Confederate Industrialisation

I'm trying to round up a few general points about the potential development of Confederate industrialisation here. I've quoted a few relevant sections for context, but i'm trying to restart detailed conversations which are now buried a long way back in the thread.

Confederate finances, slave capital, and foreign investment

But the reality is that there was no banking infrastructure to finance capital investment in the Confederacy. This doesn't mean full stop. It just means that such a finance structure has to come into being. I fully acknowledge the likelihood and possibility.

The Confederacy - or, more precisely, some states within it - did have a banking system pre-war. The biggest financial centre in the CSA was New Orleans. Not a superpower of finance, of course, but it did exist. It's something that will almost certainly develop further in an independent Confederacy. Or it might develop rivals (as Atlanta eventually did in OTL, I believe), but the Confederacy was not developing a financial structure completely de novo.

Finally, I take the view that as a security asset, slaves will be tangibly different from land, from gold or silver, or from other forms of assets. Then or today, different forms of assets are valued or considered differently for security purposes, and measurably affect the willingness of lenders to lend, and in particular, how much lenders will lend for what rates.

An economy with a substantial slave component is certainly something distinct from most economies that developed in OTL. Depending on context, slaves could be treated as assets, capital or labour. I agree that there will be rates and security conditions which will need to be taken into account.

On a broad scale, though, I think that such constraints will still be better than the financial system which existed in the OTL post-war south, ie where the pre-war banking system was more or less destroyed, and the capital which was destroyed by the war. To say nothing of a higher population who are alive and not mutilated, and much less infrastructure which needs to be rebuilt. Economically speaking, the CSA will be better off. (Morally speaking, and for the people condemned to generations more of bondage, the CSA is of course much worse off.)

Rather more complicated than that. Slaves are an asset with a life cycle. That life cycle includes a protracted period where it's nothing but an expense. Say from birth to twelve or thirteen years of age. Even if we accept child slave labour, that's only a partial return and likely to result in wastage of the product.

Based on how this was worked in OTL, slaveowners would assign slave labour around their life cycle and abilities, too. Slaves tended to move between different jobs at different points in their lives. For instance, children would be assigned various light duties, people of prime age would be mostly field hands or equivalent strong labour, then as they got older, move more into craft occupations or other duties where reliability was more important than strength.

This was built into slave prices, too. It's disturbing to see some of the ways in which slaveowners valued slaves and the general markups or markdowns for various skills and/or disabilities. Fogel's comment is rather telling: "there was little difference between the way in which planters priced their slaves and the way they priced their other capital assets".

Why am I telling you this? Because Feller-Buncher's are lousy collateral assets. Basically, its an extremely expensive, extremely specialized machine with a very small market. Because its specialized, its hard to sell if you happen to foreclose on one.

Getting back to point, high skilled slaves may be highly valued for certain purposes, not so highly valued as a security interest.

True up to a point, but a person is much easier to retrain than a machine. Skilled slaves commanded consistently higher prices.

Of course, much of this may be due to the historical pattern of how slaves were trained into craft occupations. Slaves tended to be trained to craft occupations later in life, and in some antebellum sources, the instructions were to pick potential craftsmen from the ablest of the field hands, ie those who were thought to be best at learning. So if a slave has been thought worthwhile of training to a new skill (ie is smart/practical enough), then there would be an expectation that they could usefully be taught other skills.

As I've said, there isn't unlimited foreign investment. The ATL pool is no bigger than the OTL pool. So a good argument has to be made why some of that ATL money is going to go into the Confederacy, rather than the places it went OTL.

My view is based on what happened in OTL, both pre-war and during the ACW, and in comparison to the main other slaveholding country, Brazil. There was British investment in the South before the war. There was abundant British investment in Brazil right up until abolition, slavery notwithstanding. And even after the CSA declared its independence, when it's an obviously risky place with no guarantee of survival, and a nation which has declared its formation in large part to protect slavery... British and Dutch investors still fell over themselves to buy Confederate debt.

In short, the Confederacy was seen as a very good place to turn a profit, which was what mattered for investment. A CSA which has successfully won independence has removed the biggest risk to investment there, so it will be seen as even more attractive. That may mean that some ATL money is going to places other than it went in OTL because, yes, the Confederacy would be seen as profitable.

Confederate taxation

10% was far from enough and why would the law mention flour, corn, bacon, pork, oats, hay, rice if it applied to all crops? Why not just say all crops? Less ambiguity that way.

For more context, this was in response to my description of what the Confederate 1863 taxation laws (and later regulations) covered. These included a variety of provisions which were surprising in themselves (including progressive taxation, with higher taxation rates for higher salaries).

Most relevant for those who think that the Confederacy was unwilling to tax planters, they included the following requirements:

"...a tax of ten percent on all profits made by the purchaser within the Confederate states, or by sale of any flour, corn, bacon, pork, oats, hay, rice, salt, iron, or the manufacture of iron, sugar, molasses (molasses of cane), leather, woollen cloths, shoes, boots, blankets, and cotton cloths."

That is, for people who bought or sold goods within the Confederacy, there was a 10% tax. A sales tax, in effect, although with various regulations and conditions.

On top of this, the producers of agricultural goods had to provide rather a large taxation in kind:

"Every farmer and planter, after reserving for his own use fifty bushels of potatoes, one hundred bushels of corn, fifty bushels of wheat, and twenty bushels of peas or beans, was required to deliver to the government for its use one-tenth of all his crops, as soon as the crops were ready for market."

