Industrial Profits and Market Forces: The Antebellum South

Abstract

There have been several important contributions to the recent literature concerned with profits in antebellum southern manufacturing (Bateman et al., 1975; Bateman and Weiss, 1975a, 1975b, 1976, 1981; and Vedder and Gallaway, 1980). Much of what we know about industrial profits during this era stems from the pioneering work of Fred Bateman and Thomas Weiss. In their work, these authors estimate rates of return to manufacturing investment for the South and the nation as a whole. They find that the rates of return in manufacturing were unusually high compared to returns in alternative investments in the decade preceding the Civil War. In fact, their estimates suggest that the financial returns in manufacturing were roughly twice as great as the financial returns to investment in agriculture. With these large sectoral differences in rates of return, Bateman and Weiss question why the South was so slow to industrialize and why the antebellum southern economy continued to be dominated by plantation agriculture.