Discussion Planter debt caused the war

Dead Parrott

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Interesting set of numbers. Relevant to the question in the original post, I wonder how much if any research has been done into the indebtedness of the individuals involved, or at least a sample of them. That information might be hard to root out. Another way at the answer might be to look for examples of slaveowners' commenting on their indebtedness in public or private statements.

ARB

A corollary question would be - what exactly did 'in debt' MEAN at that time in history? the amount someone is leveraged, the nature of the collateral, the expectation for repayments, the penalty for non-performance, the enforcement of the indebtedness, the 'expected' level of debt a large planter was supposed to carry, the periodic sweeps of fortune, between debt and plenty - ALL of these have different contexts at different times in history.

I suggest we pause before judging the 'indebtedness cause' motivating a powerful mid-19th century planter (especailly to military rebellion), until we determine what the social, financial and political impact of that level of indebtedness actually MEANT to the individual at that time.
 

lurid

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Interesting set of numbers. Relevant to the question in the original post, I wonder how much if any research has been done into the indebtedness of the individuals involved, or at least a sample of them. That information might be hard to root out. Another way at the answer might be to look for examples of slaveowners' commenting on their indebtedness in public or private statements.

ARB

Too hard to find the exact median of debt to income ratio. But there are leading indicators like high mortgage foreclosures and the constant selling of slaves to pay off debt in South Carolina that debt was prevalent. But I don't agree that was the cause of the war, the war wiped out most of the debt. Why start a war to stay in debt? I'm quite sure the culprits were the low percentage of wealthy plantation owners who wanted to sustain slavery because they were prospering.
 

Piedone

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Too hard to find the exact median of debt to income ratio. But there are leading indicators like high mortgage foreclosures and the constant selling of slaves to pay off debt in South Carolina that debt was prevalent. But I don't agree that was the cause of the war, the war wiped out most of the debt. Why start a war to stay in debt? I'm quite sure the culprits were the low percentage of wealthy plantation owners who wanted to sustain slavery because they were prospering.
I would say that the situation in SC was a picture of the Old South where plantation economy was beginning to become unprofitable as the soil was somehow depleted and the prime cash crops of these states (tobacco and rice) faced a reduced market price.
The plantations in the “recently“ established southern states (Alabama, Mississipppi etc.) should have been still extremely profitable at those times - making any headache over debts quite unnecessary. I recall certain descriptions of Louisiana planters in Olmsted and deLeon that didn‘t gave me the impression those people were in the least financially pressed. But again - I cannot support that impression with statistical data neither.
 

NH Civil War Gal

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Mary Chesnut recorded in her diary that “all you had to do was shake a cotton bush and gold coins fell off.”

I would say that the situation in SC was a picture of the Old South where plantation economy was beginning to become unprofitable as the soil was somehow depleted and the prime cash crops of these states (tobacco and rice) faced a reduced market price.
And this is getting back to the root of what I said way back up thread - the Southerners that were very dedicated to slavery (not all were and I understand that) but the ones that were, did NOT understand that economy of slavery as it existed in Africa or the Mideast. They did not understand at all fully that they could NOT tie their wealth to land AND slaves. To be sustainable, for longer than two generations - IN A BIG WAY - (counting a generation as 25 years - 1800 to 1850) it had to be in a culture that would support one or the other - Anglo-Saxons and Europeans have always held land as wealth. Africa and the Mideast has always held slaves as wealth. The British discovered it really was impossible to hold it together - the South was going to discover it was equally impossible.