In other words, 10% of all crops, barring certain amounts of food crops. This applied to cotton, tobacco, etc, as much as anything else. (If cotton products were sold within the Confederacy, they attracted a tax then, too.)

Now, these tax laws were themselves passed after what would be the end of the war in the ATL scenario I've described. But they do indicate that, if pressed, the Confederacy was willing to tax everyone, including the planters which supposedly dominated its government. This should be taken into account when working out how the Confederate goverment is going to pay its war debt.

Slaves as labour or capital, and the consequences

But once you owned a slave, the labour was then the cost of feeding it. Slaves were then essentially less like labour, more like a piece of capital equipment, like a lathe or a tool and die machine. But once that investment cost is recovered, the price of labour drops drastically. And as you yourself have pointed out, slaves reproduced naturally.

Whether slaves should be treated as labour or capital is a complex question, and depends on what purpose you're exploring.

Slaves can certainly be treated as capital for some purposes, which is why I don't accept the labour versus capital dichotomy for industrialisation presented earlier in this thread.

From the point of view of a large slaveholder, slaves are an asset, as is machinery. Choosing whether to buy another asset (another slave, or a machine) depends on the relative advantage of each. When machinery was available, the answer usually turned out to be a combination of slaves and machinery (sugar and rice plantations). When machinery wasn't available (no cotton or tobacco-picking machines), then slave labour was it. Of course there's wheat, where McCormick's reapers were never popular in slaveholding areas. Not enough incremental advantage, maybe.

But for other purposes, such as macroeconomically, slaves should also be considered as labour. In this case, the number of slaves and their potential productivity affects whether there's an effective labour shortage or labour surplus.

Broadly speaking, North America as a whole had a long-term labour shortage as long as the western frontier was open, since it could suck up virtually endless labour. There were certainly some localised times when there were labour surpluses, eg New England in the 1820s onwards when New England farmers were out-competed by those further west (and it's no coincidence that this is when New England manufacturing grew immensely). In the long run, wages tended to be driven up even in New England, though, since people could always strike out west if they wanted - and many did.

So from this point of view, in an independent CSA, there would also be a labour shortage as long as there was an open agricultural frontier and sufficient demand for cash crops to make use of it. The agricultural frontier was still open after 1860 - a lot of good land was still unused - but cotton demand is another story. The 1860s are going to be the decade of the cotton bust (though tobacco prices will be better).

So there will be a temporary labour surplus, with consequences for labour costs, and potential development of manufacturing in that period as slaveowners try to find other uses for their slaves. Textiles manufacturing is an obvious choice, since even in OTL there was some shifting of textiles to take advantage of lower labour costs (no unions, in that case), and the 1860s and 1870s may well see an expansion of textile manufacturing with available labour. Depending on political circumstances, this may be Northern capital (ie if the North is not overtly hostile), or British investment, if they see the opportunity to make a buck (and a lot of them will, I think).

Then there's the 1880s, when cotton prices sort-of recover... that may well crimp textile manufacturing for a while, if labour is being called back into cotton. Then again, from the 1890s there's the boll weevil, which will affect both agricultural labour demand and the available of raw materials for textile manufacturing.

Returning to the topic of whether slaves should be considered labour or capital, what happens if you rent a slave? That did happen, and was increasing in the later antebellum period. From the point of view of the slave renter, the slave is labour. From the point of view of the slave owner, the slave is an asset which is generating income (ie rent).

As to inferiority, the general principal is that goods produced by nouveau manufacturers are inferior to those produced by experienced manufacturers. That's simply the learning and upgrade curve for the thing. No getting around it. Japan, Korea, they all went the inferior goods route. The Confederacy will do it too.

The question is, is it possible for them to produce inferior goods cheaply enough to make it into the market.

I think it's possible, at least in some fields. Textiles were starting in that direction before the ACW, and they were also importing Northern or European expertise when required. I would expect such a trend to continue.

In other industrial sectors... maybe. The new kind of tobacco manufacturing will really kick in with the cigarette rolling machine, and then the CSA will be in as good a position as anyone to figure it out, since everyone will be new to it.

Other fields, though, will depend on the cost of labour. Again, comes down to cotton boom and bust. Labour for textiles will be cheaper during the 1860s and 1870s due to planters either going bust, switching to textile factories, or renting out their slaves to someone who can. The 1880s may be another story.

Then there's wildcards. North Carolina became a major furniture producer in OTL, once there were enough railroads. In TTL, it still has the natural resources, but may be less adept at exploiting them, particularly if there's a tariff wall with the bigger market of the United States. Things may not go so well for them, at least until the quality goes up. (The question will be whether the internal market of the CSA will be big enough while they're building up the necessary practical knowledge. Maybe.)

On a broader note, this brings into sharp relief the question of how big an internal market needs to be for significant industrialisation. Certainly the CSA is smaller than the North, France or Germany, even if you take slaves into account. (The role of slaves in an internal market is in effect made by their owners, who control the purchases, and who will have a different set of preferences than a free-labour middle class.) On the other hand, there's Belgium with an even smaller internal market, or Sweden, which was smaller than the CSA would be.
 

frlmerrin

Banned
Questionable assumption.

