. However, the South lagged behind the North in terms of urbanization and economic and social development precisely because market capitalism did not seep through the channels of the Southern economy. The Peculiar Institution was, without doubt, the main cause of the economic, political and social backwardness in the Antebellum South.
https://medium.com/@luispablodelaho...he-antebellum-south-capitalistic-447f958a9321
FWIW Ordered A Deplorable Scarcity: The Failure of Industrialization in the Slave Economy by Fred Bateman and Thomas Weiss
 
Joined
Dec 16, 2018
Messages
140
#67
In response to what was a proper investment, R E Lee might be observed. He managed his Father-in-law's estate as he understood the will. Lee, personally was very conservative as to finances. Bob Lee left some fair amount of money to his family, much of it from railroad investment. Lee, personally, did not seem to think that slaves were where he wanted his money.
 
Joined
Jan 10, 2016
Messages
199
#69
Traditionally, the Southern economy was considered non-capitalistic and pre-bourgeoise; a pre-industrialized economy that struggled to thrive due to the lack of incentives imposed by slave labor, the absence of a legal framework that stimulated the emergence of capitalism and a backward, agriculture-based economy. Eugene Genoese.
According to Genovese, slaveholders “were pre-capitalist aristocrats imbued with an antibourgeois spirit with values and mores which subordinated the drive for profit to honor, luxury, ease accomplishment, and family.” In other words, the South was an inefficient economy where the entrepreneurial search for profits typical of capitalist economies was mostly secondary.
Instead, a quasi-aristocratic class (the planters) acted like medieval landowners more concerned about their culture of honor, power and appearances than maximizing profits.
This analysis was challenged by the publication in 1974 of the controversial work Time On the Cross : The Economics of American Slavery. The authors, Nobel-awarded economist Robert W. Fogel and economic historian Stanley L. Engerman, applied novel econometric techniques to the study of slavery. In a nutshell, Fogel and Engerman (F&E) concluded that: i) slavery was economically profitable; ii) slave labor was more efficient than free labor; iii) planters behaved as modern entrepreneurs in a capitalist economy; and iv) the South was not as underdeveloped as it had been suggested in comparison with the North. In short, F&E suggested that the Southern economy was mostly capitalistic despite being largely based on slave labor. To what extent are these conclusions accurate?
F&E’s claim that slave labor was more efficient than free labor was contested by Stanford’s economic historian Gavin Wright. According to Wright, “the apparent efficiency of slave labor [was due to the] extraordinary growth of world demand for cotton between 1820–1860”
The idealized view of slaveholders as modern entrepreneurs conveyed by F&E is deeply misleading, if not fictitious. Planters did not take advantage of many valuable investment opportunities due to their narrow, reactionary mentality. As pointed out by economic historians Fred Bateman and Thomas Weiss, slaveholders failed to invest capital in industry even though “profits from southern manufacturing were high enough to have made investment in industry a rational choice by planters”
What prevented planters from allocating part of their profits in industrial activities? Essentially, two reasons: first, as stated above, their commitment to an intensively conservative ideology based on values like hierarchy, tradition and honor; second, their deep hatred towards the values represented by liberal democracy and capitalism, which were thought to jeopardize the traditional Southern way of life.
As shown above, F&E’s thesis on the capitalistic nature of the South’s economic system seems very difficult to maintain. It cannot be denied that the South incorporated certain aspects of capitalism due to the fact that its economy largely depended on the demand for cotton that came from several parts of the world. However, the South lagged behind the North in terms of urbanization and economic and social development precisely because market capitalism did not seep through the channels of the Southern economy. The Peculiar Institution was, without doubt, the main cause of the economic, political and social backwardness in the Antebellum South.
https://medium.com/@luispablodelaho...he-antebellum-south-capitalistic-447f958a9321
Thanks @Gene Green, this is such a great summary of much of the historiography of antebellum southern economics. Which is a hugely fascinating topic for me.

Great stuff, thanks again!
 

James Lutzweiler

First Sergeant
Joined
Mar 14, 2018
Messages
1,146
#70
The cotton boom was based on the ability of cotton growers to follow an easy formula to duplicate. Economic busts happen because the conditions of demand v supply change before the suppliers realize it.
The threat to cotton and slavery was that demand conditions would change, while the British began to diversify the supply. The secessionists could hide this threat from southern farmers by arguing about the political threat posed by the Republicans.
There was no escape from the first threat, and secession does not solve the problem. So the political ploy of secession solves a mainly made up problem.
Wausaubob,

Do I see and hear a little straw men here in the Secesh Declarations?

