Southern Agriculture
Slavery and Civil War
Southern Agriculture
• Similarities with other regions
– Both South and West have a large percentage of
population in Agriculture before the Civil War.
– Emphasis is on production for market even when
farms are “self-sufficient”
Southern Agriculture
• Differences
– Crops- Cotton, Tobacco, Sugar and Rice
– Use of slave labor
– Larger Size
• Both in terms of acres and labor
– Small farms did exist but did not specialize in cash
crops (exception is tobacco)
Why was Southern
Agriculture different?
• Factor Endowment made it possible to grow
crops with a production function with
economics of scale and where slave labor was
more efficient than hired labor
• Sugar is grown with slave labor regardless of
where it is grown
Efficiency-What does it mean?
• Least cost way of production
– Slave labor less costly when cost of maintaining and
monitoring labor for the same output is less than the
wage payment to free labor
• Pareto –optimality or allocative efficiency
– Cannot make someone better off without making
another worse off
– Slavery is not efficient in the this way
– Payment necessary to get free labor to work as hard
as a slave is greater than the benefit to owner of using
slave rather than free labor
• Explosion of research by Economic Historians
into slavery in the post WWII period.
• Large amounts of resources devoted to
collecting and analyzing the slave trade and
the system of slavery.
• Understanding of slavery has been radically
altered
• Slave trade explained by the movement of
productive inputs from low to high marginal valued
uses.
– In the US, there was plenty of land and few
people. In Europe, there were more people and
less land.
– The marginal product of labor was higher in the
New World.
– Slave labor was used in some crops but not others
Slave Trade
Slave Imports
1451-1600
1601-1700
1701-1810
1811-1870
total
275,000
1,362,000
6,200,000
1,898,000
9,735,000
1701-1810-Height of the slave trade.
Slave Trade was a multi-cultural enterprise.
Blacks captured slaves and transported them to
Barricos on the coast to be sold to white traders.
Malaria prevented whites from penetrating the
African interior.
• Example of Specialization According to Comparative
Advantage. The common perception is that slavery
was associated with cotton (Gone with the Wind).
This is wrong.
– Cotton and tobacco were not the most important
crops in the slave trade (as opposed to slave
system).
– Sugar was the crop which drove the slave trade.
– 80% of slaves were imported before 1810-before
cotton production really got going.
Where slaves Went
1500-1800
slaves
immigrants
13 colonies
8%
21%
Other British
colonies
French colonies
19
14
20
14
Spanish colonies
13
21
33
27
7
2
others
Differences
• Percentage of slaves in general population much lower in U.S. compared
to Caribbean.
– Economies of scale plus climate meant that sugar colonies were heavily black.
• Sugar plantations were some of the largest economic organizations of
their times.
– Many plantations had 100’s of slaves-little contact with whites and European
culture.
• Nature of sugar production required heavy labor-cutting the cane and
squeezing the sugar out in large presses.
– Little productive work for women-led to a sex imbalance among the slave
population.
• In many sugar colonies, whites comprised less than 20% of the population
sometimes less than 10% of the population.
Differences
•
•
•
In the Caribbean, the death rate was so high and the birthrate was so low, the
slave populations were not self sustaining.
– The Caribbean experienced a 2-5% rate of natural decrease among the slave
population .
– Explanation for difference is in the disease environment in the Caribbean and
the isolation of African populations that were the source of most slaves.
• Typhus, malaria, tetanus, dysentery.
Process of seasoning killed off 30% of the newly arrived slaves in the first year in
the New World.
– Also, the sex ratio in the slave population explains the rate of natural decrease
in the Caribbean.
– Less than 40% of the slaves brought from Africa were female.
The negative net present value of children in sugar culture provided the slave
owner in sugar societies no incentive to promote the birth of children.
Differences
• Through the 19th century, the majority of slaves in the
Caribbean were born in Africa.
– Native born blacks comprised the majority of US slaves as early as
1680.
