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How Slavery Became the Economic Engine of the South

Slave family picking cotton in the fields near Savannah, circa 1860s. (Credit: Bettmann Archives/Getty Images)
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    How Slavery Became the Economic Engine of the South

    • Author

      Greg Timmons

    • Website Name

      history.com

    • Year Published

      2018

    • Title

      How Slavery Became the Economic Engine of the South

    • URL

      https://www.history.com/news/slavery-profitable-southern-economy

    • Access Date

      May 27, 2018

    • Publisher

      A+E Networks

With cash crops of tobacco, cotton and sugar cane, America’s southern states became the economic engine of the burgeoning nation. Their fuel of choice? Human slavery.

If the Confederacy had been a separate nation, it would have ranked as the fourth richest in the world at the start of the Civil War. The slave economy had been very good to American prosperity. By the start of the war, the South was producing 75 percent of the world’s cotton and creating more millionaires per capita in the Mississippi River valley than anywhere in the nation. Slaves represented Southern planters’ most significant investment—and the bulk of their wealth.

Slaves leaving the fields with baskets of cotton. (Credit: Bettmann Archives/Getty Images)
Slaves leaving the fields with baskets of cotton. (Credit: Bettmann Archives/Getty Images)

An Economy Built on Slavery
Building a commercial enterprise out of the wilderness required labor and lots of it. For much of the 1600s, the American colonies operated as agricultural economies, driven largely by indentured servitude. Most workers were poor, unemployed laborers from Europe who, like others, had traveled to North America for a new life. In exchange for their work, they received food and shelter, a rudimentary education and sometimes a trade.

By 1680, the British economy improved and more jobs became available in Britain. During this time, slavery had become a morally, legally and socially acceptable institution in the colonies. As the number of European laborers coming to the colonies dwindled, enslaving Africans became a commercial necessity—and more widely acceptable.

With ideal climate and available land, property owners in the southern colonies began establishing plantation farms for cash crops like rice, tobacco and sugar cane—enterprises that required increasing amounts of labor. To meet the need, wealthy planters turned to slave traders, who imported ever more human chattel to the colonies, the vast majority from West Africa. As more slaves were imported and an upsurge in slave fertility rates expanded the “inventory,” a new industry was born: the slave auction. These open markets where humans were inspected like animals and bought and sold to the highest bidder proved an increasingly lucrative enterprise. In the 17th century, slaves would fetch between five and ten dollars. But by the mid-19th century, an able-bodied slave fetched an average price between $1,200-$1,500.

Slave auction circa 1861. (Credit: API/Gamma-Rapho/Getty Images)
Slave auction circa 1861. (Credit: API/Gamma-Rapho/Getty Images)

Economic Necessity Trumps Morality

Slave labor had become so entrenched in the Southern economy that nothing—not even the belief that all men were created equal—would dislodge it. When delegates to the Constitutional Convention met in Philadelphia in the summer of 1787, they were split on the moral question of human bondage and man’s inhumanity to man, but not on its economic necessity. At the time, there were nearly 700,000 slaves living in the United States, worth an estimated $210 million in today’s dollars. When the topic of slavery arose during the deliberations over calculating political representation in Congress, the southern states of Georgia and the Carolinas demanded that each slave be counted along with whites. The northern states balked, saying it gave southern states an unfair advantage. Their compromise? Delegates agreed that each slave would count as three-fifths of a person, giving the South more representation, and that the slave trade would be banned 20 years hence, in 1807, a concession to Northern states that had abolished slavery several years earlier.

VIDEO: The System of American Slavery – Historians and experts examine the American system of racialized slavery and the hypocrisy it relied on to function.

 

Before the American Revolution, tobacco was the colonies’ main cash crop, with exports of the aromatic leaf increasing from 60,000 pounds in 1622 to 1.5 million by 1639. By the end of the century, Britain was importing more than 20 million pounds of tobacco per year. But after the colonies won independence, Britain no longer favored American products and considered tobacco a competitor to crops produced elsewhere in the empire. Always a fickle commodity for growers, tobacco was beset by price fluctuations, weakness to weather changes and an exhausting of the soil’s nutrients. But even as tobacco waned in importance, another cash crop showed promise: cotton.

