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What was the break even price for cotton between 1800 and 1860?

Discussion in 'Civil War History - Secession and Politics' started by Hunter, Mar 1, 2017.

  1. jgoodguy

    jgoodguy Brigadier General Moderator Forum Host

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    First task is to define profitability.
    At the base level cash accounting and accrual account generate different amounts.
    Also how do we factor in things like increase/decrease in slave property and land property in with the final crop of cotton and other products.

    Lets assume I invest 1,000,000 in land, slaves, buildings and cotton seed.
    Each year I make 5% net profit or 50,000 but each each year the market value of my assets changes 5% also some years my increase in wealth is 0 and others 10,000. What is my profitability? Results of my farming operations or the total that plus change in market value.
     
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  3. Gene Green

    Gene Green Corporal

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  4. Hunter

    Hunter Sergeant

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    Well, once again, profit does not equal wealth. Profit is the revenue from an enterprise, less the cost of production. Wealth is a function of value of assets less liabilities. Assets such as slaves, land, equipment, cattle, and horses certainly did have value and often served as collateral for loans and other extensions of credit. Assume that you had inherited or married wealth. You could borrow enough to live very high on the hog even if your cotton planting operation was not profitable. Your creditors would carry you as long as the gold you received for your cotton crop was paid to them. However, because the amount of gold you received each year was not sufficient to pay your debts in their entirety, and because you had to borrow more each year to make your crop, you would slide deeper and deeper in debt and eventually into ruin. This is best illustrated by the Kentucky planter in Uncle Tom's Cabin. But to the public, who knew nothing of your financial house of cards, you were a rich guy with lots of assets.
     
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  5. Gene Green

    Gene Green Corporal

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    my point is that the potential for profit was real and achieved by many. your implication is that it was a scheme for cash flow. both may be true but the scheme doesn't work if the potential isn't there. In 1860, [Joseph] Davis was among the ten wealthiest Mississippians, boasting impressive profits and a slave labor force of 345, securing his place among the region’s elite planters. Jefferson Davis inherited his first lands. Where did that wealth come from ?
    If a planter failed in any crop year, somebody somewhere made a profit on what he did produce. If his failures continued he would be out of business but somebody would take his place. Speculation, weather, and poor management were the causes of failure, not the actual production of cotton. [Joseph] Davis was not only interested in boosting his cotton profits, but also in scientific agriculture for crops and livestock. The management system [Joseph] Davis employed for slaves was even more noteworthy. the keys to any successful enterprise.
    i would note that in the above, no number is associated with "impressive profits", but the slave count is precise. that is where the profits are hidden.
    mismanagement and poor judgement does not equal a non-lucrative enterprise.
     
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  6. Hunter

    Hunter Sergeant

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    I believe we are rehashing the same points. If you or anyone else have data on the average cost of production of a pound of cotton during the antebellum period, please post it.
     
  7. Drew

    Drew Captain

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  8. Gene Green

    Gene Green Corporal

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    ok last post. i am simply saying that i don't believe your question can be answered and that is why the number is elusive. if you find one it will be different in another time or place you must consider the plantation as a whole and over the course of many years. and it would be different from plantation to plantation. for the speculator it was a gamble and so you had to face odds for the fast return, but the evidence and potential were there.
    this was all to your question about a myth. to answer your original question, i read an article that mentioned 4 cents in the mid 30's before the recession. this was in regards to new operations in mississippi. if i run across it again i will post it. cool beans ?
     
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  9. Gene Green

    Gene Green Corporal

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    i assume you mean slate. it was written by a professor at the university of alabama if that helps. :D
     
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  10. Drew

    Drew Captain

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    Honestly, it doesn't matter where the author is from. It's a thoughtful piece and footnoted - rare for a magazine article.
     
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  11. jgoodguy

    jgoodguy Brigadier General Moderator Forum Host

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    I agree about the elusive number. In addition to those factors, plantations did not and likely could not breakout the costs for cotton alone. The land could grow cotton or something else needed for the plantation, A slave may be picking cotton, placing plates on the table, being contracted out or off season repair and replace. The buildings had multiple uses. Factoring(as in taking money now for future delivery of cotton) the cotton meant different prices though out the year and there are different grades to consider. Then there is the lack of data.
     
  12. Drew

    Drew Captain

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    I can't post from it tonight, but there is a wonderful old book on my shelf, Biographical and Historical Memoirs of Northwest L0uisiana. Published in about 1890, the book contains a lot about this plantation region, including farm production.

    In addition to cotton, they were growing corn, potatoes and peas, on a considerable scale. I'll have to dig the thing out and post some of it.
     
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  13. Hunter

    Hunter Sergeant

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    FYI, cost of production and price data have to be averaged. For example, the prices you see in the posts above are actually average prices because prices varied at the same port during the same calendar year. They might be higher at the beginning of the buying season and lower at seasons end, or vice versa. Prices also varied from port to port, such as between Memphis, Charleston, Mobile, and New Orleans.

    By the same token, everyone is correct that cost of production may vary from place-to-place, but the data can be averaged to obtain a rule-of-thumb figure. Without that, it is impossible to determine if cotton farming was profitable or not.
     
  14. jgoodguy

    jgoodguy Brigadier General Moderator Forum Host

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    Don't need an average, just need an aggregate. Does the total profit from slave grown cotton exceed costs.
     
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  15. Gene Green

    Gene Green Corporal

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  16. Gene Green

    Gene Green Corporal

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  17. jgoodguy

    jgoodguy Brigadier General Moderator Forum Host

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    It appears that wealth and profit was there.
     
  18. Hunter

    Hunter Sergeant

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  19. civilken

    civilken 2nd Lieutenant

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    now here is a very interesting point you always will come out ahead when you're speaking cotton but if you could ever bring up the word tariffs now's the time in the early 1800s I believe they were as high as 40% which is an outrageous price . And they didn't even stabilize until the mid-1840s by the time the war broke out they were basically nothing but at that point in time in the early 1800s tariffs were a killer. PS I am a strong believer in tariffs if that place properly.
     
  20. Drew

    Drew Captain

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    On what was a 40% tariff levied against? European imports? Something else?
     
  21. jgoodguy

    jgoodguy Brigadier General Moderator Forum Host

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    Not cotton exports for sure.
     

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