– By 1860, all but 1% of American slaves were American born.
• Natural Increase was the main cause of the increase in the US
slave population.
– Difference between US and Caribbean slave experiences.
– US population was self sustaining from the beginning.
Emancipation Outside US
• Slavery abolished in British Caribbean and South America mostly before
1850.
– Emancipation accomplished largely through non-violent methods
which included payments to slave owners to compensate them for
their financial investments in slaves.
• In 1860, America left as the last great slave system.
– Although the vast majority of blacks brought to the New World as
slaves were sent to countries outside the U.S., the more favorable
demographic conditions in the U.S. led to a higher survival and
reproduction rate of U.S. blacks.
– Over time the U.S. slave population grew to be the largest in the
world.
• The U.S. was a minor player in the slave trade, but by 1860 was the Great
Slave Power in the world.
US Slavery and Cotton
• Whitney’s Cotton Gin (1793) enabled short staple cotton to be
separated on a competitive commercial basis by mechanical
means
• From 1820 to 1860, cotton output rose by a factor of 11.5, the
slave population by 2.5, and output per slave by a factor of
4.6.
• From 1790 to 1860 the slave population in the South grew
slightly more rapidly than the white population---in the
absence of significant slave imports.
• Ownership of slaves became more concentrated by the
1850’s. Southern families owning slaves fell from 36% in 1830
to 25% in 1860.
Questions about Southern Agriculture
• What was the effect of Slavery on Southern
Economic Growth?
• Were Slave Owners Rational? Was the
purchase of a slave a rational decision on the
part of the planter?
• Were slave plantations efficient? The least
cost way of producing cotton. Would slavery
have ended without the Civil War?
Traditional Historical View
• Ulrich B. Philips-began publishing around 1905.
– Argued that slave culture continued because of speculation,
economies of scale, and conspicuous consumption. (%Ps>%Pc)
– Therefore, because slavery was not economically viable, slavery would
have ended on its own.
• Charles Ramsdell- Slave owners were forced to overproduce cottonirrationality argument-economies of scale.
– Natural Limits argument-Cotton production led to soil exhaustion so
that slavery required a constant expansion to new lands.
• As new lands ran out, slavery would have ended.
• Incompatibility of slavery and urban society.
– Slave system could not be adapted to urban conditions.
– No systematic investigation of profitability of slavery.
Political Motivated
• Abolitionists argued that freeing slaves would
increase economic growth because free labor
would work harder than slave labor
• Slave owners were pre-capitalist class.
What effect did Slavery have on
Southern Economic Growth?
Per Capita Income 1840-1860 by region
1840
1860
Growth rate
National Average
$96
$128
1.4
North
109
141
1.3
North East
129
181
1.7
North Central
65
89
1.6
South
74
103
1.7
South Atlantic
66
84
1.2
East South Central
69
89
1.3
West South Central
151
184
2.0
Includes slaves
Although per capita income is lower than North, growth rate of income is higher
especially in west
Was Slavery Profitable?
• In the post World War II period, economists began applying economic
theory and statistics to the central questions of U.S. history.
– Used different sources of data and different methodology than existing
scholars.
– Quantitative vs. qualitative data.
• First study by Conrad and Meyer (1958)
– Found that slave owners treated slaves like factory owners treated expensive
machinery.
– C&M found that slave owners earned about 5-8% return on slave ownership.
– C & M set off debate that refined their estimates. At the end of the debate, it
was found that the return on slaves was equivalent to the return on railroad
bonds
• Evidence that slave owners were calculating businessmen interested only
in profit-revolutionary idea at the time.
• Profitability of slavery undermines the argument for conspicuous
consumption.
Conrad and Meyer Data
• Age price profiles.
• Collected data from slave markets.
• Detailed information about prices and
characteristics of slaves recorded and published.
