The Economics of the Civil War

LewRockwell.com ^ | January 13, 2004 | Mark Thornton and Robert Ekelund

[Aurelius]

Dust jackets for most books about the American Civil War depict generals, politicians, battle scenes, cavalry charges, cannons[sic] firing, photographs or fields of dead soldiers, or perhaps a battle between ironclads. In contrast our book {[url=http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?userid=2XGHOEK4JT&isbn=0842029613&itm=7]Tariffs, Blockades, and Inflation: The Economics of the Civil War Mark Thornton, Steven E. Woodworth (Editor), Robert B. Ekelund[/url]features a painting by Edgar Degas entitled the "Cotton Exchange" which depicts several calm businessmen and clerks, some of them Degas’s relatives, going about the business of buying and selling cotton at the New Orleans Cotton Exchange. The focus of this book is thus on the economic rationality of seemingly senseless events of the Civil War – a critical period in American history.

What caused the war? Why did the Union defeat the Confederacy? What were the consequences of the War? The premise of the book is that historians have a comparative advantage in describing such events, but economists have the tools to help explain these events.

We use traditional economic analysis, some of it of the Austrian and Public Choice variety, to address these principal questions and our conclusions generally run counter to the interpretations of historians. In contrast to historians who emphasize the land war and military strategy, we show that the most important battle took place at sea. One side, the blockade runners, did not wear uniforms or fire weapons at their opponents. The other side, the blockading fleet, was composed of sailors who had weapons and guns but they rarely fired their cannons in hopes of damaging their opponents. Their pay was based on the valued of captured ships. Historians often have argued that the Confederacy lost because it was overly reluctant to use government power and economic controls, but we show the exact opposite. Big Confederate government brought the Confederacy to its knees.

Some now teach that slavery was the sole cause of the Civil War – an explanation that historians have developed in the twentieth century. However, this analysis does not explain why the war started in 1861 (rather than 1851 or 1841) and it fails to explain why slavery was abolished elsewhere without such horrendous carnage.

We emphasize economics and politics as major factors leading to war. The Republicans who came to power in 1860 supported a mercantilist economic agenda of protectionism, inflation, public works, and big government. High tariffs would have been a boon to manufacturing and mining in the north, but would have been paid largely by those in the export-oriented agriculture economy.

Southern economic interests understood the effects of these policies and decided to leave the union. The war was clearly related to slavery, but mainly in the sense that Republican tariffs would have squeezed the profitability out of the slave-based cotton plantation economy to the benefit of Northern industry (especially Yankee textiles and iron manufacturing). Southerners would also have lost out in terms of public works projects, government land giveaways, and inflation.

The real truth about wars is that they are not started over principle, but over power. Wars however, are not won by power on the battlefield, but by the workings and incentives of men who go to work in fields and factories, to those who transport, store and sell consumer goods, and most especially to the entrepreneurs and middlemen who make markets work and adapt to change. This emphasis and this economic account of tariffs, blockade and inflation, like the focus of Degas’s "Cotton Exchange" reveals the most important and least understood aspect of war.

[Ditto]

Really? You mean Madison? I would like to see the full text because I have just read the "Christian History of the Constitution" by Verna M. Hall, a compilation of many writings from that period, and in all I read, union is always voluntary...

At your service.

CHAPTER 3|Document 14

James Madison to Daniel Webster15 Mar. 1833Writings 9:604--5

I return my thanks for the copy of your late very powerful Speech in the Senate of the United S. It crushes "nullification" and must hasten the abandonment of "Secession." But this dodges the blow by confounding the claim to secede at will, with the right of seceding from intolerable oppression. The former answers itself, being a violation, without cause, of a faith solemnly pledged. The latter is another name only for revolution, about which there is no theoretic controversy. Its double aspect, nevertheless, with the countenance recd from certain quarters, is giving it a popular currency here which may influence the approaching elections both for Congress & for the State Legislature. It has gained some advantage also, by mixing itself with the question whether the Constitution of the U.S. was formed by the people or by the States, now under a theoretic discussion by animated partizans.

