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
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.
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.)
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".
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.
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
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
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).
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.
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.