• Hire rates
• Use Present Value formula
• If r is the rate of return, Rt is annual net
revenue produced in year t, Ps is price of
slave:
N
Ps=∑ t=1 Rt/(1 + r)t
• Rt depends on cotton price, yield
• Ps is known
• Solve for r
Net Income by Sex and Age
Shows the net income a slave
owner could expect from a
typical slave at different ages.
Slaves began to cover their cost
of maintenance at an early age—
late adolescence.
Prior to age 15, women earned
more than men—
For most of life females earned
20-40% less than men
Typical in a nonindustrial society
Accumulated Net Income/Age Profile
Shows the total lifetime income a slave owner
realized from a typical slave at various ages.
Until around age 12, the slave is consuming
more than the cost of maintenance—the line
is downward sloping.
At age 12, the slave begins to produce more
than he consumes-the line begins to slope
upwards but remains below zero.
By age 28, the slave has “worked off” the
investment the slaveowner made when the
slave was young-the line is above zero.
Incentive for slave owner to maintain the
slave as a productive asset throughout the
slave’s life—the lines stays positively sloped.
Slave’s net income remained positive even in
old age
Incentive for slave owners to keep old
slaves—decent treatment of old slaves.
Age Price Profile
The price of a slave at a given
age is consistent with the present
value of the expected net income
of the slave over his remaining
lifetime. Suggests slave owners
were rational
At age 0, the slave had a positive
price. This means that the slave
owner had an incentive to
encourage live births.
Peak price occurred in the late
20’s and early 30’s.
Only in the mid 70’s does
ownership of a slave become
unprofitable.
\
Rate of Return
• Conrad and Meyers found rates of return that
varied from 2.2 to 5.4 % on poor quality land
in South Atlantic area to 10-13 % in South
West
• Slaves were not highly speculative
investments
Slave Price increasing
Capitalized Rent in an 18 yr. Old Slave
Years
1821-25
1826-30
1831-35
1836-40
1841-45
1846-50
1851-55
1856-60
Average Price
$736
$792
$974
$1,206
$744
$936
$1,252
$1,596
Gross Rearing Cost
$657
$614
$671
$848
$591
$737
$807
$938
If slavery were becoming unprofitable, what would happen to
slave prices in the year’s leading up to the Civil War?
Evidence shows that slavery was profitable, was getting more
profitable, and was expected to continue to be profitable after
the Civil War years.
Were Slave Plantations efficient?
• Fogel and Engerman, Time on the Cross
– Robert Fogel (and Douglas North) won the Nobel
Prize in 1993
• Time on the Cross changed they way people
thought about slavery and also was one of the
first high profile uses of New Economic History
How to measure efficiency?
• Survivorship- number of large plantations
increases
• Total Factor Productivity
• Q=LaKbTc
• TFP=Q/LaKbTc
• Used to compare Northern Agriculture to
Southern Agriculture and to look at
productivity differences between slave
plantations of different types
• a,b, c are factor shares for labor, capital and
land
– a=.58, b=.17, c=.25
• Data on L, K, T from census
– L adjusted for age and sex differences
– T adjusted for land quality
North vs South
•
•
•
•
•
(Ls/Ln) .58 (Ks/Kn) .17 (Ts/Tn) .25 =72.8
South has 72.8% of North’s inputs
Qs/Qn = 102.5
South’s output is 102.5% of North’s inputs
TFP =102.5/72.8 = 140.8
Economies of Scale
• Data is from the Parker-Gallman Sample of the
1860 Census
• North= 100
Farm size(#slaves)
Old South
New South
0
98.4
112.7
1-15
103.3
127.2
16-50
124.9
176.1
51 or more
135.1
154.7
All slave farms
118.9
153.1
All Farms
116.2
144.7
Criticism
• Labor variable-more frost free days in South
and slave worked longer hours
– FE response longer growing season does not mean
more hours
• Weights use to adjust labor
Criticism
• Land-FE used land value
• David and Temin argue should not adjust on
the basis of value because it includes location
advantage
• Most large plantation located on rivers when
FE adjust for location advantage makes them
more efficient.