Hello everyone, I have been lurking this board a while, I have been an avid reader of some of the Confederate Independence threads for some time. This thread made me want to actually join the board because I had something to say that none else was saying. Unfortunately since I registered to join the thread has gone slightly cold but no matter, I suspect what I want to say may warm it up a bit.
Fundamentally I think the posters on this thread are making a big unsupportable assumption when developing a post American Civil War (ACW) Confederacy. The unsupportable assumption everyone is making is that the trajectory of the Union will be essentially the same as it was in Our Time Line (OTL). It won’t be.
Depending upon when and how the Confederacy leaves the Union the situation for the North might be merely difficult or it could be disastrous but in no case is the USA going to follow the same trajectory it did in OTL.
SENARIO A: Consider first more or less the best Confederate independence scenario for the Union. That is to say that the southern states leave after a negotiated settlement in 1862 or 1862, there has been no fighting, the Union retains the Confederate Arizona territory and the border states but Virginia holds on to her western lands and the Confederacy get the Indian Territory.
#1 The USA has lost its best export earner (cotton) and several other good agricultural export earners. Government revenues from this source will reduce to almost nothing. In addition to that import duties and tariff revenues will also be reduced because the Southerners who are still making a profit from the cotton will no longer be importing luxury goods through Union ports but Confederate ones.
#2 The best approximation of a great circle route across the Atlantic from Bristol or Liverpool to New York is only about 300 miles shorter than that from Norfolk. This is quite significant for a sailing ship but only a day and a bit for a steam ship going at ten knots. The cost of a day and a bit of steaming is not likely to cost more than the pre-war practice of trans-shipping the cotton through New York once custom duties, harbour fees and warehousing costs are factored in. Thus it is highly likely that New York will cease to be a significant brokering and trans-shipment centre for raw cotton destined for Europe.
#3 The USA has lost 2/3 of its Eastern coastline including the entire Gulf and half of the Atlantic coast. It has also lost control of New Orleans and so it can have no direct trade with the Mexican coast, Cuba or the West Indies. At best (from a Union perspective) the lower Mississippi will be an international waterway at worst a river in another country across which goods would have to be transported involving customs duties and possibly if the Confederacy wish to maximise their revenue trans-shipped as well (by which I mean that the goods would have to be removed from a Union riverboat, warehoused and transferred to a Confederate river boat at the port of entry).
# 4 The Union will have a major problem with its growing black population which will be exacerbated by a slow trickle of slaves escaping across the border from the South. Without the ACW and the idea that it was to ‘free the slaves’ and without the sacrifice of Union coloured troops it will not be generally accepted that blacks have any part in US American society. There is every reason to think that the lot of the blacks might be very bad indeed, repatriation programmes are almost certainly on the cards and forced repatriations are a serious possibility.
#5 It is very likely based on how they behaved in OTL that the Confederacy would wish to court France as an investor and ally. Thus they Confederacy would be accepting of Maximillianist Mexico. If the USA wished to continue to support the Juaristas it will be harder to do so as it will no longer be possible to supply them through Texas, it would have to be done via southern Alta California or through the New Mexican desert. Because of this harshness of the Desert environment and the remoteness of California USA could no longer threaten French Mexico with as large an army in the way that it did in OTL, it simply cannot support it where it needs to be. The rebels can harass the French in the north but they cannot win against them. Hence the Monroe doctrine is seen to have failed. This is likely to be a psychological blow to the people of the USA.
#6 The cattle economy in Texas is not going to develop in the same way as it did in OTL. The ready supply of beef will not support the population of the mid-West and if it supports the rapid expansion of the USA’s population it will do so to the profit of the Confederacy. As a minimum it will be Confederate ranchers making a profit, it is also likely there will be an export duty on the cattle even if they take the same routes as they do today. More likely the kine will be driven to Confederate railheads and ports for shipment. Hence the beef will be more expensive for Unionists.
#15 Due to the distances involved and the Confederacy being in the way the USA will lose control of the trans-continental railway across Panama. The Union company that operates it may or may not lose ownership of it.
So in this situation things are not too bad for the Union, it has some revenue problems which are difficult but not unduly painful. The Monroe doctrine is in ruins which is a blow to both the populous and the body politic and the USA is boxed in to its south making it almost impossible for it to become a regional power as it did in the late 19th century OTL. What happens to the Union blacks could be very savage.
SENARIO B: Let us now consider a scenario where Confederate Independence comes about through force of arms in 1862 or 1863. I do not consider this possibility that likely but neither is it that improbable. Let us also assume that the division of the ante-bellum USA between the Union and Confederacy is as above except that West Virginia has broken away from the rump of the state and joined the Union.
#1 Is as it was for the previous scenario.
#2 Is as it was for the previous scenario.
#3 Is as it was for the previous scenario.
#4 Is still going to be a problem. However the number of blacks in the Union is likely to be increased over the population found in a negotiated scenario due to a slow but continuous flow of runaway slaves from the south. The impact of the emancipation proclamation (Sept 1862) on public perceptions of the blacks may be significant by the end of 1863 but the impact of back union troops is unlikely to have been significant until the very end of 1863 at the earliest. The first black Union regiment were formed at the beginning of 1863.
#5 Is as it was for the previous scenario.
#6 Is as it was for the previous scenario.
#7 By the end of 1862 the Union Government had borrowed in excess of $US 455M to pay for the war, by the end of 1863 it had risen to $US 1,057M. The annual revenue for the Union from which payment and interest would have to come was ($US 64M in 1862 and $US 95M in 1863). Most of this debt was raised against bonds. Without the export earnings of #1 a post-war Union is going to find it very hard to fund the redemption of the bonds with the promised interests. At this point it should be possible to pay off them bonds. The most likely way to do this is to sell off the Indian lands in the West for profit rather than ‘giving’ them away as they did in OTL. Things do not look good for the Indians, even worse than OTL.
#8 The sale of bonds primarily to the patriotic wealthy of the North is beginning to soak-up much of the domestic money available for investment in Union industry. If these bonds are not redeemed at full rate by the USA’s government and as discussed in #7 this will be difficult to do then the possibility exists for a significant recession in the first few years of peace. This would deeply impact the USA’s industrial development.