Once the soil ran out, what wealth was there in the slaves? Once any sort of crop pest came along, what wealth was there in the slaves? Cotton would no longer be king for any number of reasons with cheaper and nearer markets opening up closer to Britain and India. Other varieties of cotton would be grown. The market for cotton would soften very, very quickly after the late 1800s.
 

wausaubob

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This is highly interesting. I never read something about Lincoln wanting to regulate (and on a long term interdict) internal slave trade. It would fit to his observing of the plight of some slaves being sold and transported down the river. Could you please guide me where to find something about his stance/politics regarding internal slave trade?
Are there any letters of his to be found - or something else?
James Oakes and Freedom National would be the source. But after 1807, when the trans-Atlantic slave trade was made illegal, slave traders had to show proof of American birth for the slaves they were selling. So getting the federal government involved again would not be unprecedented. It surely lead to high level litigation. The war intervened and the navy seized the city with the most active slave market early in the war.
 
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A. Roy

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Secession fervor was strongest in the deep south because the planter elite there being dependent on a debt financed cash crop economy with slaves as collateral were highly vulnerable. Ban expansion of slavery into the western territories and you depress slave valuations making it harder to use them as collateral to secure financing.

I found an interesting discussion of southern debt in a 1901 book, The Confederate States of America, 1861-1865: A Financial and Industrial History of the South During the Civil War, by economist John Christopher Schwab. He doesn't specifically mention the use of chattel slaves as collateral, but he does have some interesting things to say about the level of southern debt and its possible role as a motive for southern secession. Much of his chapter on "The Southern Debtors" is about stay and sequestration legislation in the Confederate states, but here are some quotations that seem especially relevant to the discussion here:

"The scanty records in the South do not furnish a sufficient basis for an estimate of the extent of the debtor interest during the Civil War. That it was as persistent and as effective in procuring desired legislation as under previous similar conditions is a fair inference from the adoption of the above number of stay laws.

"Another closely related question, the solution of which we can also reach by inference alone, is this: Did Southern indebtedness to the North add strength to the secession movement in 1860 and 1861? That it did, the following paragraphs would indicate; how much it added to the movement it would be rash to guess. The same questions are involved in the causes of the American Revolution, among which must certainly be enumerated the desire of the Americans to avoid the payment of their debts due to Englishmen; how weighty this motive was no one can say.

"A full month before seceding from the Union, Georgia passed a stay law, in which it was provided that no levy of attachment should be allowed unless the claimant declared under oath that the defendant was about to remove from the South or any county; Mississippi and Alabama passed stay laws within a month after seceding, and the Virginia Convention was putting difficulties in the way of Northern merchants collecting their debts in Richmond at the time the State seceded. These may fairly be styled suspicious circumstances; but will be passed over as the necessary concomitants of the commercial collapse of those months, itself caused by the fear of secession.

"We are very much in the dark as to the extent of Southern indebtedness to the North at the beginning of the war. Some put the amount as high as 400 millions of dollars, and the debts in New Orleans alone at 30 millions. Others accepted the estimate of the New York Tribune, namely, 200 millions, made in September, 1861, when the various Confederate sequestration acts were already in operation, and had unduly magnified the importance of the Northern interests involved. The most careful estimate at our disposal was made by the United States Economist. The writer anticipated a general repudiation by the South of debts due the North. A large amount of such debts had been contracted in the spring of 1860, at a time of buoyant feeling; the general depression of the fall of that year had compelled the Northern creditors to frequently renew such loans, and they were still unpaid when hostilities broke out. At that time the Economist estimated the outstanding indebtedness of the South to the North at 40 millions of dollars, three-quarters of the usual amount in the spring of the year. New Orleans, Savannah, Mobile, and Charleston had bought only two-thirds the usual amount from Northerners in the fall of 1860; and during the following months, as the clouds gathered, credit was but sparingly given to Southern buyers. Unquestionably the Northern creditor was not caught napping, and had prepared himself for the storm more thoroughly than some of the above estimates, which seem exaggerated, would indicate.

"... The cotton of the South was moved by drafts upon New York and London. The Northern and English banks advanced the desired capital in the shape of currency to the Southern cotton factors and planters. The latter keenly felt this 'abject banking dependence,' and hoped to escape it when they seceded from the Union. It is noticeable that the distinctively cotton States were the first to secede, that all of them did so before President Lincoln's inauguration, and all of them, with the exception of South Carolina, —which had led the movement on December 20, 1860,—within twenty-three days thereafter. We shall see how the complementary notion of the industrial dependence of the North and Europe upon the South was fostered by the conditions the war brought about.