Criticism
• Crop mix-North cannot grow cotton
• Turns out farms in South with <15 slaves grow
about the same crop mix as in North and are
still more efficient
Sources of Economics of Scale
• Specialization- Team production
• Gang Labor System
• How much is more intense labor due to
economics of scale in coercion as opposed to
economies of scale in the production process?
– Revisit this question after the Civil War
Treatment of slaves
• Both positive incentives and punishments were used
to motivate slaves
– Gang vs task system
• Slave diets were higher in calories than northern
labor
– Average height of slaves was inch less than northern born
whites
– More than laborers in Europe
– Slaves in sugar colonies
– Slave children< 7 were smaller
Treatment of Slaves
• Slave families were kept together when it was
in the interest of planters to do so
– Slave families that were sold together brought a
higher price than would have been received if
individual were sold separately
– Families were not always kept together
Domestic Slave Trade
• Domestic Slave trade remains in place until
the Civil War
• States in South Atlantic exported slaves to
South west
• Were plantation owners deliberately breeding
slaves to be sold west?
– Not clear
Evaluation of Fogel and Engerman’s
work
• In the early 1990s, 178 Economic Historians were
surveyed about a number of debates in economic
history
– All disagreed with these statements that planters were
irrational in using slave labor and that the plantation
system was dying on the eve of the Civil War
– 75% agreed that slave agriculture was more efficient than
free agriculture in either North or South
– More than half agreed with the statement that materially
(not psychologically) slaves were better off than free
workers
The Great Tragedy of the Civil War.
• Why fight?
– Voluntary Emancipation and the failure of the U.S.
Constitution.
– The usual method of conflict resolution in the U.S. is
through non-violent means , e.g. the ballot box.
• Why was the Civil War so costly to fight—both in lives and
material?
– Motivation.
– Balance of Forces.
– Technology and Tactics.
• Could Slavery have been ended more cheaply?
Explaining the Lethality of Civil War.
• 2 Factors led the Civil War to be very lethal.
– Evenly matched opponents-same culture, tactics, weapons, etc.
• Balance of forces-equally divide country, same culture, tactics,
technology and will to fight-leads to long and bloody conflict.
• Tactics.
– Generals trained at the same military academies.
– Many of them knew each other personally.
– Wars where new tactics and technology are employed for the
first time are usually short and not bloody.
More Technology
– Improvements in Logistics
• Railroads and canal system allowed the
concentration of large groups of armed men in the
field for extended periods of time.
• The transportation system also allowed large groups
of men to sustain a high level or armed conflict.
– Changes in the technology of warfare.
• Musket vs. percussion cap vs. machine gun and
artillery--increased rate of fire of percussion muskets
• Minnie Ball and Percussion Cap increased rate of fire.
Technology and Tactics
• The Civil War was a case where the
technology of warfare had advanced while the
tactics employed by generals had not
adjusted.
• The result was a very high level of lethality.
How Many People Died in Civil War?
Total Deaths
Total Deaths Battle Deaths
Civil War (Union)
364,511
140,414
Civil War (Confederacy)
258,000
Spanish American War
2,446
385
WWI
116,516
53,402
WW2
405,399
291,557
Korean Conflict
54,246
33,629
Vietnam (American)
56,886
46,498
Vietnam (North Vietnamese)
660,000
Vietnames (South Vietnamese)
220,357
6-Day War (Israel)
1,000
6-Day War (Egypt, Jordan,
Syria)
18,000
Other Deaths
224,097
2,061
63,114
113,842
20,617
10,388
Wounds Not Mortal
281,881
199,515
1,662
204,002
640,846
103,284
153,000
If you were a draft age male what were your
chances of being killed or wounded?
Deaths and Wounds as a Percent of Male Population
Civil War
Spanish American War
WWI
WW2
Korean Conflict
Vietnam (U. S.)
