Southern Reconstruction by Philip Leigh
In lieu of a review, below is a speech Philip made about the book.
Historians reinterpreted Civil War Reconstruction over the past fifty years. Shortly before the Centennial, it was commonly believed that the chief aim of the Republican-dominated Congress was to ensure lasting party control over the federal government by creating a reliable voting bloc in the South for which improved racial status among blacks was a coupled, but secondary, objective. By the Sesquicentennial, however, it had become the accepted view that Republicans were primarily motivated by an enlightened drive for racial equality untainted by anything more than negligible self-interest. Consequently, the presently dominant race-centric focus on Reconstruction minimizes political and economic factors that affected all Southerners regardless of race.
Contrary to popular belief, for example, Southern poverty has been a longer-lasting Civil War legacy than has Jim Crow or segregation. Prior to the war, the South had a bimodal wealth distribution with concentrations at the poles. The classic planters with fifty or more slaves had prosperous estates but they represented less than 1% of Southern families. Partly because 1860 slave property values represented 48% of the Southern wealth, seven of the ten states with the highest per capita wealth soon joined the Confederacy.
Since nearly 70% of Confederate families did not own slaves, however, the regional per capita income was only slightly ahead of the north central states and well behind the average northeastern state. A century later eight of the bottom ten states in per capita income were former members of the Confederacy. The depth of post-Civil War Southern poverty and its duration were far greater, longer, and more multiracial than is commonly supposed. It took eighty-five years for the South’s per capita income to regain the below average percentile ranking it held in 1860.
The war had destroyed two-thirds of Southern railroads and two-thirds of the region’s livestock was gone. Steamboats had nearly disappeared from the rivers. Excluding the total loss in the value of slaves resulting from emancipation, assessed property values in 1870 were less than half of those of 1860, while property taxes were four times higher. Approximately 300,000 white Southern males in the prime of adulthood died during the war and perhaps another 200,000 were incapacitated, representing about 18% of the region’s approximate 2.7 million white males of all ages in 1860 and about 36% of those over age nineteen.
During the war, Southern farms drifted back to nature. Since their protective levees had been destroyed, thousands of square miles of Mississippi Delta cotton lands were overrun with briers and cane thickets. Returning Confederate soldiers often found that their families were starving. In December 1865, estimated half-million whites in three Gulf states alone were without life’s necessities, and some had starved to death.
Historian David L. Cohn adds:
When there was a shortage of work stock, the few surviving animals were passed from neighbor to neighbor. [When] there was no work stock [the men] hitched themselves to the plow. By ingenuity, backbreaking toil, and cruel self-denial thousands of Southern farmers survived reconstruction…They received no aid from any source, nor any sympathy outside the region.
By 1870 Southern bank capital totaled only $17 million, compared to $61 million ten years earlier in 1860. So great was the devastation and anemic the rebound that by 1900 the South had barely recovered to the level of economic activity prior to the Civil War. Economic conditions in the South after the Civil War were largely ignored by national policies until President Franklin Roosevelt commissioned a report in 1938, which was nearly eighty years after the end of the Civil War.
The Roosevelt-commissioned study disclosed that the South remained America’s poorest region. Its 1937 per capita income of $314 was only about half of the $604 for the rest of the country. Since residents paid one another less than elsewhere for local goods and services the South also had a lower cost of living. The difference, however, was minor. A 1935 survey that placed the American family poverty line at $75 monthly, estimated the figure was only three dollars lower in the South at $72. Shortly after the Great Depression began, the president of General Motors voluntarily cut his annual salary from $500,000 to $340,000. His $160,000 cut was more than all the income taxes paid by two million Mississippi residents that year.
Conditions were worst among the farmers who powered the South’s main economic engine. During the last year before the Great Depression that started in 1929, Southern farmers earned an average of $190, which was about 65% below the $530 average of other American farmers. Yet their revenue was a gross income out of which operating expenses such as fertilizer, seed, and interest on debt had to be paid. As a result there was often little money left for food and clothing and none for such common articles as books and radios. Cotton and tobacco provided two-thirds of Southern farm income.