It is fortunate when disputed theories, can be decided by undisputed facts. And here the undisputed fact is, that the Constitution was made by the people, but as imbodied into the several states, who were parties to it and therefore made by the States in their highest authoritative capacity. They might, by the same authority & by the same process have converted the Confederacy into a mere league or treaty; or continued it with enlarged or abridged powers; or have imbodied the people of their respective States into one people, nation or sovereignty; or as they did by a mixed form make them one people, nation, or sovereignty, for certain purposes, and not so for others.

The Constitution of the U.S. being established by a Competent authority, by that of the sovereign people of the several States who were the parties to it, it remains only to inquire what the Constitution is; and here it speaks for itself. It organizes a Government into the usual Legislative Executive & Judiciary Departments; invests it with specified powers, leaving others to the parties to the Constitution; it makes the Government like other Governments to operate directly on the people; places at its Command the needful Physical means of executing its powers; and finally proclaims its supremacy, and that of the laws made in pursuance of it, over the Constitutions & laws of the States; the powers of the Government being exercised, as in other elective & responsible Governments, under the controul of its Constituents, the people & legislatures of the States, and subject to the Revolutionary Rights of the people in extreme cases.

It might have been added, that whilst the Constitution, therefore, is admitted to be in force, its operation, in every respect must be precisely the same, whether its authority be derived from that of the people, in the one or the other of the modes, in question; the authority being equally Competent in both; and that, without an annulment of the Constitution itself its supremacy must be submitted to.

The only distinctive effect, between the two modes of forming a Constitution by the authority of the people, is that if formed by them as imbodied into separate communities, as in the case of the Constitution of the U.S. a dissolution of the Constitutional Compact would replace them in the condition of separate communities, that being the Condition in which they entered into the compact; whereas if formed by the people as one community, acting as such by a numerical majority, a dissolution of the compact would reduce them to a state of nature, as so many individual persons. But whilst the Constitutional compact remains undissolved, it must be executed according to the forms and provisions specified in the compact. It must not be forgotten, that compact, express or implied is the vital principle of free Governments as contradistinguished from Governments not free; and that a revolt against this principle leaves no choice but between anarchy and despotism.

--------------------------------------------------------

Entering the military is a voluntary action, but it is usually not a good idea to just walk away whenever you damn well feel like it. That can get your ass shot.

Yes, joining the Union was voluntary, but it was a nation, not a frigging social club. If states could walk for any cause, or no cause, the Union was meaningless. Washington, Madison, Hamilton and the others spent months creating a Federal Union, not a Elks Lodge. Unilateral secession makes as much sense as allowing soldiers to just come and go whenever they please.

[mac_truck]

The simple fact is that without Lincoln's fleet there would have been no bombardment. It was the direct and causal instigating event.

Apparently the constitutional election of a Republican as President of the United States was a direct and instigating event to southern Democrats like Governor Pickens. His inaugural address in Dec 1860 makes that clear enough.

[exmarine]

I can't understand the need for the Lost Cause cult to attempt to wrap a transparent legal fig leaf around what was nothing but Revolution.

By the way, I am neither pro-south or pro-north. I believe slavery was wrong, but I also believe that God's judgment rained down on the entire nation for national sins not just southern ones. Look what many northerners did to the native americans - did they treat them with the humanity that they demanded the south treat the slaves? Nope. Wasn't it Sheridan who said, "the only good indian is a dead indian"? Then there was the Trail of Tears, etc. etc. Some of the northern generals were just vile - Pope (called the "miscreant Pope" by Lee), Spoons Butler, "Kill Calvary Kilpatrick" - a bloodthirsty rogue; the list goes on. I must admit that, at times when I read Civil War narratives, I find myself rooting for the south.

[Poohbah]

Can you show me in the U.S. Constitution or in the debates over it where it was determined that once a State voluntarily joins the Union, it cannot voluntarily leave it?

Well, let's walk through the Constitution.

We the people of the United States, in order to form a more perfect union...

A "more perfect union" relative to what?

Relative to that made under the Articles of Confederation.

The introduction of the Articles of Confederation are as follows:

To all to whom these Presents shall come, we the undersigned Delegates of the States affixed to our Names send greeting.

Articles of Confederation and perpetual Union between the states of New Hampshire, Massachusetts-bay Rhode Island and Providence Plantations, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina and Georgia. (Emphasis added.)