Vietnam (Vietnamese)
6-Day War (Israel)
6-Day War (Egypt, Jordan,
Syria)
Percent of Male
15-24 Population
Killed or
Percent of Male Wounded (17%
Population Killed
of population
Population
or Wounded
male, 15-24)
31,443,321
7.02%
41.30%
50,000,000
0.02%
0.10%
92,228,496
0.70%
4.09%
132,164,569
1.58%
9.31%
151,325,798
0.21%
1.22%
203,302,031
0.21%
1.21%
39,463,910
4.46%
26.24%
2,746,898
0.07%
0.43%
38,662,000
0.09%
0.55%
Monetary Cost of Civil War
• Estimated cost of the Civil War was $6.6 billion dollars.
– About half of this government expenditure.
– The rest includes loss of physical capital, loss of life
• Total cost of $206 for each American in 1861 or almost twice the amount
consumed by the average American in 1860, i.e. 2 years wages.
– Had the same amount been invested at 6% it could have provided an
annuity equal to 10 % of average income.
– $6.6 billion was enough to buy the freedom of all the slaves at market
prices, provide them with 40 acres and a mule, and still leave $3.5
billion to pay for reparations to blacks for the lost pay under slavery.
Why Fight--Cost of Emancipation to White
Southerners in 1860.
• The U.S. constitutional system is good at compromise--division of powers,
senate vs. house of republicans, electoral college. Etc.
• Constitution constructed to force differences of opinion into the political
arena and it has largely been a success.
– The U.S. is largely free of outbreaks of violence.
• The constitution and politicians wrestled with the slavery question for
decades prior to the Civil War.
– End of slave trade in 1810-expected to end system of slavery.
– 3/5ths Compromise-count each slave as 3/5ths of a person for determining
representation.
– 1820-Missouri compromise (Maine Missouri)
– Compromise of 1850 (Land acquired in Mexican/American war)
– Kansas Nebraska Act (1854).
• Ultimately, the constitution failed. Slavery was “too big” a question.
The end of slavery the one big issue where
the U.S. constitution failed.
• Capital Value of Slaves in 1860 was $2.7 Billion.
– Invested at 2.5% this was enough to reduce the value of income to the
average southerner by 23%.
– Clearly, the end of slavery would have a profound and significant effect
on the average white southerner’s welfare.
• Southerners were not going to agree to any system of voluntary
emancipation that did not fully compensate them for the value of
their slaves.
• Northerners would have to impose very large tax increases to pay for
voluntary emancipation.
The Conundrum of the Civil War.—Why did
Northerners fight CW?
• Main Beneficiary of Slavery White Northern consumers.
– Why the second half of Fogel’s Without Consent or Contract (The
Ideological and Political Battle Against Slavery) is about the battle to end
slavery.
• Slavery the low cost method of producing cotton.
– Gang system of labor.
– Hand rating system.
– Monitoring costs.
• Market in slaves competitive so that slave owners earned only a normal rate
of return on slave ownership.
• Market in cotton textiles competitive so that price of cotton bid down to the
minimum ATC of production.
• Consumers who bought cotton textiles enjoyed the benefits of slavery in
terms of lower cotton prices.
“The Great Moral Crusade.”
• Northerners subjected themselves to huge cost to
end slavery which did not directly benefit them.
• Moral explanations of the end of slavery.
Fogel concludes that whites were not pursuing their
narrowly defined self interest (money income) in
ending slavery but instead were motivated mainly by
moral factors.
– Why half of his book, Without Consent or
Contract, is entitled “The Ideological and
Political Campaign Against Slavery.”
Historiography of Civil War
• In the period prior to the Civil War, abolitionists mounted
a public relations campaign against slavery.
– Similar to the anti-smoking campaign going on today.
– They argued that “the end justifies the means.”
Turning Point of US Economic History?
• Was the Civil War the turning point of US
Economic History? If so why?
– Not much evidence to support in GDP or GDP per
capita growth statistics
– The Southern economy does grow more slowly
than the Northern economy after the war.