The Economics of Slavery
Some striking data to illustrate the role slavery played in the economy of the South.
This is one of the those posts that I write because I know I am going to want to refer back to it in the future.
Matthew Yglesias points to a paper by Thomas Piketty and Gabriel Zucman (two economists from the Paris School of Economics) entitled “Capital is Back: Wealth-Income Ratios in Rich Countries 1700-2010.” The paper itself is about capital accumulation in rich countries and is interesting/significant in own right as it pertains to current debates over inequality. However, Yglesias noted some extremely illustrative data from the piece that was relevant to capital holdings in the antebellum South that is worth highlighting.
In an attempt to assess historical rates of aggregate capital accumulation, the authors’ noted that a great deal of wealth in the United States in the pre-Civil War period was possess in the form of slaves:
By putting together the best available estimates of slave prices and the number of slaves, we have come to the conclusion that the market value of slaves was between 1 and 2 years of national income for the entire U.S., and up to 3 years of income in Southern states.
[…]
Needless to say, this peculiar form of wealth has little to do with “national” wealth and is better analyzed in terms of appropriation and power relationship than in terms of saving and accumulation. We view these “augmented” national balance sheets as a way to illustrate the ambiguous relationship of the New world with wealth and inequality. To some extent, America is the land of equal opportunity, i.e. the place where wealth accumulated in the past does not matter too much. But at the same time, America is also the place where a new form of wealth and class structure – arguably more extreme and violent than the class structure prevailing in Europe – flourished, whereby part of the population owned another part (35).
Here is the graphical representation of the findings:
As Yglesias notes:
The “human capital” consisting of black men and women held as chattel in the states of the south was more valuable than all the industrial and transportation capital (“other domestic capital”) of the country in the first half of the nineteenth century. When you consider that the institution of slavery was limited to specific subset of the country, you can see that in the region where it held sway slave wealth was wealth.
For those who understand that the core reason for southern secession and therefore for the Civil War itself was slavery, then this information is less illuminating as it confirming. However, I am constantly running into people who want to claim that the Civil War was caused by other factors, with the most popular being tariffs as well as the ever-popular “states’ rights” argument.
The above figure blows the tariff argument out of the water insofar as if the Southern states were willing to secede and risk war over the economic impact of a tariff (so the argument goes) then how much more so would they have been willing to secede and risk war over the wealth represented by their collective slave holdings.
As I keep trying to tell any number of persons (who range from simply those who desperately want to hold to a romantic view of the antebellum South because they are from the South to hardcore neoconfederates): the Civil War was very much driven by economic forces and slavery was the main variable in the discussion.
As occasional OTBer Alex Knapp noted on Facebook:
In 1860, slaves were worth more than than all all the industrial and transportation capital in the United States. This is why a war in the U.S. to end slavery was inevitable – in other countries where slavery ended peacefully, it was only a tiny fraction of their wealth. But for the South, slavery was their wealth.
So yes, it can properly be said that the Civil War was about states’ rights, but only if one acknowledges that the “right” in question was the right to maintain the institution of chattel slavery. This fact is, of course, rather obvious to anyone who reads the documents of the day from the persons engaged in the seceding (for example). Still, for those still struggling with the notion, I give them the figure above.
Just a point: if the a War over slavery was inevitable, a War between states over any other issue(Including territorial claims) was not. Part of the problem was the political organization between the States before the Civil War.
This is the kind of post that would be largely unnecessary if we had a better education system, particularly in the south.
There are a couple of different models for dealing with unpleasant historical facts. The Germans, whether because of their own virtues or because it was forced on them, have been pretty good about admitting to their past evils. The Japanese have decided to simply not talk about it.
We Americans have slowly come to accept that we committed ethnic cleansing at the very least and genocide at the worst as regards Native Americans. But we are divided on our acceptance of culpability on slavery. First it was a regional split – northerners blamed southerners and southerners denied. That’s changed a bit to become a political split.
We are not the only country with terrible crimes on its conscience. That’s not the problem, because that’s mostly in the past and there’s a thing we can do about it. But denial of plain truth is a mental and moral cancer. Today Germany sits at the heart of a united Europe. Germans aren’t always liked, but they are no longer seen as aggressors.
The Japanese on the other hand are still seen in China and Korea as potentially hostile and untrustworthy.
