History/Culture, Politics/Economics

Slavery Hampered White America More Than It Helped

This essay was originally published on The Alternative Hypothesis under the title “Whites Did Not Benefit from Slavery.” It has been slightly edited by the editor-in-chief.

There exists a popular myth that whites (as a whole) benefited from slavery, and that whites are as well off as they are today because of slavery.

Obviously the United States is not made out of cotton, tobacco and indigo. The argument is not that blacks literally built the infrastructure (if they’re making that argument that’s obviously false since most rail was in the north and nearly all railroad workers during the slavery period were white), but rather that the profit off of their labor funded America’s industrial expansion.

To be perfectly clear, the present topic is strictly about whether or not WHITES, on the aggregate, benefited from slavery AT THE TIME.

There are two aspects to the popular (yet false) claim which will be refuted:

First: the related claim that the “South funded US industrialization”.

Second: that whites, as a whole and on net, benefited from the direct expropriation of labor. To address this claim we will investigate how much whites received directly from black slaves versus what they would have received doing other things.

[1] Refuting “The South Funded US industrialization” Claim

1A. Northern Agriculture was more valuable than Southern Agriculture

In 1860, 65% of all United States farm acreage was in the North. It’s possible that Northern farm production was less than 65% of the value of what was produced, or even less than 50% – that the South, with 35% of the farmland, produced more money with it’s agriculture than the North did with their agriculture.

But there are reasons to not believe this. First are the overall values of farm products produced in 1860:

Product Total value in 1860 (millions)
Cereals $558.3
Cotton $211.5
Hay $152.7
Potatoes $44.5
Tobacco $21.7

The combined production of hay and potatoes gave “king cotton” a run for it’s money. However, the real value of US farm production in 1860 was cereals. It’s unclear what the exact percentage of farms in the North and South produced cereals, but the North was more geared toward cereal (wheat, oats, barley, corn) than the South.

Farmland in the North also cost more per acre, according to Peter Lindert’s study of farm prices in the paper “Long-Run Trends in American Farmland Values”:

Region Farm Price / Acre in 1860 (in 1960 dollars) Side in Civil War
Mid-Atlantic $98.61 Union
East North Central $92.66 Union
East South Central (Mississippi Valley) $58.65 Confederacy
New England $46.22 Union
West North Central $31.67 Union
South Atlantic $29.28 Confederacy
West South Central $26.89 Confederacy

Of course, there are many reasons land would cost more in the North, so I’m not suggesting the additional cost was entirely a function of additional yield. However, the fact that it did cost more makes the idea that Southern agriculture was, in aggregate, more valuable than Northern agriculture seem unlikely. This at least demonstrates that there is no obvious reason to believe Southern Agriculture would be more valuable.

1B. The tariff was disproportionately paid by the North

A table from The Rise of the New York Port by Robert Greenhalgh looked at the percentage of imports that were received by the states of New York, Pennsylvania, and Massachusetts.

1821-1830 1831-1840 1841-1850 1851-1860
New York 46.3 57.8 60 64.4
Massachusetts 18.9 13.8 18.6 14.2
Pennsylvania 14.5 8.6 6.8 5.5
The 3 States 79.7 80.2 80.6 87.1

Of course, the fact that 80+% of all imports were going through these states each year doesn’t necessarily mean that they were paying 80+% of the tariffs (though this likely is the case). In the year 1859 the port of New York paid roughly 76.67% of all US tariffs. So for that one year, the percent of imports received roughly matched the percent of tariffs paid.

Andy Hall looked at the highest tariff revenues of selected ports in the United States in FY 1859, and listed off some of the revenues for various ports:

Port Tariff Revenues
New York $35.155m
Boston $5.133m
Philadelphia $2.262m
New Orleans $2.120m
San Francisco $1.352m
Baltimore $1.011m

He also made this visualization:

Tariff01_720

In the case of New York, Boston and Philadelphia, this appears to match what we know about the percent of goods imported through those ports.

This reinforces the claim that Northern agriculture was bigger than Southern agriculture. According to the National Parks Service, the North had twice as much machinery per acre than the South, which translates to 78.79% of all agricultural machinery. So even if we presume farmers were hit harder by the tariff because it increased the cost of farm machinery, a disproportionate amount would be paid by the North anyway because they bought most of the farm machinery.

The North was paying slightly more than 80% of the tariff directly, and used slightly less than 80% of all agricultural machinery.

The North was paying around 80% of the tariff in both direct and indirect costs.

Conversely, the South was not paying the tariff, and slave labor produced perhaps 1/3 of what the south way paying based on their population.

1C. A disproportionate amount of Federal infrastructure funds went to the South

Not that it matters much, since federal spending in 1860 was $78 million, while the GDP of the US was roughly $4,387 million or $4.387 billion. Federal spending amounted to 1.78% of GDP in 1860. For what it’s worth, 42% of all Federal infrastructure spending went to the South between 1800 and 1860 (table 5).

But it was a drop in the bucket so who cares.