Even as late as the 1930s, more than half of Southern farmers depended upon cotton alone. Price fluctuations in the World cotton markets were sheer gambles, yet they were often the key determinant of the one-crop farmer’s income. Cotton prices dropped from $0.20 a pound in 1927 before bottoming-out at $0.06 in 1931. Only once during the ten years from 1927 to 1937 did the price change less than 10% annually.
Tenant farmers and sharecroppers that composed more than half of all Southern farmers were at the bottom of the heap. Many lived in circumstances comparable to the Russian serfs of the nineteenth century. Sharecropper per capita incomes ranged from $38 to $87 annually, which equated to $0.10 to $0.25 per day. By comparison, during the depression that followed the 1873 Financial Panic sixty-five years earlier, the Ohio Department of Labor Statistics estimated the poverty line at one dollar a day. Perhaps most surprising to present-day audiences, Roosevelt’s report disclosed that whites composed half of all sharecroppers and that they lived “under economic conditions almost identical with those of Negro sharecroppers.”
Since cotton was the cornerstone of the South’s economy nearly all residents shared the farmer’s hazards to some extent. Financing the farmers, for example, was more costly than elsewhere because of the greater risk of failure. One 1934 study revealed that 10% of Southern farmland was owned by lenders who had been forced to foreclose on mortgages.
Poverty bred poor health. Ailments such a pellagra, rickets and hookworm that were almost unknown in other parts of the country and could be prevented by cheap dietary changes, better sanitation and shoes, plagued the South for almost a century after the Civil War. Even in Southern cities an average of three-fourths of the poor did not have enough money to afford the preventive diets. So short was the life expectancy in South Carolina that as late as 1930 half the state’s population was under age twenty.
Of three million farm homes surveyed in 1930 only 6% had piped-in water. More than half were unpainted. Only about one-third had screens. Nearly eighty years after the end of the Civil War the Roosevelt study concluded that half of Southern families needed new housing.
Post-war politics and federal economic policies contributed to the South’s long delayed economic recovery. Among such factors were property confiscations, Republican Party self-interest, discriminatory federal budgets, protective tariffs, Union veteran pensions, banking regulations, discriminatory freight rates, lax monopoly regulation, absentee ownership and the requirement that America’s most impoverished region pay for the public education of the children of ex-slaves even though emancipation was a national—not regional—policy.
When Lee surrendered to Grant, more than two million fungible cotton bales were scattered across the South. Given an average price of 43 cents per pound, each bale was worth about $172, putting the value of the entire inventory at nearly $350 million as compared to $15 million of US currency then circulating in the region. The cotton inventory might have primed the pump of Southern recovery, but instead it was plundered.
Union soldiers, US treasury officials, and Northern businessmen stole most of it under the pretext of legitimate confiscation, or no pretext at all. A dismayed US Treasury Secretary Hugh McCulloch remarked, “I am sure that I sent some honest cotton agents South, but it sometimes seems very doubtful that any of them remained honest very long.”
Southern lands were also confiscated for non-payment of state taxes imposed by Carpetbag regimes, which were some of the highest in relation to wealth in US history. At one point 15% of Mississippi’s taxable land was up for sale due to tax defaults and an Arkansas newspaper required sixteen pages to list delinquencies.
When the Civil War ended the Republican Party was barely ten years old. Its leaders worried that it might be strangled in the cradle if re-admittance of Southern states into the Union failed to be managed in a manner that would prevent Southerners from allying with Northern Democrats to regain control of the federal government. If all former Confederate states were admitted to Congress in December 1865 and each added member was a Democrat, the Republican Senate majority would have dropped from 40-to-8 and become 40-to-30. Similarly, the Party’s majority in the House would have dropped from 111-to-40 and become 111-to-79. In short, the Republicans would have no longer held a veto-proof two-thirds majority in Congress.
Thus, the infant GOP needed to ensure that most of the new Southern senators and congressmen were admitted as Republicans. That meant that vassal governments needed to be established in the Southern states. Since there were few white Republicans in the region the Party needed to create a new constituency. Consequently, Republicans settled on two objectives.
