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Damnifying Growth in the Antebellum South

Published online by Cambridge University Press:  11 May 2010

Thomas F. Huertas
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Abstract

The South's failure to industrialize more rapidly in the antebellum period did not lead to its immiserization. The South's terms of trade improved over the antebellum period so that its consumption potential expanded more rapidly than did production. Specialization in cotton production promoted a favorable movement of relative prices facing Southern producers. A customs union analysis shows that the South might have industrialized to a greater extent and might have raised its consumption potential further had it been able to impose an independent tariff on imports from all areas, including the rest of the United States.

Type
Papers Presented at the Thirty-Eighth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 39 , Issue 1 , March 1979 , pp. 87 - 100
Copyright
Copyright © The Economic History Association 1979

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References

1 North, Douglass C., in The Economic Growth of the United States, 1790-1860 (New York, 1961)Google Scholar develops the earlier work of Schmidt, Louis B., “Internal Commerce and the Development of the National Economy Before 1860,” Journal of Political Economy, 47 (1939), 798–822 and ofGoogle ScholarCall-ender, Guy S., “The Rise of International Commerce,” ch. 7 in his Selectionsfrom the Economic History of the United States (Boston, 1909)Google Scholar. In North's model the growth of southern export staples stimulated the economic growth of the entire nation through interregional trade linkages. North's hypothesis concerns the years before 1843 and is not tested here. It should be noted that recent research has undermined the staple model and exposed the absence of significant trade along the West-South axis. For a critical review of this literature, see Lloyd J. Mercer, “Antebellum Trade Reconsidered,” paper presented at the meetings of the Western Economics Association, Honolulu, June 1978. Gallman, Robert E., “Self-Sufficiency in the Cotton Economy of the Antebellum South,” in Parker, William N., ed., The Structure of the Cotton Economy of the Antebellum South (Washington, D.C., 1970), pp. 5–24Google Scholar, and Diane Lindstrom, “Southern Dependence on Interregional Grain Supplies: A Review of the Trade Flows, 1840-1860,” ibid., pp. 101-14 have refuted the hypothesis that the South imported significant quantities of foodstuffs from the West during the late antebellum period. Uselding, Paul, “A Note on the Interregional Trade in Manufactures in 1840,” this JOURNAL, 36 (06 1976), 428–35Google Scholar has revived that part of the North hypothesis dealing with North-South trade after it had been called into question by Herbst, Lawrence, “Interregional Commodity Trade from the North to the South and American Economic Development in the Antebellum Period,” this JOURNAL, 35 (03 1975), 266–67Google Scholar and by Lindstrom, Diane, “Demand, Markets, and Eastern Economic Development: Philadelphia, 1815-1840,” this JOURNAL, 35 (03 1975), 273Google Scholar.

2 This hypothesis is most clearly stated by Wright, Gavin, “Slavery and the Cotton Boom,” Explorations in Economic History, 12 (10 1975), 450CrossRefGoogle Scholar.

3 Previous estimates include those of Fishlow, Albert, “Antebellum Interregional Trade Reconsidered,” American Economic Review, 54 (05 1964), 352–64Google Scholar and his Technical Appendix, mimeo (1964); Herbst, 'Interregional Commodity Trade; and Uselding, “Note.”

4 Fogel, Robert W. and Engerman, Stanley L., Time on the Cross (Boston, 1974), Vol. 1, p. 248Google Scholar, estimate per capita real income growth in the South to have been 1.7 percent per annum for the period 1840 to 1860. They define the South to exclude the slave states of Missouri, Maryland, and Delaware. Population growth for these states from 1840 to 1860 was 2.4 percent per year, so that total real income grew at 4.1 percent per annum for the period. Texas population interpolated from data in Newton, Lewis W. and Gambrell, Herbert P., A Social and Political History of Texas, (Dallas, 1932), p. 280Google Scholar.

