ECONOMIC CONDITIONS OF THE STATES BEFORE AND AFTER THE AMERICAN CIVIL WAR

Abstract

ABSTRACTEven though, American Civil War is considered as a seminal event in history of United States, there are not many empirical studies examining economic conditions of Union and Confederate states. Even though, economic conflict is not considered to be a cause of Civil War, economic conditions after war were vastly different in Union and Confederate states. The purpose of this study is to analyze economic outcomes of individuals in Confederate states and Union states before and after American Civil War using census data for 1860 and 1880. Our goal is to analyze improvements in occupation income scores. Since slaves were freed, we also examine whether there was a reduction in farm households.Keywords: The American Civil War, Census, Confederate States, Occupational Income Score1. INTRODUCTIONThe American Civil War is an event of significant economic impact in American history. The war resulted in abolition of slavery in Southern states and preservation of Union. The issues relating to slavery, trade and tariffs and state's rights were causing divisions between Northern and Southern states before Civil War. The economic divisions with Northern states with growing manufacturing sector and small farms using free labor and Southern states with large farms using slave labor aggravated situation. When Northern states wanted to ban slavery in Western Territories that would become new states, Southern states feared that such a move would eventually result in abolition of slavery and loss of their valuable assets in form of slaves. The American Civil War began with secession of Southern states, South Carolina, Mississippi, Florida, Alabama, Georgia, Louisiana, Texas, Virginia, Arkansas, Tennessee and North Carolina, in sequential order, from Union in 1860-61. The war ended in 1865 with death of more than 750,000 people (Hacker, 2011) and destruction of South's infrastructure. Even though there is a vast literature on economic impact of civil war, most studies focus at macroeconomic level. The purpose of this study is to examine impact at individual level using census data.2. LITERATURE REVIEWThe American Civil War has been examined in detail. Therefore, we will only discuss literature relevant to this study. According to Beard and Beard (1927), defeat of agricultural South resulted in rise of Hacker (1940) also comes to same conclusion. However, his thesis is that victory of Northern states provided industrialist-capitalist class clout to pass legislation that resulted in the triumph of American capitalism. (Goldin and Lewis, 1975). In short, both Charles and Mary Beard and Hacker conclude that even though Civil War caused extensive damages, it also generated net benefits because of subsequent high growth. However, Cochran (1961), Salsbury (1967; Engerman, 1966) challenge these views. Cochran, for example, finds that growth in value added from 1839 to 1859 are similar to those from 1869 to 1889. Engerman (1966) finds that commodity output growth between 1870 and 1900 was similar to that between 1840 and 1860. Engerman (1966) also finds no basis for claim that US economic activity took off after war based on Gallman (1966) GNP estimates. Therefore, we may conclude that Civil War was not a defining moment as Beards and Hacker have claimed.Even though, census data has been an extensive source for micro-level analysis, there are not many studies that analyze Civil War using census data. Hacker (2011) uses it to estimate number of Civil War dead. Jaworski (2009) uses linked sample of census data for 1850 and 1870 to examine wealth buildup and concludes that wealth accumulation was significant in Southern states in 1850's and sluggish in 1860's. …