Cottons Impact on the United States Before the Civil War With the end of the War of 1812, few people in the United States envisioned a civil war in the future. With a developing Western section of the country, the future looked bright for a stable growing economy based on extraction of resources (agriculture, timber, and various resources in the ground). With the shipping resources of New England and financial centers in the North, agriculture and extraction of resources seemed to be the foundation to base the country’s economy on. Within a short period of time, however, the North was beginning to industrialize while the Southern states stayed agrarian. A reason why the South did not industrialize was that cotton provided an economic system for the whole country that was as rewarding to the Southern farmers as to the Northern industrialists.
An example of the Southern attitude toward the Northern way of life is illustrative. A white Alabaman during this period exclaimed, “We have no cities. We don’t want them. We want no manufactures; we desire no trading, no mechanical or manufacturing classes. As long as we have our rice, our sugar, our tobacco, and our cotton, we can command wealth to purchase all we want.” Factors that contributed to the economic system that this attitude was part of were: the sale of government land in the South, foreign and domestic demand for cotton, and the contrast between free and slave labor. Early Years of Cotton After the War of 1812, the U.S.
government sold large amounts of land in what was the Southern territories of Alabama and Mississippi. Sales of government land in the two territories went from 27,000 acres in 1815 to almost 3 million acres in 1819. Many of the purchasers of the land were farmers from South Carolina and Georgia. These farmers looked forward to planting on previously uncultivated land. The land could take heavy cultivation before the output suffered. As an example, three acres of land could be bought for the same cost of the lime used to restore productivity on one acre of land in South Carolina. The crop the farmers planted on this land was cotton.
The reason they planted cotton was that the price of cotton per pound surged from 14 cents before the War of 1812 to 21 cents in 1815 and to 29.5 cents in 1816. The high price was due to a heavy demand for raw cotton in Great Britain. In the 1830’s and 1840’s, over 80 percent of all cotton produced was e! xported. Of this, around 85 percent of all exported cotton went to Great Britain. Once the new lands had been prepared for and planted with cotton, the supply of raw cotton increased to help bring the price of cotton down to 12 cents a pound by 1824.
An increase in domestic and foreign demand helped increase the price of cotton to 18 cents a pound by 1836. This caused another round of high levels of Western land sales. After 1836, the increased supply of cotton caused the price of cotton to go down to 6 cents a pound in 1844. By 1849 834 million pounds of cotton was being produced a year compared to 154 million pounds in 1816. The amount of cotton produced in 1849 would have been much less if the steamboat had not been in the West to transport the cotton.
Even though the price of cotton was high in the early years, the cotton grower had challenges to making money. Between goods bought from the outside for the farmer’s family and slave labor, the farmer managed a subsistence living. The steamboat provided a way for the farmer to make a living. Prior to the steamboat, goods purchased had to come over the Appalachians at a large premium. As an example, army garrisons in Illinois used flour costing $100 a barrel and pork $127 a barrel.
This compares to $10 and $20 on the East Coast. The steamboat helped solve this problem by reducing the freight rates going to and from New Orleans. By the Civil War, freight rates upriver had dropped to 5 to 10 percent of what they were in 1815. The money saved on goods provided a margin that could be used for investment. The investment made by the farmers was in more land and slaves.
By 1840, two-thirds of the cotton produced in the U.S. came from Tennessee, Alabama, and Mississippi up! from one-sixteenth in 1811. The productivity of the land in pounds per acre in 1850 follows: Tennessee, 300; South Carolina, 320; Georgia, 500; Alabama, 525; Mississippi, 650; Texas, 750. The income received by the Cotton South residents reached levels greater than the average person in the North. Southern Income based on Slave Labor Table 1 shows per-capita income prior to the Civil War.