Slaves on an American plantation operating a cotton gin. (Credit: MPI/Getty Images)
Slaves on an American plantation operating a cotton gin. (Credit: MPI/Getty Images)

King Cotton

Picking and cleaning cotton involved a labor-intensive process that slowed production and limited supply. In 1794, inventor Eli Whitney devised a machine that combed the cotton bolls free of their seeds in very short order. Manually, one slave could pick the seeds out of 10 pounds of cotton in a day. The cotton gin could process 100 pounds in the same time.

There was an irony in all this. Many people believed the cotton gin would reduce the need for slaves because the machine could supplant human labor. But in reality, the increased processing capacity accelerated demand. The more cotton processed, the more that could be exported to the mills of Great Britain and New England. And the invention of the cotton gin coincided with other developments that opened up large-scale global trade: Cargo ships were built bigger, better and easier to navigate. Powerful navies protected them against piracy. And newly invented steam engines powered these ships, as well as looms and weaving machines, which increased the capacity to produce cotton cloth.

With all these factors amping up production and distribution, the South was poised to expand its cotton-based economy. With more land needed for cultivation, the number of plantations expanded in the South and moved west into new territory. Production exploded: Between 1801 and 1835 alone, the U.S. cotton exports grew from 100,000 bales to more than a million, comprising half of all U.S. exports. The upshot: As cotton became the backbone of the Southern economy, slavery drove impressive profits.

The benefits of slave-produced cotton extended to industries beyond the South. In the North and Great Britain, cotton mills hummed, while the financial and shipping industries also saw gains. Banks in New York and London provided capital to new and expanding plantations for purchasing both land and slaves. As a result, slaves became a legal form of property that could be used as collateral in business transactions or to pay off outstanding debt. Slaves comprised a sizable portion of a planter’s property holdings, becoming a source of tax revenue for state and local governments. A sort of sales tax was also levied on slave transactions.

Steadily, a near-feudal society emerged in the South. At the top was the aristocratic landowning elite, who wielded much of the economic and political power. Their plantations spanned upward of a thousand acres, controlling hundreds—and, in some cases, thousands—of slaves. A culture of gentility and high-minded codes of honor emerged.

Below the elite class were the small planters who owned a handful of slaves. These farmers were self-made and fiercely independent. Slaveless small farmers and landless whites were at the bottom, making up three-quarters of the white population—and dreaming of the day when they, too, might own slaves. No matter how wide the gap between rich and poor, class tensions among whites were eased by the belief they all belonged to the “superior race.” Many convinced themselves they were actually doing God’s work taking care of what they believed was an inferior people.

Slaves returning from the cotton fields in South Carolina, circa 1860. (Credit: Fotosearch/Getty Images)
Slaves returning from the cotton fields in South Carolina, circa 1860. (Credit: Fotosearch/Getty Images)

Slavery, Wealth and the Confederacy

By the start of the 19th century, slavery and cotton had become essential to the continued growth of America’s economy. However, by 1820, political and economic pressure on the South placed a wedge between the North and South. The Abolitionist movement, which called for an elimination of the institution of slavery, gained influence in Congress. Tariff taxes were passed to help Northern businesses fend off foreign competition but hurt Southern consumers. By the 1850s, many Southerners believed a peaceful secession from the Union was the only path forward.

When considering leaving the Union, Southerners knew the North had an overwhelming advantage over the South in population, industrial output and wealth. Yet, the booming cotton economy most Southerners were optimistic about their future. As one state after another left the Union in 1860 and 1861, many Southerners believed they were doing the right thing to preserve their independence and their slave property.

To raise funds, Confederate leaders sold bonds for gold coin, which was in circulation at the time. The Confederate currency was inherently weak and became weaker with each printing. In time, the paper money lost 90 percent of its buying power. What gold and silver existed, was taken out of circulation and hoarded by the government and private citizens.

What Happened to the Gold?

By war’s end, the Confederacy had little usable capital to continue the fight. In the conflict’s waning days, it is believed that Confederate officials stashed away millions of dollars’ worth of gold, most in Richmond, Virginia. As the Union Army entered the Confederate capital in 1865, Confederate President Jefferson Davis and millions of dollars of gold escaped to Georgia. What happened after that is disputed, the subject of many myths and legends.

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