Fateful Lightning: A New History of the Civil War & Reconstruction (94 page)

But these costs paled beside the toll that the war exacted from the Confederacy. Confederate war deaths were, in terms of overall numbers, fewer than the Union’s, although the quality of Confederate record keeping (not unaffected by the amount of Confederate destruction in the last year of the war) is even less reliable than its Union counterpart. Estimates of Confederate battle-related deaths range from 74,500 to 94,000, while between
110,000 to 160,000 Confederate soldiers died of various diseases. But the Confederacy had a far smaller pool of military manpower to draw upon: not only was the military-age population of the South smaller, but it was restricted until the very end of the war to whites, so the war cut a far wider swath through the racial power structure of the South than the numbers may at first suggest. All told, this means that eighteen out of every one hundred Confederate soldiers never came back, three times the death-rate of the Union army. It is almost impossible to estimate how many Southern civilians may have died war-related deaths, due to the disruption of the war and dangers of being a refugee.
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Along with these lives, a large portion of the prewar Southern economy vanished into the smoke that hung over the devastated Confederacy. Although embittered Southerners were wont to blame most of their losses on Yankee pyromaniacs, the single biggest item in the bill was caused simply by emancipation. Of the $7.2 billion worth of Southern property listed in the 1860 census, $2.4 billion existed in the form of slaves, as the chief capital investment of cotton agriculture. The Emancipation Proclamation and the Thirteenth Amendment simply erased the slave assets of the South. A second blow was fiscal in nature, as the money that Southerners had converted into Confederate bonds and notes disappeared the moment it became clear that the United States government had no intention of assuming any part of the Confederate government’s debt obligations. Only after these losses came the destruction of physical capital: as much as 43 percent of the South’s non-slave agricultural assets were destroyed by the war. By 1865, a third of the cattle, horses, and mules of the South were gone, and in the absence of slave labor to till the soil, Southern farm values fell by half. In Alabama, per capita wealth among white farmers fell to one-sixth of what it had been in 1860. In Georgia, one-quarter of the state’s rail lines were piles of useless, twisted iron, and the state controller general helplessly estimated that “almost four-fifths of the entire wealth of Georgia had been destroyed or rendered unproductive.” Even here, though, the plundering of agricultural property included that done by Confederate impressment officers as well as by Yankee foragers.
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By 1870, the accumulated value of all Southern property stood at only $2.05 billion, which means (after wartime inflation is factored in) that the war cost the South
between $5 billion and $8 billion. The irony in these figures is that if Southerners in 1861 had accepted the kind of slave buyout plan Lincoln devised for Delaware that November, then, for the $6.6 billion the Civil War cost the entire nation, every slave could have been freed at market value, with enough to fund the purchase of forty acres and a mule for every slave family, and still have had $3.5 billion in hand as a fund for promoting black economic entrance into a market economy.
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It has long been a truism that the Civil War ruined the South but became the maker of the Northern industrial economy; that, in turn, has generated suspicious comment that the war was actually a deliberate mechanism of Yankee capitalists and industrialists to seize control of the republic from its agrarian patriarchs. But the wastage of the Southern economy in the postwar years was not entirely a product of the war, nor was the explosion of Northern industry. Southerners had pegged their prewar economic success to cotton, and believed devoutly that King Cotton would force the European nations to intervene on their behalf. Too many of them had spent too much time in an environment in which the laws of demand—whether of slaves or commodities—allowed them to ignore the complementary laws of supply. And sure enough, even before the War had come to its first major battle, cotton consumers in Europe were busy shifting to other sources of supply. The viceroy of Egypt “with a laugh” assured the Confederate propagandist Edwin De Leon, “If your people stop the cotton supply for Europe, my people will have to grow more and furnish them.” And so they did. India doubled its exports of cotton to Britain; Brazil quadrupled its cotton exports; Egypt was shipping more than half a million bales to British cotton mills by 1865. Cotton remained king; it simply transferred its throne.
