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]

I wonder if it's worth mentioning that every one of the items in your little list is related to wealth and power, which is exactly what I said the revolution was about, only to be rebuffed by you in your insistance that no, it wasn't about wealth and power, unless you take three paragraphs to spell out the words "wealth" and "power" without ever using either.

Whatever.

Nice sluffing off of the founder's words. They were just a pack of greedy, corrupt SOBs I guess. They only wanted wealth and power?

I absolutely agree with you that the Civil War was about wealth and power. There is no question about that. For all but twelve years of the Republic's existence under the Constitution, the power and the wealth belonged to the southern states, which in general was not a bad thing. As time progressed, however, the wealth of the south, which became more and more concentrated in the hands of a few, derived from human bondage.

At the same time, our articles of freedom, the founding principles of this Republic became more than catch-words and justifications for a rebellion against England. It became “self evident" among those who saw human bondage as a fundamental contradiction to the laws of "Nature, and Nature's God."

Just as today with advanced medical technology, many of us oppose the taking of a human life in the womb for “connivance sake”. Call it faith or principle, or "whatever", but people then who believed in the founding ideals of this Republic began to see slavery as both a sin and a fundamental contradiction to those ideals. Ideals are real.

From a Constitutional standpoint, slavery was a "done deal". It existed, and those who were uncomfortable with it sought other answers. In the north, where slavery was less dense, it was gradually abolished. In the south, where it was more concentrated, many sought to find a way to wean the economy away from it and also address the inevitable social disruptions. Hence, the American Colonization Society, James Madison, founder.

The rub came with the newfound wealth inadvertently created by the invention of the cotton gin. A device meant to eliminate the drudgery of separating seeds from cotton inadvertency allowed the cultivation of a breed of cotton, highly desirable, but previously uneconomical, and suited for cultivation in vast areas of the south.

Do you want to blame the Civil War on someone, blame a humble mechanical genius named Eli Whitney. His simple invention took slavery from a dieing institution to becoming the most profitable business in the nation.

All that was necessary for a civil war in this country was a confrontation between wealth and power. In 1860, the wealth was still among those who built the industrialized slavery economy of the south, but the power fell to a demographic majority in the north who variously saw slavery as an moral evil or a threat to their future. That majority, by electing Lincoln, asked no more than to limit the grown of slavery to its existing confines.

That confrontation between “wealth and power” became a matter of survival.

I'll leave you with Robert Toombs argument before the Georgia legislature in December of 1860 as to why secession, in fact, revolution, was necessary for the slaveocarcy. And I'll gladly allow you to defend his argument. Lincoln did nothing but oppose expansion.

Robert Toombs, Confederate Sec of State.

"In 1790 we had less than eight hundred thousand slaves. Under our mild and humane administration of the system they have increased above four millions. The country has expanded to meet this growing want, and Florida, Alabama, Mississippi, Louisiana, Texas, Arkansas, Kentucky, Tennessee, and Missouri, have received this increasing tide of African labor; before the end of this century, at precisely the same rate of increase, the Africans among us in a subordinate condition will amount to eleven millions of persons. What shall be done with them? We must expand or perish. We are constrained by an inexorable necessity to accept expansion or extermination. Those who tell you that the territorial question is an abstraction, that you can never colonize another territory without the African slave trade, are both deaf and blind to the history of the last sixty years. All just reasoning, all past history, condemn the fallacy. The North understand it better - they have told us for twenty years that their object was to pen up slavery within its present limits - surround it with a border of free States, and like the scorpion surrounded with fire, they will make it sting itself to death. One thing at least is certain, that whatever may be the effect of your exclusion from the Territories, there is no dispute but that the North mean it, and adopt it as a measure hostile to slavery upon this point. They all agree, they are all unanimous in Congress, in the States, on the rostrum, in the sanctuary - everywhere they declare that slavery shall not go into the Territories.

[Ditto]

...launching a war while the legislature was out of session.

Excuse me? Check your timeline.

[GOPcapitalist]

Excuse me? Check your timeline.

It's accurate. The senate ended its special session in March. Lincoln launched his war in April. Neither house reconvened until July.

[Ditto]

Lincoln launched his war in April by firing of Fort Sumter?

I must have missed that part. I sort of guessed that Jeff Davis held off firing until Congress went home thinking that Lincoln would have been frozen.