Now, let's look at the conclusion of the Articles of Confederation:

And Whereas it hath pleased the Great Governor of the World to incline the hearts of the legislatures we respectively represent in Congress, to approve of, and to authorize us to ratify the said Articles of Confederation and perpetual Union. Know Ye that we the undersigned delegates, by virtue of the power and authority to us given for that purpose, do by these presents, in the name and in behalf of our respective constituents, fully and entirely ratify and confirm each and every of the said Articles of Confederation and perpetual Union, and all and singular the matters and things therein contained: And we do further solemnly plight and engage the faith of our respective constituents, that they shall abide by the determinations of the United States in Congress assembled, on all questions, which by the said Confederation are submitted to them. And that the Articles thereof shall be inviolably observed by the States we respectively represent, and that the Union shall be perpetual.

The union was perpetual before the Constitution. The intent of the founding fathers was to ensure that that "perpetual" union was "more perfect."

[Ditto]

Can you show me where they tried Davis and found him guilty of treason?

Technically, the 14th Amendment saved Davis' ass, but in reality, there was little desire on the part of the North to punish confederates once they has surrendered. People wanted to bring the nation back together and hanging southern leaders wouldn't have advanced that agenda. Lee and all of his troops, were given a parole by Grant at Appomattox. Grant followed Lincoln's advice to him to "Let them up easy." Andrew Johnson, a southern man himself, wanted Lee tried. Grant told Johnson he would resign from the army and raise hell in the press if he went after Lee and broke Grant's word. Do you recall Lincoln's 2nd inaugural?

With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.

That lunatic stage actor who I saw you praising the other day killed the best friend the south had at that point. Reconstruction would have been much different and better for the south, and for the nation, had Lincoln lived.

[exmarine]

Yes, joining the Union was voluntary, but it was a nation, not a frigging social club. If states could walk for any cause, or no cause, the Union was meaningless. Washington, Madison, Hamilton and the others spent months creating a Federal Union, not a Elks Lodge. Unilateral secession makes as much sense as allowing soldiers to just come and go whenever they please.

You make a strong point. So, fine, then, the same logic and principles could then be applied to the American Revolution. What business did the founders have to sever their ties to mother England? Why is the authority to sever ties with Britain valid, but not the authority for the south to sever ties with the Union? Forced Union carries with it a diminishment of liberty. I will look up some quotes from the founding era that support this noble concept and pass them to you tomorrow.

That being said, Madison does appear to oppose any secession here except by severe oppression (which did not apply in 1861). However, there is no codified law that supports forced union, and it does militate against judeo-Christian principles of government - no doubt about it. It is not within the Constitution itself. We are a nation of laws not men, men do not have arbitrary authority - not even Madison. If they intended that the Constitution be involuntary, that was not even remotely hinted in the document itself. We know what the founders meant by their wording in the Bill of Rights. Why was no one tried for treason if the rebellion was illegal?

Let us remember that the States were self-governing entities and people were loyal to their States, not the Federal Govt. at that time.

[exmarine]

That lunatic stage actor who I saw you praising the other day killed the best friend the south had at that point. Reconstruction would have been much different and better for the south, and for the nation, had Lincoln lived.

What the hell are you talking about? I have never praised Booth. Clearly, you have me confused with someone else pal. Post my comment or retract NOW. Next time you should make sure of what you say before you say it.

[exmarine]

I just alluded to Lincoln's 2nd inaugural and how the radical republicans, in their HATRED, extended the war by 12 years! It seems the hatemongers had some malice.

[exmarine]

The fact remains that not one southerner was tried for treason. There was no law to support it! You have to cite a law to prove treason in Court. And I firmly believe that the powers that be knew there were in for a helluva legal fight if they tried it! Furthermore, if they had tried Lee, there NEVER WOULD HAVE BEEN PEACE or healing. This is an example of the malice and hatred of Stevens and other radicals in the north.

I will state again. The north committed many evils and atrocities and I listed a couple. Need more?

[exmarine]

By the way, my tag line (sic semper tyrannis) is Virginia's state motto. There is no connection with that murderer Booth's latin exclamation as he jumped to the stage. I just don't like tyrants. Lincoln made mistakes but he was no tyrant. There is much to admire about Lincoln. Unlike you, I can see the big picture. I can see the good and evil on both sides. The war was a judgment on the entire nation. If the founders had dealt with slavery properly in 1787, there would have been no civil war. They made a mistake. Men are basically evil, but can be virtuous if guided by a Fear of God.