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But war rarely acts as anyone’s friend, and if it was no friend to Southern cotton growing, it was also no friend to Northern industry. The rate of commodity growth actually slackened in the four postwar decades, and manufacturing showed a boom only in certain narrow sectors. In a few places, industrial employment rose at giddying speed: in Chicago, it quadrupled between 1860 and 1870, and tacked on another 50 percent of 1870 employment numbers over the next decade. But in Philadelphia, the economic impact of secession and government war contracts was broad rather than deep; some Philadelphia manufacturers made sizable personal profits out of war contracting, but the overall structure of the Philadelphia economy, not to mention its politics, underwent little reorganization during the war. In Pennsylvania’s rural Chester County, the war multiplied land values and boosted the Phoenix Iron Works in Phoenixville to a competitive level with British ironmakers. But it also starved to death the cotton and woolen mills that had been the original foundation of Northern industry in the first half of the nineteenth century, and wiped out the small-scale iron mills that once occupied the banks of Chester County’s Brandywine Creek. As much as Northern
industrial muscle was vital to providing the weight of arms and material that gave the Union armies victory, much of its astounding output was channeled to the production of articles, from siege guns to uniforms, that had no peacetime value or market. Few of the officers and bureaucrats who learned how to manage large-scale production and distribution were ever able to translate those lessons into the peacetime economy.
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If there was any segment of Northern industry that enjoyed a boost from the war, it was the railroads. No single technological innovation of the nineteenth century was dearer to the heart of old Whigs and new Republicans than the railroad, and no industry meant more to the support of the armies than the private railroad companies that Stanton harnessed to the Union war effort. All told, the federal government handed rail corporations 158 million acres of public lands and more than $64 million in federal bonds to underwrite construction. By the 1870s, one-third of all the iron being manufactured in the United States went into rails. The same story was repeated on the state level, especially in the South. The Southern rail system staged an astonishing recovery, with much of the rolling stock being provided by demobilization sales of locomotives and cars by the U.S. Army’s military railroad system. “Nine-tenths of the railroads in the South are now in operation,” announced
Scientific American
at the close of 1866, “consisting of ninety roads with aggregate length of 8,170 miles.” That, in turn, created a host of large-scale subsidiary industries in machines and tools that helped make the great ironworks (such as the Phoenix Ironworks) immensely profitable, but that left the small-scale prewar mills dropping ever further behind.
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Yet even the boost given to the railroads by the war was tangential rather than direct; it was not so much the war as the free hand a Republican Congress was given in 1862 to fund railroad construction that put new sources of wealth behind the railroad industry. Any other excuse to override Democratic opposition to such “internal improvements” would probably have produced the same result. Northern agriculture and Northern finance benefited far more from the war than did Northern industry and Northern railroads. The outbreak of the war and its demands for foodstuffs neatly coincided with the mass introduction in the late 1840s and 1850s of mechanical seeders, steel plows, and McCormick reapers (250,000 of them were in use by the end of the war), and the potent combination of wartime demand and machine-based productive capacity combined to swell the production of Northern
wheat and oats by 35 percent, Northern wool by 66 percent, and Northern potatoes by 28 percent; exports of wheat, even during the war, doubled over prewar export levels, as did exports of pork and corn. Moreover, Northern wartime price inflation helped Northern farmers pay off their land indebtedness with cheap greenbacks, and doubled land values in major western states such as Illinois and Iowa. “Creditors were running away from debtors,” smirked William McCormick, of the reaper family, “who pursued them in triumph and paid them without mercy.”
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Northern financiers benefited in even more remarkable ways. The seven Democratic administrations that straddled the first six decades of the nineteenth century gave little if any encouragement to the development of American finance by holding the government’s role in the economy strictly to exchanges of specie. A good deal of the capitalization of American industry in the 1820s and 1830s had to be imported from abroad. But the war and the Republicans changed that: first, the threat of the civil war drove foreign investors off the American securities market, drove down demand, and allowed American investors to step into the vacuum; then, the Republicans dismissed the Democrats’ abiding suspicion of the financial markets and took the nation off the gold standard; finally, the immense amounts of money needed to carry on the war created a new class of financiers—bankers, insurers, and brokers such as Jay Cooke—who dealt in unprecedented volumes of cash and securities. The creation of the national banking system in 1863, and the subsequent disappearance of state bank currencies from Northern circulation, helped to further shift massive new amounts of financial power in the hands of financiers.