You know that the 'Rats' back then always mis-underestimated the guy.

Some things never change.

Time for me to turn in. Have a good night Jonny Reb. ;~))

[GOPcapitalist]

Lincoln launched his war in April by firing of Fort Sumter?

Nope. By sending his fleet there with orders to fight their way in.

[Non-Sequitur]

Sumter was shot up because a fleet of yankee warships was en route there. That is hardly the behavior of somebody who was leaving us alone.

If the supply fleet had been allowed to complete their mission, then food and supplies would have been landed at Sumter and the ships would have sailed back to New York. Charleston would not have been bombarded, nobody would have been injured, and y'all would have been left alone.

[Non-Sequitur]

The only one, it might be added. Of course, the same thing would have resulted had the Confederacy won.

Sooner or later government intervention would have been required to end slavery. When would the south have found that acceptable? Would it have taken 10 years? 50 years? 100 years?

[Non-Sequitur]

Funny. One could easily apply any number of those grievances to Lincoln and the yankee's actions before and during the war:

And yet they did not. The southern declarations of the causes of secession do not claim taxation without representation, failure to Assent to Laws, disolved legislatures, standing armies without consent of legislature, or sea plundering. They first and foremost talked about the threat that they saw to the institution of slavery. That was by far the single most important reason for the rebellion.

[Vision]

the demented activities of John Brown

I was talking about Brown the other night with a friend. Why do you call his activities demented?

[carton253]

Let's be honest... (I know, sometimes its hard in the heat of the moment)... but Ft. Sumter was the flash-point. Both sides knew it, and both sides exploited it.

Don't pretend that Lincoln didn't send the fleet down there to start something. He did.

Don't pretend that the South wasn't hoping that Lincoln would do just that so they could start something. They were.

The times were primed for war... any cause, any spark would ignite it. Lincoln sent his warships to Sumter because he knew the South would fight. This drawing of "first blood" by the South was just what he needed, desired, and got to call for his volunteers.

Lincoln was not the innocent you portray him to be... Neither was the South the guilty you portray them to be. It was war by mutual consent...

[Non-Sequitur]

I would disagree. I think Lincoln was at a loss as to what to do, but he knew that he was on record as stating that he would defend those federal facilities that had not yet been seized by the forces of the rebellion. Sumter was short of food, the commander on the scene had reported that he would be forced to capitulate within a matter of days unless resupplied. If Lincoln's sole intent was to force the issue then why did he make it clear, in letters to Major Anderson and the governor of South Carolina, that his intent was to land food only unless opposed. If his intent was to start a war then why say anything? Why give a warning? Why not just go in guns blasting?

Lincoln was not about to accept the southern rebellion, but to say that he had given up all hopes of a peaceful solution and had decided on war is, I believe, false. Davis needed the war more than Lincoln did, and his actions showed it.

[TexConfederate1861]

No...the real question is wether Abe Lincoln was a gay crossdresser......:)

[carton253]

Your devotion to Lincoln is very admirable... but wrongly misplaced.

Why didn't Lincoln just let South Carolina have Ft. Sumter? Why draw a line at Sumter when you allowed the Confederates to take over other US installations throughout the South?

You don't let them have the fort because you are going to force their hand... and the South was a willing and complicit partner to having their hand forced.

[TexConfederate1861]

Not my children....my 15 year old almost gave the teacher an proverbial fit when he did an essay on how Lincoln destroyed the government of the founding fathers....:)

Of course she was willing to concede when she saw his references.

[TexConfederate1861]

John Brown was a cold-blooded murdering swine. And when I visit Lake Placid this summer, I intend to spit on his grave accordingly!

[Non-Sequitur]

Why didn't Lincoln just let South Carolina have Ft. Sumter? Why draw a line at Sumter when you allowed the Confederates to take over other US installations throughout the South?

First of all, Lincoln did not allow the confederates to seize federal facilities all over the south. Buchanan did that, and Lincoln was in record as opposing it. In several speeches prior to the inauguration, and in his inaugural address itself, Lincoln had stated his position that the U.S. would continue to retain those facilities belonging to it that had not already been seized by the Davis regime. And why not? Sumter was federal property, built by the federal government on land deeded to it by the South Carolina legislature, and the Davis regime had no claim to it.