#15 Is as it was for the previous scenario.
The situation for the USA is very serious and far worse than in Scenario A
Let us look at the impact of the Confederacy retaining the (Confederate) Arizona territory before we move on to another scenario. There are three interesting points to make
#9The revenues from the gold and silver mined in the territory now feed into the Confederate coffers rather than Union coffers. It is not a large amount but neither is it insignificant.
#10 In this case the Juarista rebels in Mexico can only be supplied by the Union (should they still wish to do so) via the south of Alta California an area which at this time was nearly deserted San Diego having a population of less than 1,000 and Los Angeles barely 5,000. In this scenario the Juarista rebels would be boxed in to the remote North West of Mexico and the best they could hope to achieve would be to pin down some Franco-Mexican troops in the local area. They are finished.
#11 The Old Spanish wagon trail is denied to Unionists wishing to migrate to California as is the preferred route for a southern railway to the west coast.
SENARIO C: Next let us consider the situation when Lincoln is defeated in the 1864 election and the new President negotiates a peace.
#1 Is as it was for the previous scenario.
#2 Is as it was for the previous scenario.
#3 Is as it was for the previous scenario.
#4 Is probably a little better due to improving public perceptions of blacks. On the other hand it could be worse because ‘freeing the slaves’ could be blamed for the break-up of the Union and the current problems that the nation is undergoing.
#5 Is as it was for the previous scenario.
#6 Is as it was for the previous scenario.
#7 By the end of 1864 the Union Government had borrowed in excess of $US 1,650M to pay for the war. Annual revenues have roughly doubled from 1863 but there has also been a significant devaluation of the money. Most of this debt was raised against bonds. Without the export earnings of #1 a post-war Union is unlikely, very unlikely to be able to pay these bonds off. Selling off Indian land is not going to be enough.
#8 The sale of bonds has now soaked-up all of the domestic money available for investment in Union industry, it has also taken up a significant part of the savings of the middle class. Without the South these bonds will not be redeemed at anything close to full rate by the USA’s government. This will deeply impact the USA’s industrial development.
#12 The only significant sums of capital monies for investment in the development of the USA will be from foreign investors. It is most unlikely that with the USA in a serious financial crisis and the government unable to pay off or perhaps even service its debts that there will be significant interest from the foreigners. Where investments are made companies will often fall into foreign ownership and control.
#13 As a result of the lack of investment capital and failure to pay-off bonds. There will be a depression.
#14 The depression combined with the demobilisation of the USA’s armies will lead to unemployment in the industrial cities and towns. This will of make the issue of what to do with the blacks(#4) considerably worse.
#15 Is as it was for the previous scenario.
SENARIO D: Finally let us consider a situation where the British and the French go to war with the Union whilst it is still trying to hold on to the Confederacy. This is not particularly unlikely there are a number of situations where this could have occurred. Let us assume it is over the Trent Affair and let us assume that the Union fight on for slightly longer than six months (say Feb 1862 to Oct 1862). This would put their economy close to collapse. It is not the best Anglo-Franco-Union war scenario for the Union neither is it the worst.
So in this case we see a different bigger Confederacy. It is pretty much as before but they have Kentucky and Tennessee, they probably have Washington, most if, not all of Maryland and with British assistance Delaware or most of it anyway. The Arizona territory is difficult; in this scenario it is quite easy to see the Union holding on to it or the Confederacy getting it or even French-Mexico getting a large part of it. Let’s go with what is best for the Confederacy, they get it.
It is also likely that after a war longer than six months the British may want some small territorial gains but as the war will not have hurt them greatly they will not be large and they won’t take anything they don’t think they can keep. Assume they modify the border to their advantage between the Lake of the Woods and Isle Royal, All of the San Juan Islands and their neighbours, a bit the bump at the top of Maine, a strip of land in New York state south of the St. Lawrence and Nantucket Island.
The major change the British would bring is to encourage California to leave the Union as an independent state. This is by no means the only possibility but it keeps the Confederates from the Western seaboard and the French out of a good port in the north Pacific so attractive to both Union and Britain.
In this case the situation for the Union is horrid.
All of the problems mentioned in scenarios A and B are still present and fighting two wars Government debt is likely to be far higher than in OTL (#7). It is also likely that items #7 through #14 will come to pass in this scenario, far more quickly that in Scenario D.
#16 The Union has lost all of the revenue and specie from Californian gold.
#17 The Union’s access to the Pacific has been severely reduced; if California took parts of the Oregon with it then it might be reduced to just one major harbour.
#18 During a war with Britain the Union will be blockaded, there will be no import tariff income at all!
#19 During a war with Britain the South can trade in cotton and arms freely and this is why it is suggested that it will retain the border states of Tennessee And Kentucky.
#20 As a result of the blockade Union farmers will not be able to sell their crop in Summer 1862 to either the south or internationally. This will cause widespread rural poverty and may result in farmers destroying their farms and moving west away from government control. It will take several years for the agricultural economy to recover.
#21 The British will stop all immigration to the Union for the duration of the war and given that there will be unemployment at the end of the war and depression it is unlikely to recover for at least a decade if it ever does.
#22 Britain and France will demand reparations probably in specie.
#23 Maximillianist Mexico may demand reparations and a re-negotiation of the Treaty of Guadalupe Hidalgo.
#24 The Union will have lost most if not all of its navy this will have to be replaced. This was a very high cost item for Russia after the Crimean war. On the plus side they get modern ships.
#25 The British will reduce as many of the third system forts as they can. These will either need to be replaced or replaced with a large navy.
#25 The British will use their usual practice of plundering and burning the watersides and harbours of several Union cities such as New York, Boston, Rochester, Chicago and so on. This will cause millions of US dollars of damage, thus further reducing the availability of capital in the post-war USA.
#26 The Union will no longer be attractive to British and French investors both for patriotic and financial reasons.
#27 The British, as part of the peace treaty may compel the USA to reduce or abolish the import tariffs on a variety of British goods.
In this Scenario the USA is facing absolute disaster.
In conclusion, none of these scenarios leads to a post-war USA following the same trajectory as in OTL . In most of these Scenarios the Confederacy would do reasonably well in the last probably very well.
 