First was mandatory African-American suffrage in all former Confederate states. Republicans expected that the mostly illiterate and inexperienced black electorate could be manipulated to consistently support Party interests out of gratitude for emancipation and voter suffrage. Second was to deny the vote to the Southern white classes most likely to oppose Republican policies, which meant many former Confederates.
Although it is often assumed that Republican Party sponsorship of Southern black suffrage was motivated by a moral impulse to promote racial equality, the bulk of the evidence suggests the Party was more interested in retaining political power.
First, the 1866 Civil Rights Act passed over President Johnson’s veto declared nearly all blacks to be citizens but expressly denied citizenship to Indians unless they were paying taxes. Indians would not gain full citizenship until the 1920s. Other “non-whites” such as Asians were also excluded. Chinese-Americans, for example, could not even become naturalized U. S. citizens until 1943.
Second, Republicans recognized that many Northerners did not favor black suffrage in their own states. When the Civil War began, blacks were not permitted to vote in sixteen of the twenty-two Union-loyal states. In most of the remaining six they could only vote by meeting property and education tests that were more stringent than those applied to whites.
Upon the war’s conclusion, only five New England states with tiny black populations permitted them to vote. Connecticut, Minnesota, and Wisconsin each rejected black suffrage in 1865. Kansas did so in 1867 as did Michigan and Missouri in 1868 and even New York in 1869. As shall be explained, the Republicans would adopt a strategy that would permit Northern states to reject black suffrage with only negligible consequences but would significantly penalize Southern states for doing so.
Third, a month after General Lee’s surrender at Appomattox, Union Major General William T. Sherman wrote a colleague, “I have never heard a negro ask for… [voting rights] … and I think it would be his ruin…I believe the whole idea of giving votes to the negroes is to create just that many votes to be used by others for political uses…”
Fourth, the two Republican leaders most commonly believed to be sincerely interested in black racial equality also admitted that they also wanted Southern black suffrage in order to help keep their Party in power.
Pennsylvania Representative Thaddeus Stevens who would ultimately be buried in a black cemetery said, “If [black] suffrage is excluded in the rebel States then every one of them is sure to send a solid rebel representative delegation to Congress…They, with their kindred [Northern] Copperheads, would always elect the President and control Congress.” He also stated that the Southern states, “ought never…be…counted as valid states until the Constitution shall have been amended…to secure perpetual ascendancy to the party of the Union [meaning the Republican Party].”
Similarly, a Rhode Island Republican complained to abolitionist Senator Charles Sumner of Massachusetts, “Without [black suffrage in the South], Southerners will certainly unite…with Democrats of the North, and the long train of evils sure to follow their rule is fearful to contemplate…[including]…a great reduction of the tariff.”
Fifth, after the collapse of the Carpetbag regimes in 1877, Washington Republicans virtually ignored the black electorate until the eve of the tightly contested reelection campaign of President Benjamin Harrison against Democrat Grover Cleveland in 1892. In 1890 Massachusetts Representative Henry Cabot Lodge introduced a “Force Bill” to empower the federal government to supervise elections in the South under the glitter of bayonets thereby optimizing Republican election prospects in the region. The bill, however, was dropped when the Republicans traded it away for Southern support of the McKinley Tariff, which raised import duties to about 50%. Although Republicans claimed the Lodge Bill underscored the Party’s determination to protect black voters, the motive was evidently less powerful than their hunger for higher tariffs.
As a result of their post-war lust for lasting political power the Republicans proceeded with a plan for universal black suffrage in the South, if not the North. The first step was to adopt three 1867 congressional acts passed over President Andrew Johnson’s vetoes. The acts imposed four requirements on the South.
First, except for Tennessee the remaining ten states of the former Confederacy were divided into five military districts and governed by martial law. Soldiers could be used to supervise voter registration in order to optimize Republican-favorable results. Tennessee was exempted because it already had a Radical Republican government. Second, each of the ten states was to organize a convention to adopt a new constitution satisfactory to Congress. Third, the states were required to let black males vote for convention delegates but were simultaneously obliged to deny the vote to many white military and civil officers of the former Confederacy specified by their previous office or military service. Fourth, each state constitution was to require universal black male suffrage and typically also block white suffrage at least as rigidly as it was restricted in the earlier vote for constitutional convention delegates.
