For decades, historians have been attacking the shopworn idea of Northern industrialists as the dominant figures of American capitalism in the first half of the nineteenth century. Resting on a rich array of misconceptions and a few outright lies, this idea has withstood even the most severe factual challenges because, as an explanation for the Civil War, it has been useful no matter how the war is remembered. It has licensed romantic interpretations of the War of the Rebellion, the War Between the States and even the War of Northern Aggression. One could assign all kinds of political faults to the antagonists but still commemorate the fratricidal tragedy of Billy Yank and Johnny Reb because the notion of an industrial North dragging an agrarian South into the capitalist future offered magically offsetting historical alibis. By divorcing the North from slavery and the South from capitalism, it ennobled all of the white men involved.
On the Southern side, the stereotype has permitted a misinterpretation of the war’s economic circumstances and consequences. After the war, and largely because of it, the South was the poorest region of the United States. Even today, the states that had very large slave populations in 1860 tend to have low per capita incomes, with Mississippi perennially at the bottom. If, however, wealth is assessed the way most white people calculated it at the time—by counting enslaved African-Americans as valuable property rather than as victims of the desperate poverty that slaveholders imposed on them—the South was the nation’s wealthiest region before the Civil War. Two-thirds of all Americans who owned estates worth more than $100,000 lived in the South in 1860; Mississippi and Louisiana boasted more millionaires per capita than Massachusetts and New York; and more capital was invested in enslaved African-Americans than in railroad and industrial assets combined.
But the Southern slaveholders were more than just rich. As the Harvard historian Walter Johnson explains in his bracing new history of slavery and capitalism in the Deep South, River of Dark Dreams, the slaveholders were the quintessential American capitalists. They were early adopters of technology, avid consumers of financial data, expert manipulators of legal arcana and aggressive speculators in everything, including not only human chattel and cotton but also unstable paper money and exotic credit arrangements. Above all, the slaveholders of the Cotton Kingdom were rapacious—and highly effective— masters of the essential capitalist process of converting labor into commodities. The whole point of plantation slavery, Johnson explains, was this chain of capitalist mutations: from “lashes into labor into bales into dollars into pounds sterling.”
Much of the North’s wealth also depended on the exploitation of slave labor, even though the Northern states abolished slavery within their boundaries in the decades after the American Revolution. Many of the early Northern factories turned Southern cotton into cheap textiles, which were then sold to the slaveholders as low-grade “negro cloth.” But the factories were not the big story, since they remained relatively small in this period. Most Northerners were farmers rather than industrialists or industrial workers. The serious profits were made in commerce, especially shipping, financing and insuring the cotton that accounted for roughly half the value of all US exports from 1820 to 1860. Southern cotton, even more than the grain hauled through the Great Lakes and Erie Canal, fed the rise of New York to commercial eminence.
The slave-labor economy of the Mississippi Valley endowed the masters at the top of its pyramid with fabulous wealth and a profoundly exaggerated sense of their power in the world. Because the American South supplied 80 percent of the world’s cotton, the planters believed that the world economy depended on them instead of the other way around. They thought riches and ruin were theirs to mete out, not only to the American North but also to the major European powers. They were wrong. When they acted on their imperial fantasies by engaging the North in the Civil War, they lost their wealth, their slaves and their market power, as their erstwhile customers turned to competing cotton suppliers in Egypt and India.