James
 

James Lutzweiler

First Sergeant
Joined
Mar 14, 2018
Messages
1,146
#71
In response to what was a proper investment, R E Lee might be observed. He managed his Father-in-law's estate as he understood the will. Lee, personally was very conservative as to finances. Bob Lee left some fair amount of money to his family, much of it from railroad investment. Lee, personally, did not seem to think that slaves were where he wanted his money.
Tell me more about Bobby Lee and his RR investments.
 
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Dec 16, 2018
Messages
140
#72

uaskme

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1,664
#77
Far from being poverty-stricken, the South was quite rich by the standards of the antebellum era. 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 richest nation of the world in 1860. The South was richer than France, richer than Germany, richer than Denmark, richer than any of the countries of Europe except England. Presentation of southern per capita income in 1860 dollars instead of 1973 dollars tends to cloak the extent of southern economic attainment. The South was not only rich 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 WWII.

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 England. The the colonial dependencies, countries such as India and Mexico, had less than one tenth the per capita income of the South in 1860.

The false image of the South as a land of poverty emerged out of the debates on economic policy among southern leaders during the 1850's. As sectional tensions mounted Southerners became increasingly alarmed by federal policies which they thought were giving economic advantage to the North. They also became increasingly active role by their state and local governments to promote internal improvements and to embrace other policies that would accelerate the southern rate of economic growth. To generate a sense of urgency southern newspapers, journals , economic leaders, and politicians continuously emphasized every new economic attainment of the North and every unrealized objective of the South, every northern advantage and every southern disadvantage. The abolitionist critique on the issue of development was lifted -- lock, stock, and barrel--from southern editorials, speeches, and commercial proclamations. sometimes with acknowledgements (as in Olmsted), sometimes without (as in Helper).

The myth of southern backwardness and stagnation thus arose not because of any lack in the southern economic achievement but because the northern achievement was so remarkable, and because the continuous, comparisons between the North and South were invariably unfavorable to the South. Compared with any country of Europe except England, however, the South's economic performance was quite strong. That comparison was never invoked by the abolitionist because it made the wrong point. It was rarely invoked by the Southerners because it would encourage complacency when urgency was called for.

Table 4 also shows that far from stagnating, per capita income was actually growing 30 percent more rapidly in the South than the North. The South's rate of growth was so rapid (1.7 percent per annum), that it constitutes prima facie evidence against the theses that slavery retarded southern growth. Since few nations have achieved a rate of growth as high as 1.7 percent per annum over sustained periods, those who continue to advance the retardation thesis are implying that in the absence of slavery, the progress of the antebellum South would have exceeded France, for example experienced an average growth rate of 1.55 percent per annum over a 103 year period ending in 1960. Over similar periods the growth rate of the United Kingdom was 1.2 percent and Germany's was 1.43 percent. The long-term annual growth rate for the U.S. as a whole has averaged 1.6 percent. Only Sweden and Japan have been able to sustain long-term growth rates substantially in excess of that achieved by the antebellum South between 1840 and 1860.

When one disaggregates the southern rate of growth by subregions, it turns out that growth within each of the three subregions was less than the growth rate of the South as a whole. THis is because part of the South's growth was due to the redistribution of southern populations from the older states to the newer ones. particularly to Texas and the other rich states of the west central subregion. It will be noted that this subregion enjoyed an even higher level of per capita income than the Northeast. Approximately 30 percent of the annual growth in per capita income was due to the redistribution of population among subregions and the balance to the growth of per capita income within each of the subregions.

To argue that the people within subregions "could hardly see the realities" of growth which could be obtained through shifts between subregions is to misunderstand completely the meaning of figure 11, which showed the dramatic shift of the slave population from a concentration along the Chesapeake Bay in 1790 to a concentration in the cotton belt in 1860. It is precisely because Southerners could perceive the benefits to be achieved from interregional migration, because they could perceive the "meaning in such economic development," that so many of them moved, The large share of the southern growth rate due to interregional migration underscores the point made at the end of chapter 2, the extreme flexibility of the slave economy and the ease with which it "adjusted to the rapidly changing labor requirements of various southern firms and localities. Time on the Cross by Fogel and Engerman pp246 252

The Death of the South had been greatly exaggerated. Cotton prices went down but cost also declined. Economies of Scale, labor production increases because of coercion efficiencies, better seeds, mechanical improvement due to capital investments, reduced cost. Supply outstripped demand. Many times a product price declines and profit goes up.

The last few paragraphs reflect on South Carolina. Slavery production efficiencies were causing Cotton Production to go West. The land was more fertile. Same thing happened to Virginia when Tobacco production decreased. Virginia had to find something else to do. Slavery slipped out of the Upper South for the same reasons. These Plantation Owners weren't stupid people. The Stupid ones went bankrupt. Grant was given Slaves, Land and a Planters Daughter, he couldn't make it work.
 