Although Congress overrode his objections, President Johnson’s veto messages cast doubt on the constitutionality of the Reconstruction Acts as well as the 1866 Civil Rights Act. Ever since the 1791 Tenth Amendment voter qualifications had been universally regarded as a states’ right. In 1868, therefore, the Republicans resolved to amend the US Constitution. The result was the Fourteenth Amendment, which had two key provisions.
First, persons born in the United States would be American citizens and citizens of their resident states. No race could be excluded, except non-taxpaying Indians, although the Supreme Court would later rule that Chinese-Americans were also prohibited from becoming naturalized citizens. Second, states refusing suffrage to male citizens of any qualified race would have their congressional representation cut by subtracting the number of members of the excluded race from the state’s population for purposes of calculating its House representation and electoral votes. Due to their tiny black populations, the provision was inconsequential in Northern states. As an incentive for Carpetbag states to approve the amendment, Congress separately specified that no elected representative from the former Confederate states could be seated in Congress until his state adopted the Fourteenth Amendment and Congress approved his state’s new constitution. Until then, Southern state governments had no legal authority.
The Fourteenth Amendment was ratified under controversial circumstances in July 1868 when Secretary of State William Seward declared that 28 of 36 states had approved it, even though two (Ohio and New Jersey) had rescinded their ratification. Additionally, Seward counted Tennessee as a ratifying state even though its legislature obtained a quorum only by arresting two opposing legislators and forcing them to sit quietly while the motion passed.
By disfranchising many white Southerners and forcing black suffrage in the South the Republicans were able to get six Southern states included among the 28 ratifying the amendment. As a result, the 1868 Republican presidential candidate, Ulysses Grant, won 450,000 black Southern votes without which he would have lost the popular vote although he would have retained a majority of electoral votes.
Since six of the readmitted Southern states voted for Grant in 1868 and only two voted against him, it soon became apparent that a second amendment granting black men the vote in every state could be quickly approved. As a result, the Fifteenth Amendment was ratified by three-fourths of the states in 1870. Since Southern state constitutions already included black suffrage, the amendment’s practical effect was in the Northern and former border-states where blacks composed less than 5% of the population. It did, however, insure that no Southern state could avoid black suffrage in the future by repealing such terms in its own constitution.
During Reconstruction Southerners were required to pay their share of federal taxes for sizable budget items that if funded by an independent defeated foe would have constituted reparations. To be sure, reparations are not a rare form of a victor’s compensation, but it should not be assumed that the Southern states escaped equivalent penalties merely because they were readmitted to the Union.
The above table summarizes federal tax revenues and spending for a quarter century following the Civil War. More than half of federal tax revenues were applied to three items: (1) interest on the federal debt, (2) budget surpluses, and (3) Union veterans benefits. Although compelled to pay their share of taxes to fund them, former Confederates derived no benefit from the allocations.
But the table does not tell the whole story.
First, the 1869 Public Credit Act required that federal debt be redeemed in gold. During the war, however, the great majority of investors used paper money to buy the bonds even though the paper money traded at a discount to gold. The discount got as high as 63% while Grant was sustaining heavy casualties in 1864 only to be stalemated at the siege of Petersburg. In short, gold redemption was a huge windfall for the bondholders.
Southerners held few, if any, bonds. Some were held by national banks, which bought them to use as monetary reserves as mandated by the 1863 National Banking Act, but many Northern civilians also owned them. Federal debt jumped forty-fold from $65 million to $2.7 billion during the war. Since bonds and interest had to be paid in gold, the amount of paper currency needed pay them was larger than the face amounts of the bonds and the nominal coupon interest rates. The difference was an extra cost to the taxpayer and a bonus to the bondholder.
