Wednesday, October 5, 2011

The Role of Tariffs in the Civil War - Part 3

Why didn't Southern entrepreneurs take advantage of the protectionist tariffs to increase their manufacturing base?

This question may be the most perplexing.  Most historians are familiar with the industrial disparity between the North and South at the beginning of the Civil War.

  • 28% of the 120,000 US manufacturing establishments were in the North
  • 92% of the nation's 1.4 million factory workers were in the North
  • 72% of America's railroads were in the North
  • The value of Southern farm land was $1,871,000,000 in 1860

The Confederacy's industrial workforce was characterized by its wide and extensive use of slaves. In the 1850s, anywhere from 150,000 - 200,000 slaves were used in industrial work.  Nearly 80% of these slaves were owned by industrial owners and, the remaining were rented out by plantation owners. Often, manual labor performed by slaves would be combined with skilled white artisans in order to better compete with northern and foreign industry.

Despite the profitability of slave industry, Southern industry had been under capitalized for years by the time of the outbreak of the war.  Besides a social preference for ownership of real property (slaves and land), agriculture in staple goods (cotton, tobacco, sugar cane) was considered the easiest route to profitability. Therefore agriculture always outbid industry when it came to capital allocation. As early as 1830, Southern industry was a generation behind, and by the Civil War, was vastly inferior to northern and foreign manufacturing. [Source: Robert S. Starobin The Economics of Industrial Slavery in the Old South The Business History Review, Vol. 44, No. 2 (Summer, 1970), pp. 162 as quoted in Economy of the Confederate States of America]

With the Southern economy tied to agriculture and slave labor, it is no wonder that the influential plantation owners refused to end the practice.   Their failure of foresight in funding manufacturing and building a more diversified industry, lead to the Civil War and the loss of the Confederacy in that war.

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