Table 1 Per Capita Income Before the Civil War in 1860 Prices Total Population Free Population 1840 1860 1840 1860 National Average $96 $128 $109 $144 North 109 141 110 142 Northeast 129 181 130 183 North Central 65 89 66 90 South 74 103 105 150 South Atlantic 66 84 96 124 East South Central 69 89 92 124 West South Central 151 184 238 274 Source: Robert W. Fogel and Stanley L. Engermann, “The Economics of Slavery,” in The Reinterpretation of American Economic History (New York: Harper & Row, 1971), Table 8, p.335. As can be seen, the free population in the West South Central states had a per-capita income far above the other regions in the country. This contrasts with the older regions of the South that had incomes below the nation’s average. The table shows that the Northeast had a per-capita income almost equal to the Cotton South for all people. But looking at only free population, the Cotton South per-capita income was much greater than the Northeast.
The surplus income mostly came from the slave labor used in the cotton economy. By the Civil War, estimates placed a slave’s economic output at $160 a year. Economic studies of slavery over the years have debated how much of the output the slave received. In most cases, the slaves received housing, food, clothes, and other living necessities. One estimate of the cost of maintaining slaves was $60 per year.
This indicates that the farmer received an average profit of $100 on each slave. On the part of the slave, this profit was income that could have gone for consumption. The slave owner used the profit for a lavish lifestyle and promoting the cotton economy (more land and slaves). In the case of free labor, all income earned could go to consumption. Since the free labor was trying to make a living, income spent went to basic necessities.
This factor helped promote industry and railroads. In the early 1800’s, it was expensive to transport finished goods from the factory to outlying areas. In order to be able to sell the goods, the factory had to be located near major markets. In the South, the low consumption of the slaves and non-slaveholding population did not provide enough of a demand to help factories locate there. Without heavy industry, railroads were less likely to go into those areas.
The initial high rates of railroads required the railroads to make money on high value goods going one way or less valuable goods going two ways. A railroad could not tolerate much empty freight going between two points. One of the first railroads in the United States was a line going between Lowell and Boston. The line built in 1835 carried cotton to the factory in Lowell and sent a full load of textiles back to Boston. In the South, railroads had a hard time making money since the amount of goods coming in was so much less than the cotton shipped out.
The co! tton also had be consolidated from surrounding areas which added to the cost of selling cotton. The steamboat had rates much lower and was the choice for shipping goods. Some rich Southerners could see the need to industrialize. By diversifying the economy, the South could recoup some of the money going to Northern interests. As much as a fifth of the cotton price went to merchants in the Northeast for loans, insurance, warehousing, and shipping to Europe.
By the 1850’s 100 to 150 million dollars a year in commissions were going to the North. This was in addition to the money made making the textiles. In 1860, the value added by textile makers to the raw materials was 55 million dollars. As much as the cotton growers were making money, Northern interests were making a lot of money too. When factories were built in the South, the owners tried to use slave labor. When slaves were used in a factory, the wage scale was lower than it would be otherwise.
Very few factories could get along without free labor. With slaves employed, the factory owner had a low wage base on which to base subsequent employees. This gave free labor an incen! tive to look elsewhere for work. Without productive labor available to work, southern factories were not able to grow to any large size. Conclusion The slowness to industrialize on the part of the South was a reaction to the profitability of cotton.
If cotton had not gotten a hold on the Souths economy in the early years, industry may have had a better chance of growing. But the land sales and presence of the steamboat allowed the cotton grower the chance to make money. By using slave labor to grow and harvest the cotton, the slave owners attained a standard of living much greater than the average American. Many of the few Southern industrialists that built factories used slaves in the factories but found that it was not as profitable as what they thought. With the demand of English and American textile makers, cotton became the engine that drove the American economy forward. Bibliography Bruchey, Stuart.
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Who Built America?: Working People and the Nation’s Economy, Politics Culture, and Society (New York: Pantheon Books, 1989). Poulson, Barry W. Economic History of the United States (New York: Macmillian Publishing, 1981). Walton, Gary M. and Ross M. Robertson, History of the American Economy, 5th ed.
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