"To return to the indebtedness of the South to the North in 1860: It must have been these bankers' advances upon the cotton as it moved to the Northern and English markets which were the basis of the extravagant estimates cited above. Moreover, it is to be remembered that the Northern banks could not have suffered seriously by the repudiation of their claims upon Southern cotton men on the score of their advances, as they held sufficient collateral security in the cotton, which was practically consigned to them.

"Even with the above qualifications, the debtor interest in the South must have been of sufficient weight to be taken into account among the factors which led up to the formation of the Confederacy."

(John Christopher Schwab, The Confederate States of America, 1861-1865: A Financial and Industrial History of the South During the Civil War, New York: Scribner's, 1901. Pages 106-123.)

ARB
 

wausaubob

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But if your family was one the owners of a large number of slaves, 20 or more, and that property was about to become less liquid because the Republicans were going to make threats about the slave trade, and banks were starting to doubt slaves as collateral, and doubt they could recover on their security in state courts, the value of slaves as collateral drops quickly and any leveraged grower is facing falling asset values.
 

Piedone

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Mary Chesnut recorded in her diary that “all you had to do was shake a cotton bush and gold coins fell off.”


And this is getting back to the root of what I said way back up thread - the Southerners that were very dedicated to slavery (not all were and I understand that) but the ones that were, did NOT understand that economy of slavery as it existed in Africa or the Mideast. They did not understand at all fully that they could NOT tie their wealth to land AND slaves. To be sustainable, for longer than two generations - IN A BIG WAY - (counting a generation as 25 years - 1800 to 1850) it had to be in a culture that would support one or the other - Anglo-Saxons and Europeans have always held land as wealth. Africa and the Mideast has always held slaves as wealth. The British discovered it really was impossible to hold it together - the South was going to discover it was equally impossible.

Once the soil ran out, what wealth was there in the slaves? Once any sort of crop pest came along, what wealth was there in the slaves? Cotton would no longer be king for any number of reasons with cheaper and nearer markets opening up closer to Britain and India. Other varieties of cotton would be grown. The market for cotton would soften very, very quickly after the late 1800s.
Yes, on a longer run they inevitably would have run into serious trouble.
Your concept of land OR slaves is a concise phrase and I must admit that in the beginning I somehow wasn’t grasping it‘s full meaning.

Might it be that the South faced an inevitable decline?
The price for their cash crop softened up following just basic economic laws as the textile industry is dominating just in the first phases of industrialization with her products rapidly becoming a cheap mass commodity afterwards.
And the soil wasn‘t probably neither of stable worth - only the prime cotton fields were highpriced but they rapidly were depleted and after that were nothing but just rather average fields whose products (corn, peanuts, rice etc.) were rather lowpriced commodities.

Hence the using of slaves as corollary could have „only“ exacerbated that fundamental problem?

It seems to have been a monocultural economy trying to squeeze the most profit out of just one commodity - disregarding long term problems and postponing changes that were overdue?

That sounds strangely familiar, doesn‘t it? Reminds me of the car industry, tobacco industry, oil industry, coal industry...et patati et patata....
 

Specster

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Cash crop planters were often in debt, fearing their position and way of life as semi feudal lords was going to end they pushed for secession and having the confederate gov't assume responsibility for debts owed to northerners.
Is this the true cause of war-debt and extreme measures to get out of it by the elite class?
The US gov't assumed debt owed to British merchants post war for independence so was this the inspiration for southern planters.
The plantation owners seemed to be far from impoverished. If they had become poor their solution was to secede from a wealthy populous country and throw their lot in with a brand new country with few people and fewer wealth? In the name of corporate welfare when such a thing did not exist?
 