[carton253]

You are missing the forest for the trees. Lincoln knew that if he sent those ships into that harbor when the tensions between the Confederacy and Union ware at fevered pitch that the South would fire on his fleet. (And if he didn't understand this...then he was a fool.)

He knew and understood the consequences of his actions. It was a calculated political stroke on his part.

You seem to put great emphasis on Lincoln's words as if his words alone are all the proof any student of history would need to understand that Lincoln was just trying to keep the peace. Bull! He sent that fleet into that harbor to pick a fight with an opponent that was only too eager to oblige him.

[Non-Sequitur]

Lincoln knew that if he sent those ships into that harbor when the tensions between the Confederacy and Union ware at fevered pitch that the South would fire on his fleet. (And if he didn't understand this...then he was a fool.)

He knew that if he did nothing then the forces in Fort Sumter would be forced to turn over the facility to the Davis regime. He knew it was a tense situation, which is why he made his intentions clear to Governor Pickens in a letter outlining the peaceful intentions. A letter delivered well before the projected arrival date of the supply ships. Lincoln did what he could to ensure that the status quo would be remain in place. It was Davis who forced the issue.

You seem to put great emphasis on Lincoln's words as if his words alone are all the proof any student of history would need to understand that Lincoln was just trying to keep the peace. Bull!

And you seem to think that it was Lincoln goading the Davis regime into firing that was the sole reason for the war. Likewise bull. Davis needed a war worse than you claim Lincoln did. He knew that his rump 7 state confederacy had neither the free population or the industrial base to thrive. It was doomed to dependency on someone, either the U.S. or Europe. Davis knew that if the south was to succeed then it would need the other 8 slave states. With those states the confederacy would have a larger population and some semblance of an industrial base. Davis knew that only a war would bring those states into his fold, and gambled that a war could be won. He gambled and he failed. It could be argued that any chance of an independent south died at Sumter, and it was a victim of a suicide orchestrated by Jefferson Davis.

[carton253]

See... this is where the debate always breaks down. Why do you have to defend the actions of the North while you villify the South... Why put all the blame for the Civil War on the South alone? Why not pull back and show some even-handedness...and understanding of the times when you debate?

You state that Lincoln's letter to Pickens justified his decision to send the fleet to Sumter. But... you dismiss and excuse the political reality of why he did it.

Sure, he may not have wanted the South to have Sumter... but why? Why did he dig his heels in over that one fort. If peace was his true end-game, then why not just give them the fort. It's not like the fort could sail up the Atlantic and fire on Boston.

No, he wanted that fort because he knew and understood that war was coming.

Furthermore you then justify Lincoln's action by railing against Davis... It's a red flag and a diversion. I hold Davis as equally culpable as Lincoln. I don't try to excuse what Davis did... What would be the point? Davis was just as politically motivated as Lincoln was.

So... the gist of your argument seems to be that Lincoln's motives were as pure as the driven snow (after all, he sent a letter) and that it is evil Jefferson Davis that deserves all the blame for the bloodshed of the next four years.

Sigh...

[Non-Sequitur]

Sure, he may not have wanted the South to have Sumter... but why? Why did he dig his heels in over that one fort. If peace was his true end-game, then why not just give them the fort. It's not like the fort could sail up the Atlantic and fire on Boston.

So your position is that the only hope for peace was to turn over all federal facilities to the Davis regime and accept the legitimacy of the soutern rebellion. In other words, complete and total surrender. Why should Lincoln do that? Why reward rebellion? Why follow acts of aggression against you with acts of appeasement towards the aggressors? Where is the sense in that?

Lincoln believed the southern acts of secession were illegal, and that the southern states were not a sovereign nation but were merely areas in rebellion. The political reality was that the Lincoln government either took the correct position that the rebellion was illegal or surrender and accept it. Lincoln chose to stand by his convictions, and in your eyes that makes him a war-monger. War may have been coming, but as Lincoln himself pointed out the south would not have its war without the south initiating it. And that is what the south did.

Furthermore you then justify Lincoln's action by railing against Davis... It's a red flag and a diversion. I hold Davis as equally culpable as Lincoln. I don't try to excuse what Davis did... What would be the point? Davis was just as politically motivated as Lincoln was.

I would have a hard time finding any evidence in your posts to date to support that. It all seems to be Lincoln's fault, and that's consistent with myth of the Lost Cause. There did not have to be a war started at Sumter. The only reason that it did start was that the Davis regime wanted it.