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Yet even these entries on the profit side of the war’s ledger were mottled with failures and ambiguities. Northern finance quickly outstripped the capacity of the Federal government to oversee and regulate it, and the financial community soon found itself agitating for a return to the gold standard, not to restrain the freewheeling dealings of the financial markets, but to slow down currency inflation and attach the markets to a standard independent of federal control. This meant, in effect, returning the United States to its dependence on the international flow of specie, especially through the hands of British financiers, and when the British financial markets failed in 1873, they carried Jay Cooke and the other American financiers down with them.

The Panic of 1873 hit agriculture the hardest. The farmers who had rashly expanded westward on the balloon of increased wartime production and cost-free
homesteading now suddenly found themselves tied to distant markets where their goods sold for less and less. The dream of easy landownership promised by the Homestead Act in 1862 opened the spigots for emigration westward: Montana, which was organized as a territory in 1864, saw its population balloon from 21,000 in 1870 to 143,000 by 1890; Kansas, which was the source of so much grief before the Civil War, was admitted as a state in 1864 with less than 110,000 inhabitants, but by 1890 it had more than 1.4 million. By 1886 the
North American Review
concluded that “for all practical purposes of bestowing free farms on its growing population, the public domain of the United States is now exhausted.”
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What the Homestead Act did not tell these hopeful settlers was that the lands of the Great Plains contained some of the most arid, inhospitable, and useless agricultural soils in the world. The weather veered unpredictably from baking hot to freezing cold, and the wind howling across the unforested prairie was enough to drive the isolated mad. “On every hand the treeless plain stretches away to the horizon,” wrote one traveler in 1893; “one mile of it is almost exactly like another,” and “when the snow covers the ground the prospect is bleak and dispiriting.” And the land itself was difficult and intractable to farm: “Some savage quality must be taken from the ground by cultivation.” And that was in the best of times. The winter of 1886 was appallingly severe in the West, freezing hundreds of thousands of cattle in enormous snowdrifts, and in the summer of 1887 drought killed off the wheat harvest—as it did for the next ten years. The wheat that did survive brought less and less, as prices on the world markets tumbled from $1.05 a bushel in 1870 to 49 cents in 1894. The farmer who had eagerly seized on the new homesteads opened up in the 1862 found himself, thirty years later, mortgaged, foreclosed, or bankrupt. The territories had been kept safe from slavery, but they had not been kept safe from the fluctuations of the market.
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The most important change in the shape of the postwar American economy was organizational rather than industrial or agricultural; but not only did it have nothing to do with the Civil War, it would probably have emerged on its own, war or not. That was the swift rise to dominance of the corporation. Before the Civil War, only about 7 percent of American manufacturing was organized in corporations (which is to say, as business enterprises too large to be successfully owned and managed by an individual or family, but owned indirectly by shareholders through the purchase of stock, managed by a cadre of professional administrators, and overseen by boards of directors who reported to the shareholders). By 1900 corporations accounted for 69 percent of all American manufacturing; between 1897 and 1905 alone, 5,300
small-scale firms were consolidated and reorganized into just 318 corporations, and 26 super-corporations (or trusts) controlled 80 percent of major American industrial output. Standard Oil of Ohio, chartered in 1870, was converted into a trust in 1882, by which time it controlled more than 90 percent of American oil refining.
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“Now,” warned James A. Garfield in 1874, “a class of corporations unknown to the early law writers has arisen, and to them have been committed the vast powers of the railroad and the telegraph, the great instruments by which modern communities live, move, and have their being.”