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Yes
Yes, on a longer run they inevitably would have run into serious trouble.
Your concept of land OR slaves is a concise phrase and I must admit that in the beginning I somehow wasn’t grasping it‘s full meaning.

Might it be that the South faced an inevitable decline?
The price for their cash crop softened up following just basic economic laws as the textile industry is dominating just in the first phases of industrialization with her products rapidly becoming a cheap mass commodity afterwards.
And the soil wasn‘t probably neither of stable worth - only the prime cotton fields were highpriced but they rapidly were depleted and after that were nothing but just rather average fields whose products (corn, peanuts, rice etc.) were rather lowpriced commodities.

Hence the using of slaves as corollary could have „only“ exacerbated that fundamental problem?

It seems to have been a monocultural economy trying to squeeze the most profit out of just one commodity - disregarding long term problems and postponing changes that were overdue?

That sounds strangely familiar, doesn‘t it? Reminds me of the car industry, tobacco industry, oil industry, coal industry...et patati et patata....
Yes! 👍
 

wausaubob

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The plantation owners seemed to be far from impoverished. If they had become poor their solution was to secede from a wealthy populous country and throw their lot in with a brand new country with few people and fewer wealth? In the name of corporate welfare when such a thing did not exist?
As a separate country they have to do all the things a national government has to do, supported by a smaller tax base. But it doesn't appear they were willing to pay taxes even to support their attempt at independence. And if a foreign government is going to provide the merchant services, and naval protection necessary for them to ship cotton, the foreigners are going to be gradually extracting a higher price.
But the debt issue probably shows one of the lines of cleavage in the potential Confederacy. Only major cotton and tobacco farmers had assets that could serve as collateral. The ordinary farmers were practicing a minimal investment type of farming, as the never felt secure in their titles, or the ability to hold out if a big operation wanted their acreage.
 

NH Civil War Gal

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The ordinary farmers were practicing a minimal investment type of farming, as the never felt secure in their titles, or the ability to hold out if a big operation wanted their acreage.
I would like to know why the ordinary farmers felt insecure against the big planters in regards to land titles compared to northern farmers on this.
 

NH Civil War Gal

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But the debt issue probably shows one of the lines of cleavage in the potential Confederacy.
There were lots of lines of cleavage in the Confederacy - none of them could play with scissors and be left alone:rolleyes:. The Governor of Georgia wouldn't cooperate with anyone and North Carolina wouldn't lend uniforms to the ragged men of Lee's army, never mind anything else that was needed among the states.

Benjamin Judah was smart but I don't think he was cotton smart - I think the Confederacy seriously left out the people in New York or didn't listen to the brokers in Savannah about the demand for cotton in Europe. They seriously overestimated what Europe would need. Cotton had very good harvests leading up to the war and cotton was bought and stored in England and Europe. The British and French did not have any cotton shortages for more than a year after cotton wasn't being shipped from the South.

The Confederacy made another mistake and a very critical one. They could have preplanned and used the cotton the buy firepower - bullets, guns, medicine and all sorts of materials needed for an upcoming secession. After all, they'd been talking about it for at least 10 years previously. Instead, the Confederacy decided to HOARD their cotton and they deprived their army of a golden opportunity to improve its firepower. And by the time they figured all this out, the Confederacy was shrinking month by month due to the Anaconda plan. The ships that slipped through the blockade were just trickles - nowhere near enough to supply the CSA.

By the CSA holding onto its cotton, even in the beginning months of the war, the South made the Union blockade even more effective until the Union Navy could enforce it.

I have always, always, always wondered who planned for the secession and why it was so badly planned. It was all emotional and NOT done with a lick of practicality. There were great speeches about "manhood" and "honor" but no one ever talked about privations and breadlines and desolation caused by the very leaders who were the 1% of the CSA - not the army but the planters (oligarchy) led this war. It was emotionally and greed driven for more territory for more cotton to be run by slaves. They STILL hadn't figured out that they couldn't run an African economy in the western world for cotton. If they didn't have a CW with the North, we would have eventually had a CW with slaves and they hadn't figured that out, especially when the boll weavil was waiting for them - but that's another thread...... and the valuable collateral was no longer valuable and a drain on much less valuable land.
 
