Musings on the American Civil War
This essay covers some interesting economic factors relevant to the American Civil War, and to alternate histories written about it - particularly about what happens if the Confederacy wins, and thus remains independent. There are three main topics. First, why some North-South economic differences would probably remain in an alternate timeline. Second, why the suggestion that an independent South would emancipate the blacks any time soon (such as is portrayed in Harry Turtledove's book "How Few Remain") actually seems very unlikely. Third, how demographic differences between the North and the South contributed greatly to North/South differences and to different development after the American Civil War.
A New Economic View of American History (Jeremy Atack, Peter Passell, 1994) is a very good book providing an overview of US economic history. It demonstrates that a surprising number of factors in US history are traceable to underlying economic conditions, including a lot of social differences. Most of the information here comes from that book.
Northern/Southern Economic Differences
One interesting conclusion is that due to relatively immutable factors such as geography, there is strong pressure for the North-eastern US to be densely populated and industrialized, and strong pressure for the Southern US to focus on agriculture. Thus, independent of the details of history such as politics and policies, the most likely outcome of having fairly similar societies in these two areas is a similar North/South economic difference as in OTL (at least prior to the 20th century, and spill over effects would tend to happen into the 20th). A big part of this is simple comparative advantage, from two factors.
First, the South has better farmland in general, and is especially good for growing lucrative, exportable “cash crops”. When significant trade exists, a given area will naturally tend to focus on things that it does best relative to other areas, and trade for goods where its advantage over other areas is least (which can mean that it is only slightly better, or that it is at a disadvantage). The superior agriculture of the South, relative to the North and in cash crops relative to Europe, produces a powerful tendency to focus on agriculture, especially on large plantations, and to import manufactured goods. And by manufactured goods I’m not talking specifically about machines – in the 18th century, when manufactured goods were produced by craftsmen, the Northeast was still naturally the center of manufacturing.
Second, the chief form of energy of the pre-steam era – water power – tended to be more commonly and cheaply available in the North on the scales needed for early manufacturers such as lumber mills, flour mills, cotton mills, iron furnaces, and so on. In fact, even by 1880 only half of the firms in New England and the Mid-Atlantic had switched to steam power, and steam made further inroads only very slowly. Water power didn’t die out until electrification came along.
The specialization that existed reinforced itself due to population distribution – the population in the South was far less concentrated than that in the Northeast, since that made sense for an economy based around largish farms. It is striking if you look at a map showing cities with over 5000 people in 1900 – there are only a two in all of the south (New Orleans and what appears to be Louisville, Kentucky), but New England and to a lesser extent the Midwest is covered with dots. Transportation improvements – first roads, then canals, then railways – spread rapidly in the North but slowly in the South. The North had more large towns, and they were closer together, so that such transportation improvements were far more profitable. Improvement could connect far more people per mile.
The South, on the other hand, primarily used river transportation – this was more easily available, and it worked just fine to transport goods to ports for shipment to distant markets. Canal construction had a significant impact on the North beyond improving transportation, because canals were projects on a scale not previously seen in North America. Paying for them was a huge impetus to the development of financial markets (particularly in bonds), to government sponsorship of infrastructure, and to foreign investment in the US.
This all gives an interesting dynamic for any ATL where Northern and Southern differences are a concern. The major economic pressures push more heavily toward government intervention in the North than in the South (even without plantation slavery). Tariffs are unattractive to Southern agribusiness, but attractive and – within limits – economically beneficial to Northern industry. There is a large natural demand for government investment in transportation in the North, but little in the South. The North will tend to be be much more heavily urbanized, with more call for government intervention in the more complex social and economic structures of the cities. The North will tend to industrialize faster and earlier, with more pressure to develop various labor and workplace regulation laws as a result. Its poor will also be much more heavily skewed towards urban workers, who tend to be much more active at pushing for social welfare reform than tenant farmers or farm laborers. They also find it easier to organize in numbers, and for them poverty is more likely to result in homelessness and starvation rather than bare subsistence.
The US in general has – relative to Europe – a greater tendency to invest in technology and other new capital developments. According to economic analysis, the conditions for investment seem to have been different in the US from in Europe in an important way, because capital and land were complementary to production. What this means is that if you have both lots of investment and lots of land, there is a synergistic relationship between them where their benefits are greater than either in isolation. The end result of this is that if you have a large supply of land, investment in capital assets becomes more attractive relative to investment in labor than it normally would be. This promotes investment in labor-saving technology, even if the price of labor isn’t terribly high.