The little verbal tics of conservatives when discussing race are forms of denial, Japanese style rather than German. They love to talk about the few black slave owners. They love to talk about slaves being sold by their own people in Africa. The even more tone deaf will go on to assert that slavery wasn’t so bad, really, no worse than a job in a textile factory. And they push the notion that slavery would simply have gone away if left alone. Many then walk the crazy forward a few steps to assert that racism is dead — except as practiced by the 13% against the 87%.
These are lies, similar in character to holocaust denial.
Antebellum Natchez, I’m told, had more millionaires per capita than any other US city.
@michael reynolds:
It´s not so easy.
Paraguay has problems with governance in part because their neighbors feels guilty about the Paraguay War – many people think that Paraguay at the time was becoming an industrial superpower, and that England bribed Argentina, Brazil and Uruguay to attack the country(Historians point out that was is inaccurate). There was tolerance to the fact that Strossner tried to use robbed cars from Brazil and Argentina to supply their people with cars.
On the other hand, in Brazil, slavery was REALLY a brutal institution(Until the banning of the Slave Trade, few slaveholders cared about FEEDING the slaves), and even Middle Class Blacks don´t understand how brutal slavery was in their own country.
@michael reynolds:
There’s a bit of an attitude shift these days, though, in part because of the influence of the former East Germany (which never advanced as far as the West in acknowledging Germany’s sins) and in part because we’re a couple generations removed from World War II and a lot of young people are not as willing to accept collective responsibility for something with which they feel they had nothing to do.
This article should put a stake through the heart of that particular myth. Far too much wealth was wrapped up in it for that to happen.
Greetings:
I don’t know that I disagree very much with your point, but I think that one point seems to need more emphasis than is supplied.
If I remember correctly, when what we think of as America was getting started, it was primarily an agricultural society and economy, so most of its capital was the land, perhaps a wagon, a plow, an axe, a couple of firearms, etc. (Parenthetically, when I was reading Fred Anderson’s “Crucible of War” about the French and Indian War, I was a bit surprised (not shocked) about our pre-Obama most favorite President, George Washington’s involvement in what I guess can be called land speculation.) So, the idea that a lifetime of very low maintenance that a slave would be compelled to supply would compare economically to an acreage that would supply a lifetime of fertility.
Or more succinctly put, your point kind of compares a pre-industrial (agricultural) economy to the burgeoning Industrial Revolution one. I once had a professor whose favorite brain-teaser was that our Constitution worked better before capital became industrial and thus more moveable as Detroit seems to have suddenly brought to light.
Greetings:
An embarrassing flub has been executed due, no doubt, to my inner racism. The second sentence of my second paragraph above should have read:
So, the idea that a lifetime of very low maintenance labor that a slave would be compelled to supply would compare economically to an acreage that would supply a lifetime of fertility.
Nothing will ever convince the neo-Confederates and their allies (including one US Senator) that the War of Northern Aggression was justified.
Your chart does give us yet another proof to hit them over the head with, though.
@michael reynolds: Very well said, Mr Reynolds! As always.
But since the Original Post was about the economics of slavery not the issues of morality and conscience let us take the conversation further on the dollars & cents of it. I see that the value of a slave in 1860 was $1650.00. (http://courses.wcupa.edu/jones/his311/notes/plantati.htm) And by using a handy inflation calculator, that is roughly the equivalent of $41,000.00 in 2012.
We are not even allowed to think about what it might mean is owed to today’s black Americans based on the theft of thousands of dollars from their ancestors by my ancestors. And many objections have real ethical weight, of course; many Americans personally or their forebears arrived here after the War Between the States, for example. And we know how Rush’s feelings are easily hurt, poor man, by “reparations”.
But it does have implications for many current controversies; “affirmative action” is one.
And Prof Taylor must know that he is going to be accused of Marxism as soon as our rightwing friends read this. Surely the economics of losing their wealth had nothing to do with the Confederate citizens willingness to commit treason and bear arms against their country. Surely, my ancestors were motivated purely by patriotism, right? Surely!
One of the things the article cited underscores is why a war was necessary to end slavery in the United States. Other than in the context of civil war the Takings Clause would have made ending slavery prohibitively expensive. Basically, the North couldn’t afford to pay the South to end slavery.
Why stop there? How much is owed the first nations for the theft of all continental USA? I should be able to retire on my share of that.
The problem with all these things is that people alive today weren’t directly involved in what went on in the past. I’d be satisfied if things were just done fairly today.
Acknowledging is the first step to recovery…
@Dave Schuler:
I generally agree with you, however I can’t help but notice that following the Civil War we descended into a 100 year period of apartheid, segregation, and Jim Crow Laws in the liberated slavery-free South. We paid an enormous price to maintain a quasi-feudal oppressive region within our nation. The Civil War was a catastrophe, and the post-Civil War descent was a disgrace.
