Discussion Planter debt caused the war

shooter too

Private
Joined
Mar 4, 2021
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

https://babel.hathitrust.org/cgi/pt?id=loc.ark:/13960/t59c7kq58&view=1up&seq=122
 

OpnCoronet

Lt. Colonel
Joined
Feb 23, 2010
As I have noted, Southern Planters were more or less satisfied with the way their economic system performed. Cotton had been King for some time and most could not conceive of a time when it would not. So their debt was normal, even a part of being a Southern Planter.

Their discontent stemmed from what they considered agitation by outsiders, to disrupt and destroy the economic basis of not only their economy, but their government and society as a whole.

IMO, planter indebtedness may have been on of the many issues that drove the South to secession it was far down the list.
 

wausaubob

Lt. Colonel
Joined
Apr 4, 2017
Location
Denver, CO
The richer, the more politically connected, the more elected judges controlled, the better I can steal your land legally.
Title documents are easily manufactured. The guy with the most money has a huge advantage if a title is litigated. I don't think there was much in the way of adverse possession protection in the south. That was more of a western concept.
 

bayouace

Corporal
Joined
Nov 22, 2020
Location
Louisiana
Title documents are easily manufactured. The guy with the most money has a huge advantage if a title is litigated. I don't think there was much in the way of adverse possession protection in the south. That was more of a western

Title documents are easily manufactured. The guy with the most money has a huge advantage if a title is litigated. I don't think there was much in the way of adverse possession protection in the south. That was more of a western concept.
The Napoleonic Code of Law of Louisiana always made things a bit interesting in civil issues.
 
Joined
Jun 7, 2021
Title documents are easily manufactured. The guy with the most money has a huge advantage if a title is litigated. I don't think there was much in the way of adverse possession protection in the south. That was more of a western concept.
My two cents on this: One of the reasons Abraham Lincoln's father moved from Kentucky was because of his problems in getting a clear title to land. Multiple people would claim ownership which made it difficult to buy or sell property. Original titles had to be recorded back in Virginia and that was quite a journey in the 1790s and early 1800s. Sometimes land would change hands several times before the first deed was even properly recorded. And when deeds were contested judgements always went for the last person to properly record his deed. It was a mess.
When our family farm in Kentucky was sold in the 1970s we had to finally settle boundary line disputes stretching back 100 years because the property was originally identified by the surveyor as "Starting at the Oak tree on the hill and extending to the big rock beside the creek and following the bank of the creek... As time went on and these landmarks changed or disappeared, there were a lot of lawsuits and fighting over boundaries among all our neighbors. I make no claim that this applied to any other southern state, but I have no trouble believing that titles could have been very nebulous and subject to the whim of the party with the most money and influence.
 

LetUsHavePeace

Volunteer
Joined
Dec 1, 2018
The "drafts" from New York and London were "advances" only in the sense that futures contracts are. The banks and brokers were placing their orders for deliveries, not lending money. The planters took these commitments and used them as collateral for their local borrowing. The structure of these advances is, I think, the best explanation for the political choice the South made to embargo shipments to Europe. The planters assumed that their force majeure defaults would put immediate financial pressure on the firms that held the futures contracts and that those firms in England and France and their American intermediaries would use their political power to force an international arbitration of the dispute.
 

LetUsHavePeace

Volunteer
Joined
Dec 1, 2018
Cotton has a very limited shelf life, unlike wool. The persistence of the use of woolens long after cotton had arrived is best explained by this fact. You had to manage cotton in the same way you had to manage coal - which also has the problem of wastage; you could not simply buy lots of it when the "price" was low because your cost of carry involved not only the cost of money but also the fact that your inventory would spoil. (Part of what made Levi Strauss his fortune was that he found a way to use "stale" cotton.)
The question of price is also tricky. There is the spot price for immediate delivery, as there is for oil today; but no one in the cotton textile business then or the fuel business today could rely on the spot market for their raw material. We have no idea what the futures prices were or, even more important, what their duration and terms of delivery were.
 
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