Another factor which may have influenced US industrialization in the age of steam was that it used a different steam engine technology than Europe. The American Evans engines were five times less fuel efficient than the British Watt engines, but was smaller, lighter, easier to build, and more robust when transported over rough roads. These various advantages made it more suited for the US economy (and thus, it would tend to be adopted in the US in a TL where both sorts of technology are developed). The interesting part is that these high pressure engines drove American industrial machines at a higher speed, thus producing greater wear. This led to a faster replacement of industrial machinery (with, of course, the latest new machine). I’m not saying that these reasons alone explained the US technological growth – the US society was more suited to rapid industrialization than much of Europe, for example – but they’re nontrivial details that are interesting to know. They would tend to remain constant between ATLs where culture or other circumstances do not.
Emancipation
The book American Economic History is a veritable gold mine of information for someone who wants to do any kind of “alternate ending to US Civil War” scenario. I would consider it must-read stuff for evaluating, for example, what would have been required for the Confederacy to give up slavery, and how well the two different nations would be expected to do economically. Perhaps POD members will not be surprised that the economic evidence appears to point in a rather different direction than the one taken by certain popular alternate history books featuring a southern victory. Emancipation, for example, is a huge economic dislocation no matter how you look at it. The authors point out that the market value of the slaves in the South was 2.7 billion dollars at the time of the civil war. That is a decent figure to use to represent the amount of wealth slave owners would lose due to emancipation, entirely apart from the “intangible” costs to a very racist society of having to integrate a bunch of free blacks and upset the “natural order” of race relations. Unsurprisingly, many of those who favored emancipation, especially in the South, wanted to ship the freed slaves back to Africa (this probably would have cost about a billion dollars in itself, not to mention the economic disaster to plantation owners who would lose the ability to even hire black workers).
For comparison, the best estimates of the short term cost of the civil war is about 6.5 billion dollars, including the cost of the damage and the cost of dealing it out. The total GDP of the US at that time was 4.2 billion dollars. This was split about evenly between the North and the South, but 2.3 billion of the Northern figure was government expenditure, whereas the Southern government spent 1 billion but the South lost 1.5 billion of destroyed physical capital. This indicates three things. First, emancipation with full compensation to the slave owners would actually have been considerably cheaper than fighting the civil war in total, but it would not be much cheaper for either party individually to fund emancipation rather than fight. Second, nobody really expected the civil war to cost nearly that much, so even from a purely “economic” calculation both sides would prefer to fight rather than pay for emancipation, and the Southerners had no reason to agree to emancipation unless fully compensated (in fact, because of what they would perceive as “social costs”, they would be unlikely to agree to emancipation even if paid the market price for all slaves). For a bit of perspective, fully compensated emancipation would have to be financed by borrowing, and the interest costs of that borrowing would amount to 5% of the national income (dropping as national income grew).
Third, and important for people writing ACW alternate histories, is that if the South wins it will almost by definition have lost less in the war. In particular, one would expect government expenditures to be somewhat similar to those of OTL, but for damage to capital to be much less. The Southerners will perceive the 1 billion dollars spent fighting the war to have been rather expensive – but compensated emancipation plans are much more expensive still. The plantation owners – who are the political power in Southern society – stand to lose a heck of a lot of money from an emancipation plan. In fact, I’m not sure that they could realistically be fully compensated at all, simply because they made so much of the money that non-slave owners might be impoverished by any scheme to pay them off. They would definitely want to be as fully compensated as possible, though, which would mean a substantial transfer of wealth from non-slave owners to slave owners. This gives even those who don’t own slaves a big reason to oppose emancipation. Also, I would bet big money that if the Confederacy ever got desperate enough to adopt any actual emancipation plan, as much of the resulting costs as possible would be paid for by taxes on the newly freed blacks.
There is actually a much cheaper way to emancipate slaves. You can declare a policy of “graduated emancipation”, meaning that – for example – existing slaves remain enslaved but new born blacks are free. You can add options like mandating the gradual freeing of current slaves within, say, a 20-30 year period as well. This is much cheaper, because the slave owners get to keep most of their slaves for at least a couple of decades and get whatever labor they can out of them. The “up” side of this kind of emancipation is that the Confederacy might actually be able to pay for it. The “down” side, especially if you’re Harry Turtledove trying to produce a scenario where the South frees the slaves and does fine afterwards, is that this would take a long time and would not exactly be a giant leap to freedom. The bulk of the slaves have to remain enslaved for 30 years, or for the rest of their lives, or whatever to get the cost below 500 million.