The budget surpluses were caused by protective tariffs that generated more income than necessary to operate the federal government. As the table below documents dutiable items were taxed at about 45% until after President Woodrow Wilson was inaugurated in 1913. They were increased again in the 1920s after the Republicans regained the White House. Rates generally remained high until after World War II when the manufacturing economies of the Northern states had no international competitors because of the World war’s destruction of European and Asian economies. In short, America finally became a free-trade advocate only after the manufacturing economies of the Northern states had no international competition.
Protective tariffs were designed to restrict competition for domestic producers, almost none of which were in the South. The South’s was primarily an export economy. Even as late as the 1930s, 60% of its cotton was sold overseas. Foreign buyers, however, were unable to pay for Southern cotton unless they could generate exchange credits by selling manufactured goods into the USA, which protective tariffs impeded. By one estimate the post-war tariff imposed an implicit 11% tax on agricultural exports. As Cornell professor Richard Bensel puts it, “[The tariff] redistributed [wealth] from the periphery to the [Northern industrial regions] in the form of higher prices for manufactured goods and from the periphery to the national treasury in the form of customs duties.”
Finally, former Confederates derived no benefit from generous federal spending on Union veteran pensions. Ex-Rebel soldiers could only collect much smaller pensions from their respective states. Union veteran pensions were originally paid only to soldiers who sustained disabling injuries during military service, but Republicans gradually expanded eligibility to solidify veterans as one of the Party’s voter constituencies.
In 1904 any Union veteran over age 62 was regarded as disabled thereby transforming the program into an old age retirement system instead of the disability-only program it was originally intended to be. In 1893 the pensions represented over 40% of the federal budget. Although dropping as a percent of the total budget thereafter, annual spending on Civil War Union veteran pensions did not stop increasing until 1921, which was over 55 years after the war had ended. The last of the Civil War Union veterans pensions were paid in 2016.
While some federal spending items not specified in the preceding table benefitted the South, they were few, tiny, or funded by the Southerners themselves. From 1865 – 1873, for example, the federal government spent $103 million on public works, but less than 10% went to the former Confederate states. New York and Massachusetts alone got more than twice as much as the entire South.
Instead the federal government taxed cotton. As prices dropped after the war the levy represented about one-fifth of the market value. It raised $68 million in tax revenue, which was about seven times the amount of public works spending in the South from 1865 to 1873. The tax could not be passed along to buyers since most American cotton was exported where it had to compete in price with cotton from other countries that had no such tax. Southerners regarded the tax as illegal since the US Constitution prohibits a tax on the exports of any state. While no solitary state was singled-out for the tax, it undeniably concentrated on a single region.
While the Freedmen’s Bureau provided some economic assistance, it was mostly devoted to the ex-slaves. Moreover, the cotton tax alone amounted to nearly three times the federal spending on the Bureau during the Bureau’s entire existence.
To clarify how post-Civil War banking regulations restrained Southern economic recovery it should be understood that the US Constitution only granted the federal government the authority to coin money and not to print fiat currency. Due to the collapse of the Continental Dollar during the American Revolution the restriction was no mere oversight. The only paper currency circulating prior to the Civil War were the banknotes of independent banks, which merited little value if they could not be redeemed for specie—meaning gold or silver coins. The wheels of commerce required the circulation of such banknotes and/or specie.
The enormous federal financing required by the Civil War compelled monetary changes. The first was the 1862 Legal Tender Act, which paved the way for the 1863 National Banking Act. The first act authorized the federal government to print paper money without gold backing and the second forced national banks to become regular buyers of federal bonds, which were used to finance the war. Independent banks were temporarily nearly driven out of existence by placing a 10% tax on their banknotes.
Although the post-Civil War South badly needed rebuilding capital it was almost impossible for the region’s investors to organize suitable banks for five reasons.
First, national bank capital requirements were beyond the means of impoverished Southerners. Second, national banks generally could not make mortgage loans, a type of loan essential to the agrarian South. Third, national banks were prohibited from operating more than a single branch, which was a handicap in the sparsely populated South. Fourth, even though state chartered banks might offer mortgages and/or require less start-up capital, the 10% federal tax on their banknotes burdened them with prohibitive operating costs. Fifth, regulatory limitations on the amount of national banknotes in circulation made it hard to gain authorization to open new national banks thereby leaving banking concentrated in the Northeast.