@george: You are correct, sir, and I did acknowledge that both serious ethical concerns as well as trivial hurt feelings are involved in opposition to ‘reparations’. Frankly — I’d oppose simple cash payments, myself. We agree that the proper response is to do things ‘fairly’. My point is that ‘fair’ takes account of the theft of much of the life of the African-American’s ancestors.
And we are agreed on the debt owed to the ‘first nations’.
@Dave Schuler: Yessir. And I bet that this will be interpreted as ‘economic determinism’ by some readers and commenters here. The Lost Cause has been so completely suffused by romanticism that thnking there was a straightforward economic basis for the War is heresy in some circles. I was born in Montgomery AL to a family that claimed south Alabama as home since the 1830’s and I grew up breathing that atmosphere.
They’ve been posting on this over at Volokh Conspiracy. I commend this post by Randy Barnett to you for pretty well laid out discussion. It will perhaps flesh out the observations in this post.
I inferred from Barnett’s post that war was inevitable even if succession had been acceded to since battles would have ensued over the Western territories. In fact, at the time there was no real belief that the federal government could ban slavery in the states currently in the Union but that they could in the territories which would stop the spread. Of course, the modern Commerce Clause interpretation would eventually permit the halt of products produced by slavery in interstate commerce. BTW, he pretty much beats the State’s Rights argument to death. Not in that he pounds it but that he delivers fatal blows.
I do not believe the average Southerner supported the War against Northern Aggression over some affinity for slavery (other than it was how things were and had been). But that the secession and war was instigated by the political elite and as we see economically powerful to maintain their economic power built on slavery is not refutable. I would say this was driven by a swath of area rather than dispersed. Just so happens the slave belt tends to be just where they placed the “Confederate States of America” label on the map above, then going up the Mississippi River and up the East Coastal plain. So let’s view it as the powerful, monied interests who incited and imposed a war on the common people for their personal wealth interests.
@michael reynolds:
I don’t think the Germans’ handling of their past has been quite as laudable as you do. Consider, for example, the case of Anna Rosmus. Her life was dramatized in the 1990 film, The Nasty Girl.
She was forced to emigrate due to constant harassments and death threats. Her crime was writing about Germany’s conspiracy of silence surrounding the country’s actions during the 1930s and 1940s.
@al-Ameda: If you are interested in how Jim Crow aparteid succeeded Reconstruction you will find it an incredibly interesting study. Very quickly: By 1876 the enthusiasm to re-make the former Confederacy that motivated President Grant had waned. There were only a few Federal troops still stationed in the south and KKK-type intimidation was well advanced. That was a Presidential election year and the solidly Democratic south voted for a gentleman named Tilden. The Republican Rutherford Hayes inherited President Grant’s administration’s reputation for corruption and he lost the popular vote to Mr Tilden. The electoral votes of several southern states were questioned. (You’ll be amazed to learn that one of them was Florida.) So the two parties worked out a ‘compromise of 1877’ that resulted in federal troops being withdrawn from the south, black southerners left at the mercy of the old aristrocracy and the ‘redneck’ movement and — as they say — the rest is history.
Fascinating story with so much that resonates with our own era. You should look into it.
@JKB:
Ok, so if I read what you are saying correctly, then the war is still fought over slavery in that it as a fight to “preserve” the economy power and culture of the South.
At least in economic terms, slavery was an inseparable part of Southern economic power. And, if one believes in trickle down economics, then in perpetuating wealth in the South, slavery was connected (through trickle down economics) to the broader flow of all Southern capital and ultimately Southern culture.
@Dave Schuler:
Oh, I think that something could have been worked out if the South had wanted to work something out. The problem is that the South didn’t WANT to work anything out. They thought that slavery was fine and should be extended throughout the United States, even into territories and States that didn’t want slavery within their borders. And when Lincoln was elected on the platform that slavery was only to be limited to the Southern States, the South rejected the results of that election and rebelled against the United States government. That’s how war came.
@stonetools: There are relatively few occasions on which a title sums up the entire argument of a piece in a few words, but one admirable example is “John C. Calhoun: Marx of the Master Class” in Richard Hofstadter’s The American Political Tradition.