Interesting comments about the Union. And worthy of its own discussion thread.

In brief response to Jared, I think we've gone as far as I'm willing to go. I'm simply not invested enough in the Confederacy to be prepared to do the research and calculations required to reasonably assess the amount of investment capital in the Confederacy postwar, or the volumes and risks of investment capital raised from slaves as security.

I think that we can agree that there are various competitive disadvantages or inefficiencies that the Confederacy will have to wrestle with. Are these insurmountable? Of course not. It's not a yes/no or on/off proposition.

It is a matter of degrees and cumulative effects.

Take the reference to skilled slaves as a value added commodity. Will they have greater value. Yes. Will this greater value be commensurate with their skill - in many cases no, given the Feller Buncher analogy. Specialized equipment or specialized persons are underpriced on the market because they're harder to sell. Can specialized slaves be retrained. Sure. But then if they require significant retraining, they're worth relatively little more than a non-specialized slave that requires training. It's not an off/on situation, its a matter of degree.

The state of the Confederate banking and finance industry is the same way. It's not adequate, its not modern. That's just the facts. Can it escalate to meet the needs. Sure. Will it be cheap? No. Will it be easy? No. Will those costs and delays have a cumulative impact? Yes.

Same thing with transportation.

Same thing with the costs of raising investment capital from slaves.

Think of it as friction within the system, money and effort is taken up within the system, dealing with issues which other more 'lubricated' economies do not have to spend in that matter, leading to greater efficiencies. If you're trying to compete with those other economies, well, too bad, so sad.

Now it may be that those other economies have their own systemic inefficiencies or handicaps. But with the exception of one recent post, that hasn't been explored much.

The general rule is that in terms of economic competitiveness, larger, more sophisticated, more efficient economies push out smaller, less sophisticated, less efficient ones. So it's not, prima facie, looking good for the confederacy.

If you're not looking at industrializing for the international marketplace, then you're stuck with the domestic market, and there the Confederacy has problems.

Beyond that, I don't think that the discussion has moved. There's not a lot of active speculation or insight into what Confederate industrialization would actually look like - which specific industries, where, what the trajectory is, etc. There's scope, I think, for someone to do a detailed timeline exploring that, where it can be vetted and criticized.

For what it's worth, my thumbnail:

1865-1870 - There's an expansion of the Confederate economy as an agricultural/export economy. We see the beginnings of a more elaborate security/financial industry, local investments in infrastructure and transportation, oriented towards those areas that can afford them, handicapping those areas that cannot. Some industrial development, in particular, a local iron and steel industry driven by domestic markets, and a nascent textiles and agricultural commodities industry aimed at export and the British/European market. There may be some effort to establish a metropolis/hinterland relationship with Latin American/Carribean basin states, but there will be fierce competition, and overall the Confederacy is a capital consumer, not capital investor.

1870-1880 - The Agricultural economy begins to slow down as European colonial ventures, particularly British Cotton from Egypt and India, begin to make inroads. The Agricultural sector continues to dominate the economy. We're probably looking at the golden age of Confederate industrialization, as Confederate steel expands to fill meet local demand, with production capacity also feeding markets in the near-latin America - you'll probably see more railway building in central America and the Caribbean. Confederate textiles and agricultural products industries are successful at establishing market presence in Latin America and Europe. Other industries are principally domestic, such as brick-making, or mining. There are serious shortages of capital, hindering investment. Slaves are used increasingly as a security asset for financing. Infrastructure development is becoming extremely uneven, and the areas where it is needed most badly for development are the areas where it is least invested, given the emphasis on local financing.

1890-1900 - Bad times for the Confederacy. Confederate steel is in trouble as the domestic market is saturated, and the Latin American market is out-competed. This is not an off/on situation, its just that year by year, its getting harder to sell steel, profit margins are dropping, production volume is dropping, and new investment or reinvestment in the steel industry is consequently in steep decline. The Agricultural economy is also in deep trouble, the boll weevil is just around the corner, there are efforts to diversify into new crop production, but these are not as valuable. Even indigenous local industries face increasing trouble as they are competing with imports utilizing economies of scale. Textile manufacturing continues to be relatively competitive internationally. The local infrastructure deficits are really hurting the domestic economy, and efforts are being made to finance these, but the costs of financing are extremely high and new local infrastructure is in the hands of renters in the core - the Confederate hinterlands stay hinterland. The bright spot in the economy is the internal slave trade. Slaves are valuable and getting more so. Slaves as security financing means that you can mortgage them to raise capital, but its expensive capital, so the emphasis is on the highest, short term rewards - usually the purchase of more slaves. The slave bubble is forming.

