The Political Economy
Most whites were subsistence farmers who traded their surpluses locally. The plantations of the South, with white ownership and an enslaved labor force, produced substantial wealth from cash crops. It supplied two-thirds of the world’s cotton, which was in high demand for textiles, along with tobacco, sugar, and naval stores (such as turpentine). These raw materials were exported to factories in Europe and the Northeast. Planters reinvested their profits in more slaves and fresh land, for cotton and tobacco depleted the soil. There was little manufacturing or mining; shipping was controlled by outsiders
The plantations that employed over three million black slaves were the principal source of wealth, but those slaves were also the source of general tension and white racial solidarity. William Freehling and Steven A. Channing have documented the race-based system of enslavement as "prone to insurrection and racial upheaval" inside the South, and by midcentury, its maintenance there was coming under increasing attacks from outside.
Slave labor was applied in industry in a limited way in the Upper South and in a few port cities. One reason for the regional lag in industrial development was "top-heavy income distribution". Mass production requires mass markets, and slave-labor living in packed-earth cabins, using self-made tools and outfitted with one suit of work clothes each year of inferior fabric, did not generate consumer demand to sustain local manufactures of any description in the same way a mechanized family farm of free labor did in the North. The Southern economy was "pre-capitalist" in that slaves were employed in the largest revenue producing enterprises, not free labor. That labor system as practiced in the American South encompassed paternalism, whether abusive or indulgent, and that meant labor management considerations apart from productivity.
Approximately 85% of both North and South white populations lived on family farms, both regions were predominantly agricultural, and mid-century industry in both was mostly domestic. But the Southern economy was uniquely pre-capitalist in its overwhelming reliance on the agriculture of cash crops to produce wealth. Southern cities and industries grew faster than ever before, but the thrust of the rest of the country’s exponential growth elsewhere was towards urban industrial development along transportation systems of canals and railroads. The South was following the dominant currents of the American economic mainstream, but at a "great distance" as it lagged in the all-weather modes of transportation that brought cheaper, speedier freight shipment and forged new, expanding inter-regional markets.
A third count of southern pre-capitalist economy relates to the cultural setting. The South and southerners did not adopt a frenzied work ethic, nor the habits of thrift that marked the rest of the country. It had access to the tools of capitalism, but it did not adopt its culture. The Southern Cause as a national economy in the Confederacy was grounded in "slavery and race, planters and patricians, plain folk and folk culture, cotton and plantations".
The plantations that employed over three million black slaves were the principal source of wealth, but those slaves were also the source of general tension and white racial solidarity. William Freehling and Steven A. Channing have documented the race-based system of enslavement as "prone to insurrection and racial upheaval" inside the South, and by midcentury, its maintenance there was coming under increasing attacks from outside.
Slave labor was applied in industry in a limited way in the Upper South and in a few port cities. One reason for the regional lag in industrial development was "top-heavy income distribution". Mass production requires mass markets, and slave-labor living in packed-earth cabins, using self-made tools and outfitted with one suit of work clothes each year of inferior fabric, did not generate consumer demand to sustain local manufactures of any description in the same way a mechanized family farm of free labor did in the North. The Southern economy was "pre-capitalist" in that slaves were employed in the largest revenue producing enterprises, not free labor. That labor system as practiced in the American South encompassed paternalism, whether abusive or indulgent, and that meant labor management considerations apart from productivity.
Approximately 85% of both North and South white populations lived on family farms, both regions were predominantly agricultural, and mid-century industry in both was mostly domestic. But the Southern economy was uniquely pre-capitalist in its overwhelming reliance on the agriculture of cash crops to produce wealth. Southern cities and industries grew faster than ever before, but the thrust of the rest of the country’s exponential growth elsewhere was towards urban industrial development along transportation systems of canals and railroads. The South was following the dominant currents of the American economic mainstream, but at a "great distance" as it lagged in the all-weather modes of transportation that brought cheaper, speedier freight shipment and forged new, expanding inter-regional markets.
A third count of southern pre-capitalist economy relates to the cultural setting. The South and southerners did not adopt a frenzied work ethic, nor the habits of thrift that marked the rest of the country. It had access to the tools of capitalism, but it did not adopt its culture. The Southern Cause as a national economy in the Confederacy was grounded in "slavery and race, planters and patricians, plain folk and folk culture, cotton and plantations".
National Production
The Confederacy started its existence as an agrarian economy with exports, to a world market, of cotton, and, to a lesser extent, tobacco and sugarcane. Local food production included grains, hogs, cattle, and gardens. The cash came from exports but the Southern people spontaneously stopped exports in spring 1861 to hasten the impact of "King Cotton." When the blockade was announced, commercial shipping practically ended (the ships could not get insurance), and only a trickle of supplies came via blockade runners.
The 11 states had produced $155 million in manufactured goods in 1860, chiefly from local grist-mills, and lumber, processed tobacco, cotton goods and naval stores such as turpentine. The main industrial areas were border cities such as Baltimore, Wheeling, Louisville and St. Louis, that were never under Confederate control.
