Perhaps the most important factor in the South’s economic underdevelopment was the fact that emancipation, while a milestone in human freedom, was an economic calamity. There were approximately 4 million slaves, with an average value of $1,000. Emancipation meant the destruction of $4 billion of Southern capital. Slavery as a symbol of status had encouraged successful professionals and entrepreneurs to invest in slaves rather than industry. With the end of the war, that “investment” was rendered valueless, and that put severe limits on the available local capital for investment.
A very interesting post from the Professor, but there’s a flaw in the formula—”There were approximately 4 million slaves, with an average value of $1,000. Emancipation meant the destruction of $4 billion of Southern capital.” Yes, every slave had a value, but most slaves had not been purchased, so there was no investment lost.
If you borrowed money to buy slaves in the 1850s, as many professionals (doctors, lawyers, businessmen) did because the slave trade was so lucrative, then you definitely lost your investment. But if you were a planter, large or small, the slaves created your wealth for you just by being born. Thus Jefferson made the calculation that he made a 4% profit per annum on the births of black babies. The planters called this “the increase.” A planter’s cost for housing and feeding a child was minimal; children soon became productive and thus profitable, and they became disposable assets at a very young age. I think Jefferson calculated that it cost him only $8 to $10 a year to support an adult slave. Peter Wilson Hairston owned 1,500 slaves in his lifetime—nearly all of whom came to him through inheritance and natural increase.
So at the end of the war he “lost” an enormous amount of value in slave property, but he hadn’t lost any “investment” because he never bought any slaves. In the case of the Hairstons, the enormous increase in their slave population in Virginia and North Carolina by the 1830s gave them a surplus labor force which they used to develop large tracts of new cotton land in Mississippi, which they got from the government for very little after the Choctaw had been driven from Mississippi to make way for white settlement.
IMAGE: Whitehall Street, Atlanta, 1864. This photo of a black Union soldier posted at a slave auction house in Atlanta is one of hundreds taken by George N. Barnard during Gen. Sherman’s occupation of the city in the fall of 1864. Many were destroyed in the conflagration that erupted upon Sherman’s firing of Confederate munitions stores when he departed on Nov. 15.