1900-1910 - The Confederate steel industry is in freefall. It's plant is old and getting older, production runs are short, profit margins are zilch, and its increasingly uncompetitive in the domestic market. The Boll Weevil has hit, the Agricultural economy is in freefall, and efforts to find replacements for a huge swathe of the agricutural landscape are difficult - corn and potatoes aren't going to produce the same return as Cotton did. Best results are with Coca leaves, Poppy bulbs and Tobacco, all of which find increasingly receptive markets. The textile industry, unsuited to these new crops, is in decline and is actually importing raw materials. Local industries are in trouble. Infrastructure and transportation deficits continue to cause huge problems and many areas of the Confederacy are chronically underdeveloped, with much resentful muttering ensuing. The Confederacy is basically shut out of Latin America, which oddly enough, is doing significantly better. The slave bubble reaches ridiculous proportions and finally pops, and with it, a significant chunk of the Confederacy's paper wealth simply vanishes.

1910 - 1920 -The steel industry is dead, most heavy industry is dead. The textiles industry survives by importing about half its raw material and bottom feeding the marketplace. Local economies are underperforming. The financial system is a mess, with vast amounts of paper owned on slaves whos worth or productive capacity is a fraction of it. The age of confederate industrialization is gone. On the other hand, coca and poppies are doing really well, the single expanding bright spot on the economy.
 
I think that we can agree that there are various competitive disadvantages or inefficiencies that the Confederacy will have to wrestle with. Are these insurmountable? Of course not. It's not a yes/no or on/off proposition.

Of course, but there are also areas of competitive advantage, too. Slaves have, in some cases, greater advantages of profitability. Non-unionised labour is the most obvious that springs to mind. So is lower labour costs per hour than equivalent free workers, which is partly linked to non-unionised, of course, but which also depends on relative wages in the CSA as a whole when compared to economic rivals (eg the North).

I do agree with your later comment that these will need to be explored in more detail to evaluate the relative value, but it's not a case of simply accumulated disadvantages for the CSA.

Take the reference to skilled slaves as a value added commodity. Will they have greater value. Yes. Will this greater value be commensurate with their skill - in many cases no, given the Feller Buncher analogy. Specialized equipment or specialized persons are underpriced on the market because they're harder to sell. Can specialized slaves be retrained. Sure. But then if they require significant retraining, they're worth relatively little more than a non-specialized slave that requires training. It's not an off/on situation, its a matter of degree.

This point is, I think, worth pursuing in greater detail.

Historically speaking, skilled slaves commanded consistently higher prices than unskilled slaves. The degree of premium depended on the skill in question: of the examples provided in Fogel, blacksmiths and carpenters offered the highest premiums (about 55% and 50% respectively), while other craftsmen attracted lower but still significant premiums (typically around 25-30%). These skillls are valuable ones, which will transfer quite well to other roles, requiring much less retraining than an unskilled slave.

In short, I'm not sure that the Feller Buncher analogy holds all that well, since human skills are more transferable than inert machinery, and because the premium for skilled slaves, while significant, wasn't quite the same as for such a high-cost piece of equipment.

The state of the Confederate banking and finance industry is the same way. It's not adequate, its not modern. That's just the facts. Can it escalate to meet the needs. Sure. Will it be cheap? No. Will it be easy? No. Will those costs and delays have a cumulative impact? Yes.

I think we'll have to agree to disagree on this point, because as far as I can tell, the Confederate banking system is decent enough for a mid-ranked power, and there's considerable potential for foreign investment in specific industries (railroads and textiles being the most obvious two).

The general rule is that in terms of economic competitiveness, larger, more sophisticated, more efficient economies push out smaller, less sophisticated, less efficient ones. So it's not, prima facie, looking good for the confederacy.

I'm not sure that this necessarily holds. Smaller economies are often outcompeted, but not necessarily, Belgium and Sweden being two obvious counter-examples. Whether the CSA would be more efficient or not requires the more detailed analysis you referred to earlier, since there's potential advantages as well as disadvantages. Sophisticated is indeed an issue, since there are literacy issues, while on the other hand the South did have a pre-war tradition of importing foreign expertise and using it to improve their manufacturing base (in textiles, particularly).

Beyond that, I don't think that the discussion has moved. There's not a lot of active speculation or insight into what Confederate industrialization would actually look like - which specific industries, where, what the trajectory is, etc. There's scope, I think, for someone to do a detailed timeline exploring that, where it can be vetted and criticized.

I agree with this point, and would be happy to offer some comments on such a timeline.
 
Jared said:
Fiver said:
If the Confederate public wouldn’t accept higher than 15% as a wartime emergency, they’re unlikely to raise it in peacetime.
I disagree in part. It was set at 15% early in the war, because that was the amount thought necessary to fund the government, and because early in 1861, the attitude was that it would be a short war. Raising the tariff higher than 15% during the war became pretty much irrelevant because there wasn't any trade to speak of to collect it.

An excellent point. William Davis in Look Away says the Confederacy collected less than $4 million in tariff revenue during the war. In peace time that 15% tariff should get them about $15 million a year.

Jared said:
As I said, I think that it would be raised because the money to repay the war debt needs to to come from somewhere, and revenue tariffs are an obvious part of the solution. But yes, a case can certainly be made that it would stay at 15%; that doesn't mean that it would never go higher, though.

It would be a subject of some debate, but you have convinced me the tariff would probably go higher post-war to pay off the national debt. Anti-protectionist doctrine would probably insist it be lower than the Union’s tariff rates, though.

