Monday, August 03, 2015

New Economic Institutionalization in the South After the Civil War

This is a continuation, following my previous post on A Short History of Reconstruction, Updated Edition by Eric Foner. Here I deal with Chapter 4 of the book which is titled "The Ambiguities of Free Labor".

With the abolition of slavery, the plantation economic system of the southern United States -- which had been based on slave labor, and which confounded race with social and economic status -- had to be rebuilt on a new foundation. We living today have seen how long it took Japan to develop its version of capitalism and more recently how different countries with their different cultures responded to the fall of Communism. The Russian experience seeking to find a new economic model to replace Russian Communism alone helps us to recognize the replacement of one set of economic institutions by another can be a long and difficult process!

The Republicans seemed so blinded by their "free labor" ideology that they completely underestimated the difficulty in getting plantation agriculture of the pre-war south converted into an economic system that depended on a labor market in post-war America. Foner points out that the outcome of such an institutional makeover is more easily seen retrospectively than during its course, and may differ from place to place (and from crop to crop). Sharecropping by black families on small parcels was the dominant outcome after a few years, with whites owning the land. The contracts between share cropper and land owner specified the crop to be grown and the share given to each party at the end of the growing season.

From our modern perspective, the assumption that white owners and black farm workers would quickly establish a mutual concern for the productivity of the land seems naive. We of course benefit from centuries of labor management and labor owner disputes, some so grave as to lead to violence. That the former slave owners (who had seen hundreds of thousands of armed former slaves in the Union army) and the former slaves (who had been almost uniformly the victims of coercive physical violence perpetrated by slave masters under the direction of plantation owners) would easily see a common interest is naive. To the normal disagreements between capital and labor over the share each would receive of the profits of the enterprise, was added the concern of the former slaves for the freedom of themselves and their families -- freedom that they linked to the control of land and the removal of coercive control of their labor by plantation owners. Plantation owners, once fearful of slave revolts, were in the post-war world surprised by the desire of former slaves for improved status and fearful that the black workforce would not provide the labor needed to run the economy.

Foner writes that late in the war and soon after the war, a significant amount of land was distributed to former slaves. The land had been confiscated from rebels or abandoned; it was seen as needed by the freedmen to feed themselves and their families and begin them on the course towards development of a free labor system. Soon after the war, however, the federal government confiscated most of this land from its freedmen owners and gave it to the former plantation owners. I don't understand the concept of property that would allow the government to give and then take away, without cause.

Coincidentally, two economists famous for their controlled studies of development projects have concluded that a model does seem to work. Their six country study (see also the discussion in The Economist) focused on poverty alleviation projects that included a variety of inputs: "a productive asset grant, training and support, life skills coaching, temporary cash consumption support, and typically access to savings accounts and health information or services." Inputs were continued for at least two years, and evaluated after three years. The approach worked, albeit with modest benefits in terms of increased capital, income and standards of living for the poor targets. It seems very unlikely that the Freedman's Bureau was in any position to provide support of this intensity to the millions of freed slaves/

Source: "U. S. Slavery"
Cotton has been grown in the southern United States for centuries; there a warm and relatively wet climate combined with rich soils of the coastal plains to provide a suitable growing environment, and there the raw cotton could be relatively easily transported to ocean ports to be shipped to the mills in the north and in England.

Clearly cotton was king before the Civil War. With the invention of the cotton gin at the end of the 18th century the hugely labor intensive task of removing the seeds from the valuable cotton fibers was replaced by a relatively simple mechanical process. Suddenly cheep cotton from the more mechanized cotton plantations in the U.S. south fed the efficient mills of the industrial revolution in England and the northern United States to create a super product -- low-cost, high quality cotton cloth -- sold via the trading networks that were established (especially by colonial Britain) throughout the world. Here are data on U.S. cotton exports in the latter half of the 19th century:
  • in 1860 cotton goods were the #1 export of the USA with a value of 58 million 1914 US$
  • in 1880 they were the #3 export with a value of 97 million 1914 US$
  • in 2000 they were the #7 export with a value of 196 million 1914 US$
  • in 1929 they were the #4 export with a value of 364 million 1914 US$
The United States is still the worlds leading exporter of cotton. 

I wonder if the need for a product of substantial worth in the south and of tariff income from cotton exports played a role in the decision of the federal government to give the land that been in cotton production back into the hands of plantation owners/ After all, those wealthy property owners would be likely to seek the profits from the commercial product. If so, then government acceptance and support for the share cropping system that devoted a great deal of the labor of the former slaves to producing cotton rather than subsistence crops seems reasonable.

Author Foner notes (in the following chapter of the book) that many influential people in the north also wanted cotton production to return to the south to produce inexpensive cotton in large amounts. Northern mills were dependent on cotton inputs, there was a shipping industry largely run from the north that had been employed transporting cotton, and there were of course related financial interests that would be endangered by mill closures and loss of shipping routes. Moreover, there were debts due from southern borrowers and government income that would be lost if the tariffs from cotton exports were to be lost. Thus northern interests were allied with southern interests in resuming cotton production, and that implied plantation production in 1865.

This map is from "37 maps that explain the American Civil War"; the source also provided this text:
The Civil War freed the slaves, and Reconstruction temporarily granted them basic political rights. But the settlement of the war made no provision for land reform or economic redistribution. The federally owned land of the West was secured for free (largely white) owner-operated farms, but the basic underpinnings of the Southern plantation economy were left intact. Newly freed slaves owned no land or farm equipment, and had little in the way of formal education. With Southern governments from the 1870s onward uninterested in providing any of those things, most of the rural black population was forced into a particularly unremunerative form of tenant farming known as sharecropping. In exchange for land to till, seeds to plant, and basic equipment, the sharecropper would do all the work and hand a large share of the proceeds over to the landowner. Discriminatory enforcement of laws against "vagrancy," barriers to education and the professions, and discrimination on railroads and other public accommodations made it exceptionally difficult for sharecroppers to move from job to job or bargain for better conditions.

1 comment:

John Daly said...

The share of world GDP represented by the economy of the United States of America increased from about 2% in 1820 to about 16% in 1900 and about 19% in 1913. That rate of economic growth implies not only a growth in the land area under the U.S. flag, but also a change in economic institutions. Indeed, the growing importance of the United States in the world economy made the isolationism of American conservatives after World War I rather Quixotic.