5 Estimated as ratio of southern exports in 1859-60 (Table 2) to the income of the southern states (per capita income from , Fogel and , Engerman, “The Economics of Slavery,” in The Reinterpretation of American Economic History [New York, 1971], p. 335Google Scholar; population from Historical Statistics, A195). The addition of the income of the slave states Missouri (per capita income assumed to be average for North Central states), Delaware, Maryland, and the District of Columbia (per capita income assumed to be average for the Northeast) places a lower limit on the share of southern trade in southern income of approximately 20 percent.

6 Fishlow, Albert, American Railroads and the Transformation of the Antebellum Economy Cambridge, Mass., 1965), p. 274Google Scholar. My estimates are based on direct trade data where available and tend to be a minimum estimate of trade. For example, Fishlow includes the entire tobacco crop in southern exports; I have included only exports to foreign ports from Richmond and Baltimore, and to all non-southern ports from New Orleans. The principal difference is, of course, my inclusion of additional goods. A full discussion of the differences between my estimates and Fishlow's is presented in the Technical Appendix, available on request.

7 Cf. the sources listed in Footnote 1.

8 Uselding, “Note,” employs a similar method to estimate interregional trade in manufactures.

9 Engerman, Stanley L., “A Reconsideration of Southern Economic Growth, 1770-1860,” Agricultural History, 49 (1975), 344Google Scholar has outlined the historiographical questions concerning southern growth in these terms.

10 For example, Linden, Fabian, “Repercussions of Manufacturing in the Antebellum South,” North Carolina Historical Review, 17 (1940) 313–31Google Scholar; Russell, Robert R., “The General Effects of Slavery on Economic Progress,” Journal of Southern History, 4 (1938), 34–54Google Scholar; and Gen-ovese, Eugene D., “The Significance of the Slave Plantation for Southern Economic Development,” Journal of Southern History, 28 (1962), 422–37Google Scholar. These hypotheses are summarized by Bateman, Fred and Weiss, Thomas, in “Manufacturing in the Antebellum South,” Research in Economic History, 1 (1976), 3–5Google Scholar.

11 Atack, Jeremy, “Returns to Scale in Antebellum United States Manufacturing,” Explorations in Economic History, 14 (1977), 337–59CrossRefGoogle Scholar.

12 Bateman, Fred and Weiss, Thomas, “Market Structure Before the Age of Big Business: Concentration and Profit in Early Southern Manufacturing,” Business History Review, 49 (1975), 312–36Google Scholar. See also, Bateman and Weiss, “Manufacturing.” Note that their comparison of gross profit ratios in manufacturing and agriculture may not indicate rates of return on equity if, as many scholars have contended, planters had better access to credit than manufacturers. “This refers, of course, to the voluminous debate concerning the efficiency and profitability of slavery. For a summary of the argument that slavery was efficient, see Fogel, Robert W. and Engerman, Stanley L., “Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South,” American Economic Review, 67 (1977), 275–96 andGoogle Scholar their Time on the Cross. For a criticism of findings see David, Paul A., Gutman, Herbert G., et al., Reckoning with Slavery (New York, 1976)Google Scholar.

14 An index of manufacturing prices in New Orleans was constructed from data in Cole, Arthur H., Wholesale Commodity Prices in the United States, 1700-1861 (Cambridge, Mass., 1938)CrossRefGoogle Scholar. The actual goods in the index were pig and bar iron (iron), yellow pine (lumber), whiskey (distilled liquor), brown 4x 4 sheetings (cotton goods), sole leather (leather; prices for 1858-60 extrapolated on the basis of New York prices), and flour. The weights for the index were calculated from the Census of Manufactures for 1860. A regression of the ratio of the price index for export staples (Table 4, col. 1) to an index of manufacturing prices weighted by the shares of the products in 1860 value added was calculated for the years 1824 to 1860 with the following results for 1824-1860:

and for 1840–1860

Figures in parentheses are t-statistics. Full details are presented in the Technical Appendix, which is available on request.

15 Ruffin, Roy J. “Tariffs, Intermediate Goods, and Domestic Protection,” American Economic Review, 59 (1969), 261–69Google Scholar. On the limitations of the concept of a price of value added see. Jones, Ronald W., “Effective Protection and Substitution,” Journal of International Economics, 1 (02 1971), 59–81Google Scholar.