Jared said:
Fiver said:
WCoC has a chart of how many industrial workers there are in the Northeast, North Central, and South. Fogel does not define how he groups those states but using the numbers from the 1860 Census, he appears to be counting all slaveholding states as the South, yielding a base of about 190,000 industrial workers in the South.
Fogel breaks down his divisions earlier in ch. 4. (p85, in my version). Northeast refers to Pennsylvania, New Jersey, and all free soil states north and east of that. North Central refers to Ohio, Indiana, Illinois, Missouri, Kansas, and all states north of them. South refers to all slaveholding states except Missouri, but also includes District of Columbia.

Thanks for the info. Where does Fogel group the Far West? There wasn’t much industry in Oregon, but all Southern and all but one North Central state had less workers in manufacturing than California.

Jared said:
Well, you've interested me enough that I'm going to add the Evidence & Methods companion volume to WCOC to my next Amazon order.

Let me know what you think.

Jared said:
That said, I note that Fogel's basic contention is not that the majority of Southern manufacturing workers have been missed, per se - they're still listed on the census - but rather that they have been misallocated to agricultural workers rather than manufacturing workers.

In principle, I think that this possible, if the census takers in the South adopted a methodology which meant that most of Southern industry in rural areas was simply treated as agriculture.

I can see industry in rural areas being mis-enumerated as agriculture. I don’t see why this would happen exclusively in the South. Again, examining value of home-made manufactures, which was grouped under agriculture, it seems that southern industry was undercounted, but Fogel vastly overestimates how much it was undercounted. With the Census numbers, the South is undercounted by about 10,500 industrial workers; the Northeast by about 1800, the North Central by about 2700. If he’d listed it, the Far West had a little over 50,000 workers and would have been undercounted by about 200. Percentage-wise, the South was undercounted by 6.3%, North Central by 1.5%. the Far West by .4%, the Northeast by .2%.

Jared said:
He didn't just mention blacksmiths, but coopers as well, and there may have been other similar artisan work which was categorised as manufacturing in the North but not in the South. Given that most of the South's population was rural or small town dwellers, and that plantations did tend to have a decent amount of production attached to them - blacksmiths, coopers, etc - this isn't entirely out of the question.

Most of everyone was rural or small town in 1860, not just the South.

Jared said:
Fiver said:
Since the odds of 70% of southern workers in manufacturing being required to produce 6% percent of their manufactured goods are low, I suspect Fogel has overestimated a bit.

I'd consider other categories of census data besides that. If sugar mills and rice mills were being categorised with agriculture, then the value of their output would also be included in the value of agricultural output, not home-made manufactures.

Home-made manufactures are listed under agriculture. The other choices are market garden products, and orchard products. Home-made manufactures seems the most likely area the products of sugar and rice mills would be listed.

Jared said:
There's also the category of "value of farming implements and machinery", which I suspect would include a lot of the agricultural processing industries. And, quite possibly, some of the rural blacksmiths and the like as well. Eyeballing the data, Lousiana in particular has rather a high value of farming implements and machinery for its population, and this was in a state where the crops weren't exactly mechanised. I suspect that sugar mills (most of which were in Louisiana) could have something to do with that.

Per capita, Louisiana had almost 4 times the average “value of farming implements and machinery". Oregon had about 2 ½ times the average per capita value. Sugar mills probably have a lot to do with the numbers for Louisiana and nothing to do with the numbers for Oregon.

Jared said:
Southern agriculture in general seems to have quite a lot of value invested in farming equipment and machinery, too.

It’s not that neat of a pattern. Per capita, Louisiana, Mississippi, Texas, Arkansas, and South Carolina are above the national average. Alabama and Tennessee are slightly below average. Georgia, Florida and Virginia are well below average.

Jared said:
Fiver said:
Fogel’s estimate would take them contesting with Russia for 6th. Census data on home-made manufactures puts them contesting with Italy for 8th.
Just for clarity, do you mean industrialisation in total, or per capita? (I don't have a handy source to check global industrial production.)

I meant in total. That’s based on fairly limited info, so let me know if you have more.
 
Most estimates place the literacy rate for Southern whites between 80 and 90 percent (that for Northern whites was about 93 percent). The Southern literacy rate only looks "abysmal" when the slave population is included, and even that only drags it down to a bit over 50 percent, which was still better than most other places in the world at that time.

Since slaves were part of the work force, they should be considered in the literacy rates. And 50% illiteracy is abysmal compared to the Union. OTOH, it's about the same rate of illiteracy (see Table 7) as Austria, Belgium, and France and notably better than Italy, Spain, and Russia.
 
Thanks for the info. Where does Fogel group the Far West? There wasn’t much industry in Oregon, but all Southern and all but one North Central state had less workers in manufacturing than California.

For these purposes, Fogel ignores the Far West completely. The westernmost states/territories he examines are (from north to south) North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, and Texas.

And while it's an aside, the California manufacturing figures made me dubious when I reviewed the 1860 census data. Approximately 49,000 workers in manufacturing, out of a total population of about 380,000? That's an industrialisation rate of about 13%, which makes it more than double that of New York (5.9%) and much higher even than Pennsylvania (7.6%). I have my doubts that California was such a manufacturing paradise. Probably mining was included in manufacturing for census purposes.

I can see industry in rural areas being mis-enumerated as agriculture. I don’t see why this would happen exclusively in the South.

While I'd have to examine the data Fogel proposes to be sure, I can see it happening much more in the South. Most of whatever manufacturing there was in the rural South (artisans, blacksmiths, sugar mills, coopers, etc) was attached to plantations. So it could conceivably happen that anything associated with plantations was lumped in with "agriculture". The North didn't have any equivalent to plantations, so the same mis-categorisation was unlikely to arise.