Northern railroads steadily increased their ownership of Southern operators after the war due to the South’s capital shortage. The Northern owners quickly began using freight rate differentials to block Southern competition to principal Northern shippers such as steel producers and the makers of other manufactured goods. When asked in 1890 why shipping rates into the North for Southern iron products was higher, one Pennsylvania Railroad agent replied, “It was done at the request of the Pennsylvania iron men.”
Due to its wealth and industrial concentration, however, the region North of the Ohio and Potomac rivers was a market that all domestic manufactures needed to access if they were to compete on a national scale. As a means of impeding competition from Southern and Western manufactures the discriminatory rates were as effective as protective tariffs, which are constitutionally prohibited between states.
Interstate railroad freight practices were not subject to federal review until the Interstate Commerce Commission (ICC) was formed in 1887. One of its chief sponsors was Texas Representative John Reagan who had earlier served as the Confederacy’s Postmaster General. Almost from the beginning, however, the ICC sanctioned discriminatory regional rates. Even before it was formed, Southern railroads charged more per mile than did Northern ones. The disparities were officially acknowledged at the beginning of the twentieth century but were excused on the basis of higher Southern operating cost due to lower population density and seasonal shipment patterns.
No careful study was made until 1939 when rates for the same service in the South were found to be 39% higher than in the North while those in the Southwestern region (Arkansas, Louisiana, Oklahoma, Texas, and part of New Mexico) were 75% higher. The differentials were so discriminatory that remote Northern manufactures could ship finished goods into the South at lower cost than Southern makers of the same items could distribute them within their own region.
Finally, in the late 1930s Southern governors banded together and filed a complaint involving the rates applicable to fourteen items manufactured in the South. After two years of hearings the ICC handed down a five-to-four decision in favor of the Southern governors. In November 1939, it ordered rate reductions on ten of the fourteen items covered by the complaint. The decision reversed the Commission’s long-standing position that the presumed higher costs of service in the South justified higher rates.
The Transportation Act of 1940 required the ICC to investigate and eliminate geographically discriminatory rates on all freight classes, not merely fourteen items. In January 1944 President Roosevelt told Georgia Governor Ellis Arnall that the President wanted discriminatory regional rates to end. In May 1944 Georgia filed an antitrust lawsuit against twenty-three railroads for conspiring on rates and named the ICC as a co-conspirator. In June 1944, the ICC completed its investigation. In a seven-to-two decision it ruled that rates in the North be increased by 10% and that those in the South and West be reduced by 10%.
Southern hostility toward protective tariffs was also indirectly opposition to monopolies because such tariffs were a prime cause of monopolies. Many, perhaps most, Reconstruction students fail to appreciate the connection because industrial trusts did not become a familiar part of the business landscape until the last quarter of the nineteenth century whereas the end of Reconstruction is conventionally, but erroneously, defined as having ended in 1877 after the collapse of the last Carpetbag regimes.
The first federal response to monopolies was the 1890 Sherman Antitrust Act. Unfortunately, the act targeted only the apparatus of monopoly instead of the cause. Nine years later the president of New York based American Sugar Refining, which controlled 98% of the market through its famous Domino brand, admitted in testimony to an industrial commission:
The mother of all trusts is the customs tariff bill… [Production economies of scale] … in the same line of business are a great incentive to [trust] formation, but these bear a very insignificant proportion to the advantages granted in the way of protection under the customs tariff…
The tariff bill clutches the people by the throat, and then the governors and attorneys-general of the several States take action, not against the cause but against the machinery…[used]…to rifle the public’s pocket…It is the Government through its tariff laws, which plunders the people, and the trusts…are merely the machinery for doing it.