The Confederacy adopted a tariff of 15 per cent, but imposed it on all imports from other countries, including the United States. The tariff mattered little; the Union blockade minimized commercial traffic through the Confederacy's ports, and very few people paid taxes on goods smuggled from the North. The Confederate government in its entire history collected only $3.5 million in tariff revenue. The lack of adequate financial resources led the Confederacy to finance the war through printing money, which led to high inflation. The Confederacy underwent an economic revolution by centralization and standardization, but it was too little too late as its economy was systematically strangled by blockade and raids.
The 11 states had produced $155 million in manufactured goods in 1860, chiefly from local grist-mills, and lumber, processed tobacco, cotton goods and naval stores such as turpentine. The main industrial areas were border cities such as Baltimore, Wheeling, Louisville and St. Louis, that were never under Confederate control.
The Confederacy adopted a tariff of 15 per cent, but imposed it on all imports from other countries, including the United States. The tariff mattered little; the Union blockade minimized commercial traffic through the Confederacy's ports, and very few people paid taxes on goods smuggled from the North. The Confederate government in its entire history collected only $3.5 million in tariff revenue. The lack of adequate financial resources led the Confederacy to finance the war through printing money, which led to high inflation. The Confederacy underwent an economic revolution by centralization and standardization, but it was too little too late as its economy was systematically strangled by blockade and raids.
Infrastructure of the Confederacy
In peacetime, the extensive and connected systems of navigable rivers and coastal access allowed for cheap and easy transportation of agricultural products. The railroad system in the South had been built as a supplement to the navigable rivers to enhance the all-weather shipment of cash crops to market. They tied plantation areas to the nearest river or seaport and so made supply more dependable, lowered costs and increased profits. In the event of invasion, the vast geography of the Confederacy made logistics difficult for the Union. Wherever Union armies invaded, they assigned many of their soldiers to garrison captured areas and to protect rail lines.
At onset of the Civil War, the Southern rail network was disjointed and plagued by change in track gauge as well as lack of interchange. Locomotives and freight cars had fixed axles and could not roll on tracks of different gauges (widths). Railroads of different gauges leading to the same city required all freight to be off-loaded onto wagons to be transported to the connecting railroad station where it would await freight cars and a locomotive to proceed. These included Vicksburg, New Orleans, Montgomery, Wilmington and Richmond. In addition, most rail lines led from coastal or river ports to inland cities, with few lateral railroads. Due to this design limitation, the relatively primitive railroads of the Confederacy were unable to overcome the Union Naval Blockade of the South's crucial intra-coastal and river routes.
The Confederacy had no plan to expand, protect or encourage its railroads. Refusal to export the cotton crop in 1861 left railroads bereft of their main source of income. Many lines had to lay off employees; many critical skilled technicians and engineers were permanently lost to military service. For the early years of the war, the Confederate government had a hands-off approach to the railroads. Only in mid-1863 did the Confederate government initiate an national policy, and it was confined solely to aiding the war effort. Railroads came under the de facto control of the military. In contrast, U.S. Congress had authorized military administration of railroad and telegraph January 1862, imposed a standard gauge, and built railroads into the South using that gauge. Confederate reoccupation of territory by successful armies could not be resupplied directly by rail as they advanced. The C.S. Congress formally authorized military administration of railroads in February 1865.
In the last year before the end of the war, the Confederate railroad system stood permanently on the verge of collapse. There was no new equipment and raids on both sides systematically destroyed key bridges, as well as locomotives and freight cars. Spare parts were cannibalized; feeder lines were torn up to get replacement rails for trunk lines, and the heavy use of rolling stock wore them out.
At onset of the Civil War, the Southern rail network was disjointed and plagued by change in track gauge as well as lack of interchange. Locomotives and freight cars had fixed axles and could not roll on tracks of different gauges (widths). Railroads of different gauges leading to the same city required all freight to be off-loaded onto wagons to be transported to the connecting railroad station where it would await freight cars and a locomotive to proceed. These included Vicksburg, New Orleans, Montgomery, Wilmington and Richmond. In addition, most rail lines led from coastal or river ports to inland cities, with few lateral railroads. Due to this design limitation, the relatively primitive railroads of the Confederacy were unable to overcome the Union Naval Blockade of the South's crucial intra-coastal and river routes.
The Confederacy had no plan to expand, protect or encourage its railroads. Refusal to export the cotton crop in 1861 left railroads bereft of their main source of income. Many lines had to lay off employees; many critical skilled technicians and engineers were permanently lost to military service. For the early years of the war, the Confederate government had a hands-off approach to the railroads. Only in mid-1863 did the Confederate government initiate an national policy, and it was confined solely to aiding the war effort. Railroads came under the de facto control of the military. In contrast, U.S. Congress had authorized military administration of railroad and telegraph January 1862, imposed a standard gauge, and built railroads into the South using that gauge. Confederate reoccupation of territory by successful armies could not be resupplied directly by rail as they advanced. The C.S. Congress formally authorized military administration of railroads in February 1865.
In the last year before the end of the war, the Confederate railroad system stood permanently on the verge of collapse. There was no new equipment and raids on both sides systematically destroyed key bridges, as well as locomotives and freight cars. Spare parts were cannibalized; feeder lines were torn up to get replacement rails for trunk lines, and the heavy use of rolling stock wore them out.