16 Let Ps be the price of sheetings, Pc the price of cotton and Pv the price of value added. Under the

assumption that the cotton/output ratio was fixed,

where α denotes the share of expenditures on cotton in the value of output and an asterisk over the variable denotes the rate of change.

17 From regressions of the log of the price of sheetings, data from Cole, Wholesale Prices, and cotton (data from Gray, Lewis C., History of Agriculture in the Southern United States to 1860, 2 vols. (Washington, D.C., 1933), p. 1027)Google Scholar, on time, the following values of Ps, Pc and Pv in percent per annum were calculated

The value of a was 0.58, the value of raw materials used in the production of cotton goods in the slave states in 1860.

18 Cf. Mak, James and Walton, Gary, “Steamboats and the Great Productivity Surge in River Transportation,” this JOURNAL, 32 (09 1972), 639Google Scholar.

19 Cf. Green, George, “Comment,” this JOURNAL, 35 (03 1975), 215Google ScholarPubMed.

20 Cf. Pope, Clayne, The Impact of the Ante-bellum Tariff on Income Distribution, (New York, 1975)Google Scholar and James, John A., “The Welfare Effects of the Antebellum Tariff: A General Equilibrium Analysis,” Explorations in Economic History, 15 (07 1978), 231–56Google Scholar. Each conducts his analysis with reference to the United States as a whole rather than as a customs union among the North, South and West.

21 Bateman, Fred, Foust, James and Weiss, Thomas, “The Participation of Planters in Manufacturing in the Antebellum South,” Agricultural History, 48 (04 1974), 297Google Scholar.

22 Rothstein, Morton, “The Antebellum South as a Dual Economy: A Tentative Hypothesis,” Agricultural History, 41 (10 1967), 380Google Scholar cites the example of two southern planters, Duncan and Minor, who owned extensive portfolios of government bonds, northern real estate and some industrial securities.

23 The natural logarithm of import, export, and terms of trade indices of Table 4 were regressed against time. The results for the terms of trade index were for 1824-61:

and for 1840–61:

Figures in parentheses are t-statistics.

24 These results assume no change in the productivity of southern factors of production. The gains from southern specialization in cotton production and trade as a means of securing importables would be greater if the productivity of factors employed in the production of cotton increased. This in fact seems to have been the case. Some approximations of total factor productivity in cotton may be obtained by an examination of the movement in the price of cotton relative to movements in the prices of factor inputs. These calculations indicate that the total factor productivity in cotton rose during the antebellum period, so that the single factorial terms of trade rose even more strongly than the commodity terms of trade. See , Fogel and , Engerman, Time on the Cross, Vol. 2, p. 86.Google ScholarPubMed The double factorial terms of trade are difficult not only to estimate but to interpret. They indicate the division of the gains from trade in the case where only final products are traded. Since cotton was an intermediate good, the impact of a deterioration in the commodity terms of trade on the importer's welfare would be diminished to the extent that textile producers substituted other inputs for raw cotton.

25 For a discussion of the politics of the antebellum tariff, see Stanwood, Edward, American Tariff Controversies in the Nineteenth Century, 2 vols., (Boston, 1903)Google Scholar; Pincus, Jonathan J., Pressure Groups and Politics in Antebellum Tariffs, (New York, 1977), especially pp. 15–82Google Scholar; and Edwards, Richard G., “Economic Sophistication in Nineteenth Century Congressional Debates,” this JOURNAL, 30 (12 1970), 802–38Google Scholar.

26 Quoted in , Linden, “Repercussions,” p. 326Google Scholar. Concerning southern proposals for import taxes on northern goods, see Wender, Herbert, “Southern Commercial Conventions, 1837-1859,” Johns Hopkins University Studies in Historical and Political Science, 48 (no. 4), 138Google Scholar; and Debow's Review, 8 (1850), 249–51Google Scholar.

27 , James, “Welfare Effects,” p. 247Google Scholar. These calculations are merely indicative of the analysis. They are in no way scientific estimates of the magnitudes involved.