This doesn't mean no missing manufacturing workers in the North, but at a much smaller scale. Blacksmiths, for instance, would be self-employed artisans in the North, even if rural. Slave blacksmiths, or even free blacksmiths attached to plantations, could be lumped under the plantation category.

Again, examining value of home-made manufactures, which was grouped under agriculture, it seems that southern industry was undercounted, but Fogel vastly overestimates how much it was undercounted.

I take the point about home-made manufactures, but as far as I can tell, the actual cash value of many prime agricultural products was missing. I don't see an agricultural category in the census which gives a value for the main cash crops of the South: cotton, tobacco, etc. None of the categories listed really fit, and even when checking some of them (market gardens, orchards etc), they don't produce anything like the right value. Which is why I think that the output of sugar mills and rice mills, for instance, would be treated as a similar output to cotton or tobacco, and thus not given a monetary value in the census.

Most of everyone was rural or small town in 1860, not just the South.

True, but as per above, the difference may have come from plantations.

Home-made manufactures are listed under agriculture. The other choices are market garden products, and orchard products. Home-made manufactures seems the most likely area the products of sugar and rice mills would be listed.

I don't think that the value of cash crops is listed at all. Given the value of cotton and tobacco, that should leap out in the data. If it does, though, I'm not seeing where. It doesn't even seem to be in the cash value of farms.

Per capita, Louisiana had almost 4 times the average “value of farming implements and machinery". Oregon had about 2 ½ times the average per capita value. Sugar mills probably have a lot to do with the numbers for Louisiana and nothing to do with the numbers for Oregon.

Probably, although it would be interesting (if tangential) to find out what was going on in Oregon.

I meant in total. That’s based on fairly limited info, so let me know if you have more.

I don't have more convenient info; I need to track down a decent sourcebook for global industrialisation. (Any suggestions welcome.) I do note, though, that Fogel's contention is that the proto-CSA (well, South, really, since he includes Kentucky, Maryland and Delaware) was industrially comparable in per capita terms - in absolute terms may well be another story.
 
And while it's an aside, the California manufacturing figures made me dubious when I reviewed the 1860 census data. Approximately 49,000 workers in manufacturing, out of a total population of about 380,000? That's an industrialisation rate of about 13%, which makes it more than double that of New York (5.9%) and much higher even than Pennsylvania (7.6%). I have my doubts that California was such a manufacturing paradise. Probably mining was included in manufacturing for census purposes.

I suspect mining was included. OTOH, other states with high rates of people in industry are New Jersey (8.3%), New Hampshire (9.9%), Connecticut (14.0%), Massachusetts (17.7%), and Rhode Island (18.6%)

Of course looking at population percentages makes me even more dubious of Fogel’s estimate. Nearly 600,000 southern industrial workers would mean about 5.3% of the southern population was engaged in manufacturing when the country as a whole averaged 4.2% of the population in manufacturing.

Fiver said:
I can see industry in rural areas being mis-enumerated as agriculture. I don’t see why this would happen exclusively in the South.
While I'd have to examine the data Fogel proposes to be sure, I can see it happening much more in the South. Most of whatever manufacturing there was in the rural South (artisans, blacksmiths, sugar mills, coopers, etc) was attached to plantations. So it could conceivably happen that anything associated with plantations was lumped in with "agriculture". The North didn't have any equivalent to plantations, so the same mis-categorisation was unlikely to arise.

Fogel’s numbers require 70% of all southern manufacturing take place on those plantations, then. I’d be interested in seeing any numbers that prove the vast majority of southern manufacturing took place on plantations.

Checking the 1860 shows about 2 million slaves lived on plantations. Fogel’s 400,000 requires 1/5th of all slaves in every plantation in the south be incorrectly listed as agricultural workers when they engaged in industry. That’s 1/5th of all slaves, not 1/5th of all slave workers.

I take the point about home-made manufactures, but as far as I can tell, the actual cash value of many prime agricultural products was missing. I don't see an agricultural category in the census which gives a value for the main cash crops of the South: cotton, tobacco, etc. None of the categories listed really fit, and even when checking some of them (market gardens, orchards etc), they don't produce anything like the right value.

Based on the census it appears none of the main cash crops for any part of the US are listed.

Fiver said:
Per capita, Louisiana had almost 4 times the average “value of farming implements and machinery". Oregon had about 2 ½ times the average per capita value. Sugar mills probably have a lot to do with the numbers for Louisiana and nothing to do with the numbers for Oregon.
Probably, although it would be interesting (if tangential) to find out what was going on in Oregon.

My suspicion is that it’s the products of lumber mills.

I do note, though, that Fogel's contention is that the proto-CSA (well, South, really, since he includes Kentucky, Maryland and Delaware) was industrially comparable in per capita terms - in absolute terms may well be another story.

Actually, Fogel’s 600,000 requires the South be more industrialized on a per capita basis than the country as a whole.
 
Actually, Fogel’s 600,000 requires the South be more industrialized on a per capita basis than the country as a whole.

After thinking about this - and pending receipt of Evidence & Methods - one difference may be that not all Southern workers were involved in manufacturing full-time. Sugar mills, for instance, operated when the crop needed to be processed, not year-round. So the same workers would be involved in manufacturing or agriculture at different times of the year. I presume, although I'd need to check, that the same thing applied for rice mills.

Granted, not all Northern factories operated full-time either, but that may explain some of the difference.
 
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