I am reading “Lincoln and His Generals”. My favorite general is Burnside, then Jackson, Custer, Stuart. About the time that the Civil War started, the price of cotton started to fall, due to imports from overseas. I have always wondered about what the plantation system would have done if there had not been a civil war. Their money was tied up in slaves, livestock, and farm tools. The slave shipping companies of couse were bankrolled by northern banking firms.
@JohnMcC:
Thanks for the recitation of this story. I am well aware of the post-Civil War history of that time, and of the Hayes/Tilden race and Florida (as usual). As a nation, we went in the wrong direction and we continue to pay the price.
@george:
Why stop there? There are unpaid blood debts throughout all of human history, injustices told and untold. It’s one of the reasons Ivan in The Brothers Karamazov can’t believe in God. (“Or rather this world, created by God.”)
The best future generations can do is to overcome the divisions of their forefathers.
As others have mentioned, a free state sharing a border with a slave state is problematic even for separate nations. The slaves know where that border is. For states within a single nation it’s all but impossible. We wrestled with it for a long time, and with some extraordinary examples of political skill, but in 1860 that skill ran out.
More like 1850, really. The Fugitive Slave Act all but guaranteed a lot of people in the North would eventually reach “Popeye’s Epiphany”: “Had alls they can takes and can takes no more!”
@stonetools:
We can excuse antebellum Southerners in some ways since they were human. Since slave ownership was so intrinsic to wealth in the South, it’s no surprise they rejected the results of an election that signaled their demise.
You can look upon them with the egalitarian eyes of today and say, “These men were bigots. These men were monsters. They enslaved their own kind for profit.” Frankly, given how much of our American prosperity is dependent on goods manufactured for extremely low labor costs in countries with populations deprived of our luxury, I don’t see a horrible amount of difference between us and them. They fought over slavery, yes, but most innately of all they fought to retain their wealth, and that isn’t something I can begrudge them too badly. It’s the same with union members and billionaires, all of them hoping to keep something they feel (rightly or wrongly) they have earned from being taken away by outside forces.
I don’t condone political systems that wrongly afford security to the wealth of those who don’t deserve it, but I can understand (and in most cases forgive) the human urge to keep what is yours from being taken by others.
Honestly, I’m full of moralizing tonight, and I blame this whiskey.
@Tillman:
Whiskey? The Dude drinks White Russians.
@Mikey: Sure, but the Dude abides as well.
@Tillman: Takin’ ‘er easy for all us sinners.
Scotch, bourbon, or rye?
@al-Ameda: Ooops. Wouldn’t imply that you were lacking in either intelligence or education at all. Your usually very insightful and clever comments here prove otherwise. It’s a story that fascinates me and I guess I jumped at the chance to tell it again.
@Tyrell:
Slavery is one of the ways one deals with a labor shortage. With a surplus of labor it tends to die out. Who wants to live with a bunch of people who would probably like to kill you? They hired Irish to build that railroad. When a free laborer dies you haven’t lost a huge investment and might even get to pocket his last paycheck.
Also it was before the days of modern fertilizers, the cotton industry burned out land pretty quick and they needed to keep moving. Wasn’t all about morals, the Free Soilers knew they couldn’t compete against “Big Agriculture” and couldn’t out-bid them for the land to begin with. The most rabid wild-dog anti-slavers (John Brown, fer instance) set up camp in Kansas for good reason. Lots of volunteers.
@Tyrell:
It´s hard to predict, in part because Britain was pressuring for the end of the transatlantic slave trade and for the end of slavery in the American continent. It was due to British pressure that most countries in the Hispanic America abolished slavery, and that Brazil promulgated several laws limiting the slave trade in the 1800´s. (Until today there is an expression in Brazilian Portuguese – “Lei criada apenas para inglês ver”- “Law that´s created just to show it to the English”, a law that in practice has no use, precisely because of these laws).
A cynical could argue that slaves in the Southern US could become more valuable without the Transatlantic Slave trade(Brazil, the largest importer of slaves, banned the Transatlantic Slave Trade in 1850), but it also can be argued that slaves would become extremely expensive(A natural preposition since there was restrictions to the Transatlantic Slave Trade).
@Tillman:
Agreed, but part of that process might be some pain in the form of affirmative action, reparations, or some new creative mechanism. Humans have a knack for failing to respond to anything un-painful, and for repeating history.
Slavery was a despicable part of our history. Sadly, in the south that mentality is still around. Those days when black people were seen as inferior and less than human still resides in the minds of some even to this day. People won’t say that as they think we have moved beyond that but we have not. For some, America is still the land for ‘white’ people and others have no place in it. Those people are the ones who are so full of hatred that they refuse to accept anyone who doesn’t look like them or think like them. Racism is alive and well and anyone who thinks otherwise must be living in a parallel universe.