James Lutzweiler

First Sergeant
Joined
Mar 14, 2018
Messages
1,146
#78
Far from being poverty-stricken, the South was quite rich by the standards of the antebellum era. 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 richest nation of the world in 1860. The South was richer than France, richer than Germany, richer than Denmark, richer than any of the countries of Europe except England. Presentation of southern per capita income in 1860 dollars instead of 1973 dollars tends to cloak the extent of southern economic attainment. The South was not only rich 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 WWII.

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 England. The the colonial dependencies, countries such as India and Mexico, had less than one tenth the per capita income of the South in 1860.

The false image of the South as a land of poverty emerged out of the debates on economic policy among southern leaders during the 1850's. As sectional tensions mounted Southerners became increasingly alarmed by federal policies which they thought were giving economic advantage to the North. They also became increasingly active role by their state and local governments to promote internal improvements and to embrace other policies that would accelerate the southern rate of economic growth. To generate a sense of urgency southern newspapers, journals , economic leaders, and politicians continuously emphasized every new economic attainment of the North and every unrealized objective of the South, every northern advantage and every southern disadvantage. The abolitionist critique on the issue of development was lifted -- lock, stock, and barrel--from southern editorials, speeches, and commercial proclamations. sometimes with acknowledgements (as in Olmsted), sometimes without (as in Helper).

The myth of southern backwardness and stagnation thus arose not because of any lack in the southern economic achievement but because the northern achievement was so remarkable, and because the continuous, comparisons between the North and South were invariably unfavorable to the South. Compared with any country of Europe except England, however, the South's economic performance was quite strong. That comparison was never invoked by the abolitionist because it made the wrong point. It was rarely invoked by the Southerners because it would encourage complacency when urgency was called for.

Table 4 also shows that far from stagnating, per capita income was actually growing 30 percent more rapidly in the South than the North. The South's rate of growth was so rapid (1.7 percent per annum), that it constitutes prima facie evidence against the theses that slavery retarded southern growth. Since few nations have achieved a rate of growth as high as 1.7 percent per annum over sustained periods, those who continue to advance the retardation thesis are implying that in the absence of slavery, the progress of the antebellum South would have exceeded France, for example experienced an average growth rate of 1.55 percent per annum over a 103 year period ending in 1960. Over similar periods the growth rate of the United Kingdom was 1.2 percent and Germany's was 1.43 percent. The long-term annual growth rate for the U.S. as a whole has averaged 1.6 percent. Only Sweden and Japan have been able to sustain long-term growth rates substantially in excess of that achieved by the antebellum South between 1840 and 1860.

When one disaggregates the southern rate of growth by subregions, it turns out that growth within each of the three subregions was less than the growth rate of the South as a whole. THis is because part of the South's growth was due to the redistribution of southern populations from the older states to the newer ones. particularly to Texas and the other rich states of the west central subregion. It will be noted that this subregion enjoyed an even higher level of per capita income than the Northeast. Approximately 30 percent of the annual growth in per capita income was due to the redistribution of population among subregions and the balance to the growth of per capita income within each of the subregions.

To argue that the people within subregions "could hardly see the realities" of growth which could be obtained through shifts between subregions is to misunderstand completely the meaning of figure 11, which showed the dramatic shift of the slave population from a concentration along the Chesapeake Bay in 1790 to a concentration in the cotton belt in 1860. It is precisely because Southerners could perceive the benefits to be achieved from interregional migration, because they could perceive the "meaning in such economic development," that so many of them moved, The large share of the southern growth rate due to interregional migration underscores the point made at the end of chapter 2, the extreme flexibility of the slave economy and the ease with which it "adjusted to the rapidly changing labor requirements of various southern firms and localities. Time on the Cross by Fogel and Engerman pp246 252

The Death of the South had been greatly exaggerated. Cotton prices went down but cost also declined. Economies of Scale, labor production increases because of coercion efficiencies, better seeds, mechanical improvement due to capital investments, reduced cost. Supply outstripped demand. Many times a product price declines and profit goes up.

The last few paragraphs reflect on South Carolina. Slavery production efficiencies were causing Cotton Production to go West. The land was more fertile. Same thing happened to Virginia when Tobacco production decreased. Virginia had to find something else to do. Slavery slipped out of the Upper South for the same reasons. These Plantation Owners weren't stupid people. The Stupid ones went bankrupt. Grant was given Slaves, Land and a Planters Daughter, he couldn't make it work.
A wonderful contribution no matter the topic! Thank you.
 
Joined
Apr 4, 2017
Messages
7,581
Location
Denver, CO
#79
White per capita income in the south was based on black poverty. The blacks would either die out or revolt or both.
The southern areas benefited from a great territorial expansion. But the main part of the white population remained in Tennessee, Kentucky and Missouri, all which were not heavily engaged in cotton production.
 



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