[2] The direct benefit of slavery for whites

2A. The South didn’t need slaves to grow cotton

Thus, the South did not build the US. Since the argument for a BIG white benefit from slavery requires the South paying for the development of the United States, this makes the idea that blacks in the South paid for it through their labor basically impossible.

The next question is how much did whites benefit from having black slaves instead of having to negotiate a wage? Well that is difficult to tell, but we do have rough estimates for the return on investment for slaves compared to railroads and short-term (90 day to 180 day) loans. This gives us a rough idea of how profitable slaves were compared to “the rest of the economy”:

Profitability by Investment, “The Economics of American Negro Slavery
Table 14, Page 208
Table 25, Page 220

Investment Average Profit Rate
Boston Rails (1845-1860) 8.6
Southern Rails (1850-1860) 8.5
Slaves (1830-1860) 12.61
Short-Term Money (1830-1860) 9.60
All Rail (1846-1860) 7.16
Rail Bonds (1857-1860) 7.6

Now lets not sneeze at this, an average profit of 12.61 would be amazing today. But remember profits were higher back then than they are today. There were probably specific investments that paid better than slaves, but there was probably no CLASS of investments that was more profitable than slavery.

12.61% profit means 87.39% of the revenue had to cover costs. It means roughly 87.39% of what a slave was producing went back into feeding, clothing and sheltering the slaves, as well as paying for whatever was needed for him to continue working.

So what if the South didn’t have slaves? Could they have grown cotton without slaves? The answer to that is a resounding yes:

Cotton Production, The Growth of the Cotton Industry in America

Years Bales Produced Annual Average Pounds / Bale Annual Average Pounds Produced Annual Average
1856-1861 3,816,150 454.2 1.733
1865-1870 2,475,027 442.8 1.096
1870-1876 3,999,642 459 1.834

1861-1865 is the Civil War, and so we can see that cotton production collapsed after it. Now it’s hard to tell exactly due to annual fluctuations, but it seems that cotton production matched its pre-war peak around 1871, and went up from there. So yes, cotton could be produced without slaves. It shouldn’t be too hard to believe since most white southerners were farmers, and most of the farmers in the United States at the time were white, and produced a net food surplus.

2B. Opportunity denied

In 1860 slaves were 12.67% of the US population, now while some whites gained from that sweet 12.61% profit off of his slaves, the average profit for investment in the economy at large was around ~8.5%. So we’re talking about a 4-5% higher profit that people who invested in slaves received compared to what they would have received had they made an average investment elsewhere.

Remember – this is only what a very small portion of whites (Less than 5% of people in slave holding states owned slaves) received from slavery.

Because of these relatively higher profits, a certain amount of investments that could have been applied towards railroads, shoe factories, or elsewhere – were instead used on more slave plantations. This did two things:

[1] It diverted Southern investments into the comparatively short-term profits of slavery as opposed to the longer-term profits of industry.

Say you build a shoe factory – that factory has a bunch of machines to work the leather and buckles…etc., that machinery needs people who know how to work it. It requires iron and steel, and lubricants. Basically you now have a machine-tools industry. Now that you have started making them, machine tools in general become cheaper for other things, creating investment opportunities in textiles, or in metal tea pots and kettles, in coaches, in steam engines…etc..

A plantation has no such expansion effects; and this, to oversimplify a bit, is why the North exploded and the South stagnated. I’m not blaming the black slaves themselves, they obviously aren’t responsible for this, but one may conclude that southern whites would have gone more in the industrial direction if they didn’t have slaves.

[2] It diverted Southern investments away from things that employed white workers and toward things that “employed” black slaves.

Now, whether the total dollar value of the short term extra profit (again about 4-5%) some white people received from slaves instead of other investments outweighs the effects it had in directing the South down a long-run economic dead end of being an agricultural resource economy and the immediate impact of denying the white working class in the south better employment opportunities, I don’t know.

However, it seems intuitively clear that this made whites, as a whole, worse off. It certainly made working-class whites worse off, and it may have even been worse for the investing class who may have ultimately had higher profits in about 20 years had they invested in factories and the like.

Conclusion

Admittedly, this is a very theoretical argument. Lots of “mays” and “coulds.” It is impossible to know for certain whether whites on net benefited from slavery at the time.

However, the argument that the South, through slavery, funded the tariff and thus industrial expansion in the North, is absolutely wrong. Dead wrong.

We’re at the point of talking about the additional profit margins of slaves versus the denied opportunities for white workers and the long-term economy-stagnating effects of slavery.

I have not gone into the cost of the Civil War that was brought on (in part) by slavery, the damaging political externalities of having a large African population in the United States, or the budgetary impact of blacks today. The point of this post was to refute the idea that whites gained significantly from black slavery.

Whites certainly did not gain significantly. 5% extra profit for the rich in the South (Less than 5% of people in slave holding states owned slaves) – that may add up to half a percent of GDP of the whole US? If that.

Once you start thinking in these terms, you’re a million miles away from “Whites in the US today, most of whom descend from immigrants who came after 1865, owe their wealth to the profits extracted from slaves”. You’re dealing with very small numbers that are going to be dwarfed by the cost of the Civil War and the budgetary impact of blacks anyway.

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