Such a “phase out” wouldn’t really satisfy abolitionists, would not produce the short term change needed to deal with the kind of immediate crisis that might provoke emancipation sentiment, and still wouldn’t be comfortable enough for the plantation owners to accept the idea unless it was absolutely necessary. Another potential problem with freeing the next generation – from the point of view of black welfare – is that a lot of the newly free blacks would still have been raised in slave households, by parents who do not have significant resources to bequeath to them. In addition, the plantation owners would not be eager to provide for such children, because they would be a pure expense – absorbing resources, but not growing up to be a new piece of property.
The elimination of slavery would, by the way, likely cause a substantial drop in long term economic output regardless of its immediate costs. Although the South was damaged extensively in the Civil War, the damage was repaired in a matter of years. One reason for the apparent economic malaise of the south is the elimination of slavery. Freed blacks not only chose to work substantially less, they chose not to work in the gang-labor conditions that had given a significant efficiency boost to large plantations. Gang labor is actually fairly efficient with slaves, because it allows them to be forced to maintain a high output. Slaves can also be forced to work long hours. Gang labor and long hours are things that free workers avoid, on the other hand, and plantation owners couldn’t profitably pay them enough to change their minds. Emancipation caused a great transfer of wealth, decreasing the visible income of plantation owners in return for an increase in the invisible income (especially preferred working conditions and leisure time) of blacks. This caused an increase in social welfare and a decrease in GDP, relative to an ATL where slavery continued. Another reason, when the 20th century came along, is that industrialization was where the money was at. The less urbanized, less educated, poorer Southern population which started out well behind in industrial development was not ideally placed to take advantage of advanced industrialization.
Relatively speaking, a continuation of slavery would retard industrialization even more. And I don’t just mean a “slaves make poor industrial workers” argument, although there seems to be a good bit of truth in that. First and foremost, cotton would remain quite profitable for decades after the Civil War (historically, production kept increasing dramatically for some time), and the availability of slaves increases the attractiveness of cotton plantations over other investments. Even if slaves could be used in industry any time soon, such uses would remain experiments for some time. Slaves were most profitable, relative to free workers, on the large plantations – meaning that the bulk of them inevitably went to the plantation owners simply because they were willing to pay higher prices for them. So long as the profitability of slaves in farming cotton remained high, they would remain too pricey for most industrialists.
Even more importantly, industrialization involves lots of improvements in land and heavy machinery – fixed assets. As long as slavery was around, such investment was in short supply. Slaves were a highly mobile form of wealth, so there was little incentive to invest in fixed improvements such as transportation systems, public works, and so on. Those would increase the value of nearby land, but not the value of slaves. But you couldn’t make all that much profit on land, because there was plenty of it available and a tendency to move on when it was used up. After the Civil War ended, the main source of wealth in the South immediately shifted from slaves to land. Investments in fixed improvements, infrastructure, and some industries shot up in short order.
All of this is, of course, ignoring the fact that the point when people are least likely to give something up is when they consider it something they have a “right” to, and they have just successfully fought to protect it. I’m not just talking about wars here, but in general – even people who have just fought for some trivial right in court, due to a dispute with the neighbors, become unwilling to reverse the decision for any reasonable price. In fact, I just read an interesting paper about that in Behavioral Law and Economics (Cass R. Sunstein [Editor], 2000). The moment the Confederacy fought to protect slavery and won, emancipation would cease to be an option at any feasible price for quite some time to come. In fact you would probably need an entire new generation of people to come to power even for the question to be seriously considered in an emergency.
Emancipation being required to get an international alliance is probably the least likely kind of emergency to provoke that, though – that would be perceived as national blackmail rather than the sort of concession that is “acceptable” in international deals, generating so much resistance that it would never be agreed to until conditions were so dire that it was too late to save the Confederacy anyway. This is part of a fairly general pattern of human behavior. When people believe that they are being attacked, or that their rights are being violated, or in general that they are being wronged or challenged, they retaliate. Specifically, they have a strong tendency to retaliate even at net cost to themselves, discarding self-interested analysis as they are driven to resist or to hit back. In business, that means people will negotiate for mutual benefit if they think they are engaged in a “fair market transaction”, but if they perceive that their rights would be violated by a transaction then they won’t agree to it even if you offer them an amount of money that would pay for their losses plus a reasonable profit.
In international relations, if you step outside of the normal forms of exchange – defence pacts and trade deals, exchanges of frontier territories and conquered lands, payment and so on – you can expect a dramatic increase in the resistance to your demands. Try and think of it this way. For the Americans in the audience, imagine that somehow the Cold War went a bit differently, and the US is on the losing end of a war with the Soviet Union. It’s not over yet, but the situation looks pretty grim. Victory is unlikely, and nuclear weapons with which to blow up the world and call it a tie are not available. America itself is threatened, and the worst case scenario of total annexation is looking rather likely. Try and think of one of those bad movies or techno thrillers where the bad evil commies are coming and the US is really on the ropes, and think patriotic thoughts.