@Matt Bernius:
I’m really not sure what you are getting at, but if you look at the graph included in this post, you see that slavery was connected to the broader flow of all US capital and, by your logic, ultimately to US culture.
But there is no real way to dispute that for the political and economic leadership of the South, slavery, its continuation and, even worse, extension, was the overwhelming driving factor. I do not believe a concern for or against slavery was a significant factor for the common Southerner. Many of whom were against slavery and were essentially occupied and suppressed after secession to prevent their local secession back to the Union.
As this post is on economics, I recommend this discussion contrasting the economic development of North America with that of South and Central America at Marginal Revolution University. Not really examined is the Southern Plantation system had far more in common with the European Plantation/exploitation systems south of the border than with the yeoman farmer economics further north in the US and that came to prevail in expansion into the Plains. The prior 3 minute presentation will give you context if needed.
@Tillman:
Actually I agree. As I said, I’d be satisfied if things were just made fair starting today.
@Tony W:
Affirmative action can help if done right, though at this point I think using poverty instead of race would work just as well (blacks and natives are grossly overrepresented among the poor, for instance) without causing racial resentment. Reparations would almost certainly going to do more damage than good because of the resentment it’ll generate.
I’m at the point where all I care about is that the world is different for my grandchildren. Fanning resentment (whether I agree with the justice of things like reparations and affirmative action or not) is just going to keep hate alive. Because of the strong correlation between poverty and racial issues, you can attack the latter quite well by going at the former.
@Anderson: “Antebellum Natchez, I’m told, had more millionaires per capita than any other US city. ”
I was told that it either had more, straight-up, or more than any place except for NYC. Which is stronger, since a small town with a single millionaire could have a very high per-capita rate.
@Dr Taylor: Good article. Would have liked to see an analysis of the “buy them and set them free” theory which was popular, but not apparently popular enough to avoid bloodshed. @Dave Schuler: alludes to this, but I don’t think it’s quite as cut-and-dry as he says. But, maybe that’s because I’m looking at things from a modern (aka “unlimited debt”) perspective.
@michael reynolds:
If you were Otaku, you would know this to be false. Their discussion is subtle — far to suble for barbarians (that would be us westerners) to percieve — but it’s there.
You question that? Modern Technology, which had its start in that era, has reduced the vast majority of farming to running machines. (There are some exceptions, such as the Tomato). The Cotton Gin would have all-but eliminated the need for slaves in cotton farming (if not eliminated it entirely).
What it wouldn’t have done was eliminate the economic impact of slavery’s dissolution. Perhaps, then, in light of the article we may speculate that the Cotton Gin was one of the contributors to the Civil War? That is, the south had only two realistic choices and both of them invovled giving up slavery. They choose door number three, which forced the cost to be borne by the whole nation rather than just their little part of it.
Interesting article, but I don’t think it makes the argument that it claims to. The value of slaves was owned by a very small percentage of the population. The vast majority of the people who supported slavery in the South, and fought in the Confederate Army, had no financial stake in slavery. They were angry at the North and afraid of what the slaves would do if they got free. As for the slave owners, people can be willing to lose wealth for a cause in which they believe. A balance sheet isn’t necessarily enough of a reason to go to war.
Of course. It was definitely a contributing factor. If you look at the rhetoric surrounding slavery before the cotton gin and after, and run the numbers as well, it’s clearly a big deal.
True, though that percentage rises when you think of households & families rather than just the individuals listed in the census as slave owners. Either way, it’s clear that the Planter Elite owned the vast majority of slaves and were drivers of secession.
I’d add that many were horrified at the prospect of being put on equal footing with former slaves or black freemen. As were many in the North, of course (though the feeling was clearly less overwhelming). This is why you have Lincoln being careful in speeches not to claim he was for full equality. He actually used some real lawyerly language in the Lincoln-Douglas debates. He focused on the idea that whether or not the negro was the equal in all ways to the white man, he was clearly entitled to the fruits of his own labor/skills (such as they were). To me, this reads as an attempt to mollify those Northerners who were concerned that those crazy Republicans were actually for full negro equality. Voting! Marrying white women! Ahhhh! [It’s not 100% clear to me how much of this was Lincoln still figuring things out within himself, and how much was political calculation. And there’s no way of finding out]
It’s entirely consistent to believe that the genetically inferior have the same human rights.