Tariffs breed monopolies like swamps breed mosquitoes. In 1904 John Moody’s The Truth About Trusts listed almost 320 examples. All but about 20 were protected by tariffs. United States Steel was the biggest and was deliberately formed to suppress competition and restrain trade. Even though steel could be produced more cheaply in America than in other countries, U. S. Steel sold products overseas at lower prices than domestically. The differential averaged about $10 – $20 per long ton. Wire nails, for example, which sold domestically for $2 per hundredweight, were priced at $1.55 in Britain. The beneficiaries were the steel trust and its ecosystem, which included its Northern workers.
In 1889 when Andrew Carnegie toured the emerging Southern steel industry centered in Birmingham he declared, “the South is Pennsylvania’s most formidable industrial enemy.” About ten years later Carnegie’s mills were merged into—and became the largest component of—Pittsburgh-based U. S. Steel. Six years later U. S. Steel purchased the biggest Southern steel mills and imposed discriminatory pricing on Southern production. Thereafter, steel from the company’s Alabama mills included an incremental mark-up, termed the “Birmingham Differential,” of $3 per ton over the Pittsburgh quote.
To further penalize Alabama production, buyers of Birmingham steel were required to pay freight from Birmingham plus a phantom charge as if the shipments originated in Pittsburgh. After Georgia-born Woodrow Wilson became President the Federal Trade Commission (FTC) investigated the matter and concluded that Birmingham’s steel production costs were the lowest in the country and 26% below those of Pittsburgh. Yet U. S. Steel continued to require a $3 per ton “Birmingham Differential” on Alabama steel, which was raised to $5 after 1920. Six months after the differential was finally abolished in 1939 shipbuilding plants in Pascagoula, Mississippi and Mobile, Alabama announced major expansions.
The consequences of absentee ownership lasted well into the twentieth century. Former Virginia senator and author Jim Webb wrote in Born Fighting that after most of the post-bellum occupiers from the North left the South “they did so with their ownership of the Southern economy firmly in place so that their businesses could be controlled from outside the region thereby sucking generations of profits out of the South and into their own communities.”
President Roosevelt’s 1938 commissioned-study revealed that absentee ownership was a protracted problem and included such essential industries as electric utilities, railroads, steel manufacturing and even cotton textile mills. Outsiders also controlled most of the area’s natural resources such as coal, feldspar, iron ore, zinc, sulfur, and bauxite. Moreover, the most prosperous work of converting the raw materials into finished goods was located elsewhere. The South typically retained only the lower economic value-added function of extracting and shipping the raw materials.
About 90% of the 4.5 million American blacks at the end of the Civil War were living in the former Confederate states. The great majority were illiterate ex-slaves needing public education. Although the federally financed Freedmen’s Bureau spent over $5 million for black schools for five years after the Civil War, Southerners essentially paid for the schools many times over through the $68 million in federal cotton taxes collected before the end of 1868. After the Republican-dominated Congress discontinued the Bureau in 1870, the former Rebel states had to rely upon their own meager tax resources to pay for educating all their pupils, including the 40% who were black.
One effort in the 1880s to provide federal funding for public education failed to gain traction. In an attempt to avoid cutting tariffs a Northern senator proposed a bill to provide temporary federal monies for education in all the states. The aid was to be apportioned among the states based upon their respective rates of illiteracy. The initial amount was to be $15 million annually, but it would decline each year until it reached $1 million. Based upon the South’s higher illiteracy, the region would have been allocated over two-thirds of the total.
The Senate voted on the bill repeatedly over the next decade and most of the South’s senators voted in favor it. Within three years ten Southern state legislatures also passed resolutions supporting the bill. Some Southern representatives, however, balked because they did not want to give the appearance of supporting protective tariffs, which were creating the embarrassingly large budget surpluses. Some Southern opponents were also concerned that once the temporary subsidies expired their states would inherit higher educational budgets than could be sustained from their own tax base. Since most Northerners preferred to spend more money on Union veterans pensions instead of federal aid to education the bill never came to a vote in the House. It died of neglect once higher Union veterans pensions absorbed the budget surplus.
In sum, while it is necessary that Reconstruction history include a thorough analysis of racism and its protracted effects, contemporary historians should also devote comparable attention to the numerous non-racial political and economic factors that are equally important.