Now, imagine that China comes to the US with an offer – it can attack through Siberia and turn the tide of the war. You don’t really like the Chinese, because while they are no friends of the Soviets they are always prattling on about the benefits of Socialism and they’ve never helped you unless there was something in it for them. This time is no different – the Chinese won’t risk intervention without some serious concessions from you. Think about how you might respond to the following alternative concessions they might want you to make. Would your responses to them different? Would you be most likely to accept their help in some cases, and reject it in others? (Assume that you will actually have to make the concession, so you can’t just agree and then later renege)
1. They want the US to pay them a large amount of money – their military aid will essentially considered a loan that will be repaid in full over time. The US would need to spend over 10% of its postwar GNP to cover the interest on the loan.
2. They want the US to make big economic concessions – exclusive trading agreements, open borders, ending subsidies they don’t like, and agreeing to supply them with strategic goods. The actual financial cost of this would be somewhat less than that of option 1 above, but this “repayment” specifies specific agreements the US must make rather than a direct transfer of money.
3. They want the US to make strategic concessions. The US will pull all long term military presence out of the Pacific and the Middle East, and cede all territory west of Hawaii. It will have to take a hands-off attitude toward Asia and the Pacific, which are now the Chinese “sphere of influence”. All in all, the US ability to influence the rest of the world may be hamstrung and it will have to follow the lead of China. Remember that you neither like nor trust China.
4. They want the US to change its internal political structure, essentially becoming communist. There has always been a substantial Communist movement in the US, but it has been repressed. The Chinese want this to end immediately, for the Communist Party to be “equitably” represented in government, and for prominent Communists (advised by China) to be put in certain positions of power. Chinese Communism isn’t quite as nasty as Soviet Communism (this is Deng style, not Mao style), but they still want the US to initiate changes that would lead to it becoming a Communist state. But admittedly, while a big reason you hate the Soviets is because they are Communists, being an independent state ruled by domestic Communists is better than being overrun by the Red Army and ruled from Moscow. American-style Communism looks like would maintain tolerable standards of living and be relatively less oppressive, and you won’t lose all influence over the government.
Unless I really miss my guess, people will tend to find alternative 4 much less attractive than the others (and I think I did a fairly good job of making it comparable to emancipation as viewed by the Southern planters in the decade or two after the Civil War). I also expect a nontrivial tendency to view alternative 1 as the most favourable alternative, even if its short term effects on the US standard of living would be worst (excluding people who, due to strong isolationist tendencies, would actually like to remove US military presence from the rest of the world in the face of rampaging global Communism, and people who actually like Communism). Even if alternative 1 actually has a huge cost, it is designed to look as much as possible like a legitimate business transaction rather than an exploitative demand to surrender rights or freedom of action.
North/South Demographics
Demographics also played a role in American history, and some of them weren’t entirely what I expected. For example, most of the relative growth of slavery was in the 18th century. The portion of the US population that were slaves was 16.4% in 1800. That actually fell to 14.5% in 1840, even as the slave population itself was growing. Obviously, the black population must have kept dropping relative to the total for a while, since it was at least 14.5% in 1840 and is now about 11%. Immigration played a significant, but not huge, role in overall growth until the middle of the 19th century – after which it went up quite a bit. By 1870, 1/7 of the US population was immigrants and they made up 1/5 of the labor force between 1870 and 1910 (this is because immigrants were skewed toward working-age males relative to the rest of the population).
The great majority of these immigrants went to the North. In fact, There was a pervasive pattern of immigrants avoiding the South (“Avoiding the South Syndrome”). In 1860, for example, foreign-born people were 13% of the total US population, but only 5.4% of the Southern population. In 1890 the difference was even more extreme – 14.7% of people in the US as a whole were immigrants, but only 2.6% of people in the South were immigrants. Throughout US history, migration between the North and South has also been substantially less common than East-West migration. Research suggests that the English and Germans specifically shunned states where there were many Negroes. Immigrants may have been strongly driven by prejudice against blacks. Additionally, by 1900 Southern immigration bureaus were explicitly limiting their appeals to people of Anglo-Saxon origin (i.e. trying to avoid the boom in Southern European immigration). Immigrants avoided the South and the South was happy to avoid many of them. Neither of these trends seems likely to change in a timeline where the Confederacy remains independent (or where the Civil War is somehow avoided) – meaning that it is still likely to suffer a significant population decline relative to the US.