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I have always, always, always wondered who planned for the secession and why it was so badly planned. It was all emotional and NOT done with a lick of practicality. There were great speeches about "manhood" and "honor" but no one ever talked about privations and breadlines and desolation caused by the very leaders who were the 1% of the CSA -
There were a lot of very good people who saw their sons, brothers and husbands die because they were told their rights were being taken away, when it was only the pecuniary interests of the wealthy they were defending.
 

Piedone

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There were lots of lines of cleavage in the Confederacy - none of them could play with scissors and be left alone:rolleyes:. The Governor of Georgia wouldn't cooperate with anyone and North Carolina wouldn't lend uniforms to the ragged men of Lee's army, never mind anything else that was needed among the states.

Benjamin Judah was smart but I don't think he was cotton smart - I think the Confederacy seriously left out the people in New York or didn't listen to the brokers in Savannah about the demand for cotton in Europe. They seriously overestimated what Europe would need. Cotton had very good harvests leading up to the war and cotton was bought and stored in England and Europe. The British and French did not have any cotton shortages for more than a year after cotton wasn't being shipped from the South.

The Confederacy made another mistake and a very critical one. They could have preplanned and used the cotton the buy firepower - bullets, guns, medicine and all sorts of materials needed for an upcoming secession. After all, they'd been talking about it for at least 10 years previously. Instead, the Confederacy decided to HOARD their cotton and they deprived their army of a golden opportunity to improve its firepower. And by the time they figured all this out, the Confederacy was shrinking month by month due to the Anaconda plan. The ships that slipped through the blockade were just trickles - nowhere near enough to supply the CSA.

By the CSA holding onto its cotton, even in the beginning months of the war, the South made the Union blockade even more effective until the Union Navy could enforce it.

I have always, always, always wondered who planned for the secession and why it was so badly planned. It was all emotional and NOT done with a lick of practicality. There were great speeches about "manhood" and "honor" but no one ever talked about privations and breadlines and desolation caused by the very leaders who were the 1% of the CSA - not the army but the planters (oligarchy) led this war. It was emotionally and greed driven for more territory for more cotton to be run by slaves. They STILL hadn't figured out that they couldn't run an African economy in the western world for cotton. If they didn't have a CW with the North, we would have eventually had a CW with slaves and they hadn't figured that out, especially when the boll weavil was waiting for them - but that's another thread...... and the valuable collateral was no longer valuable and a drain on much less valuable land.
You are absolutely correct - but I am somehow convinced that all this unpreparedness is everything but a special southern asset.

I read in DeLeon about the organization of the first government in Montgomery and was appalled how chaotic everything was and how inappropriate even the housing was with thousands of officials and office seekers streaming into a just recently founded provincial town... hence months passed before anything constructive could be done.

Similar aspects (bullying governors, general mismanagement) were also reported from the North.

Personally I would conclude that both sides didn‘t plan earnestly for a war (or a separation in case of the South), the whole thing I deem very much just rhetoric before the shooting really started (which in my opinion is a positive asset...).

The South seems to have been generally more emotional than the North and the excitement and brouhaha of a revolution / secession / founding of a new nation didn‘t make anything easier for sure.
I also got the opinion that behind all that poiltical rhetoric bombast a certain feeling of melancholy and remorse over the leaving of the US was hidden at times - but I maybe am misinterpreting (which should have hampered sober planning somehow...)

Hence I am absolutely with you regarding your assessment of bad management but deem it more common than a special southern problem - given the fact that probably only very few (if any) people had some kind of oversight over the future of the cotton market.

And then there was obviously a hidden feeling of inferiority to a decisively mightier North which nobody talked about but is somehow readable „between the lines“ - making sober reasoning somehow difficult also.
 
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