[Non-Sequitur]

Can you show me the law where it says a State that joined the Union voluntarily cannot also leave voluntarily?

With the exception of the original 13 states, none of the states joined anything, voluntarily or otherwise. States are admitted to the Union. They don't become members unless a majority of the existing states approve their admission, through a vote in Congress. Once in the Union, a state cannot split up, combine with another state, or change their border by a fraction of an inch without the approval of a majority of the other states, through a vote in Congress. If a state needs the approval of the other states in order to join in the first place and if it needs the approval of the other states to change its makeup or borders, then it makes sense that a state would need their approval to leave.

[Poohbah]

You make a strong point. So, fine, then, the same logic and principles could then be applied to the American Revolution. What business did the founders have to sever their ties to mother England?

Under English law, none. The "Lost Cause" apologists try to pretend that there is a legally enforceable right to rebellion. There isn't. There is a morally enforceable right to rebel against tyranny. Was the South, in fact, being tyrannized by the North as of December, 1860?

Why is the authority to sever ties with Britain valid, but not the authority for the south to sever ties with the Union?

Because they won, and the Confederate States of America didn't. Yes, it really comes down to that.

[Ditto]

Both sides committed evils. The north was not this benevolent freer of the slaves my friend.

Show me exactly where or when I have ever indicated otherwise. And does that fact excuse the southern slaveocracy for their sins?

This is another dodge of the Lost Cause Cult. You treat events from 150 years ago as if they were current. If I say something perfectly true, but damning about a confederate leader, you take it as a personal insult and then scream that everyone in the north was not a saint. Or if you're insane like that stand watie character, you just scream that everyone in the north is, was, and forever will be the devil incarnate.

Hint: No one back then was a saint. They were all just people, and the majority of them on both sides were doing exactly what they thought was right for their situation.

[Non-Sequitur]

By the way, I am neither pro-south or pro-north.

Pull the other one, it's got bells on it. You, my friend, are as pro-south as they come.

[Ditto]

Look what many northerners did to the native americans - did they treat them with the humanity that they demanded the south treat the slaves?

It was just the northerners who did that? You better read some more history my friend. Start with the Trail of Tears.

BTW. In 1860, the north did not demand the south treat their slaves in any particular manner. Most people and politicians in the north didn't give a damn about southern slaves. The only thing that Lincoln told the south was that he would block expansion of slavery to the territories. Now I have already posted Robert Toombs words from Dec 1860 and he explaned quite clearly why that simple, non-offensive policy of stopping the expansion of slavery outside the south was in fact a serious threat to southern wealth and social structure.

That's what started the war.

[CIBGUY]

Ft. sumpter was within the boundaries of the Confederacy. the Union troops that occupied it were given every opportunity to pack up and skidaddle...they chose to remain. Next case! (There were no Union troops killed by Confederate gunfire. Only one Union soldier was killed and that was the result of an accident within the fort.

[Ditto]

This is an example of the malice and hatred of Stevens and other radicals in the north.

Stephens didn't want Lee tried. It was a southern man, a Democrat, Andrew Johnson of Tennessee who wanted to see him hang.

Thad Stephens was just about on his death bed at the end of the war, and his remaining efforts were on securing civil rights, including the right to vote, for freed slaves. He also wanted Johnson impeached!

[Ditto]

What business did the founders have to sever their ties to mother England?

Are you a lawyer? You keep looking around for some law to follow. The founders weren't following any British law. They tried that route and finally gave up on it. They started a damn revolution! That is never "legal" under any system of laws. But it can be morally justified, and I think the revolution of 1776 was more than morally justified. I do not think the revolution of 1861-65 was morally justified in any sense.

Another hint: When starting a revolution, be sure you can win it.

[TexConfederate1861]

I very much agree that slavery was the motivation for some....It would be dishonest to say otherwise. My point has always been that to the MAJORITY, even those opposed to slavery, as well as the common soldier in the field, The issue was rather a matter of one section of the country trying to force the South to conform to their particular ways of doing things. I believe most could have cared less one way OR the other, but when outsiders started trying to FORCE the issue, then that was another problem entirely.

[Ditto]

I have never praised Booth.

I thought it was you. If you say otherwise, my apologies.