Category: Economics

“Rhett Butler” and the Other Runners Speak

The port city of Wilmington, North Carolina, was the most successful and lasting entry for blockade-running during the war, not falling until mid-January 1865. Though Governor Zeb Vance had created State-owned runners to bring in military supplies, the Richmond government forced private runners into limiting luxury items and carrying government cotton and goods – thus reducing their profits. The “Captain Roberts” mentioned below was in fact Augustus Charles Hobart Hampden, a British sailor of fortune who wrote “Never Caught” in 1867, a personal account of his 27 trips through the Northern blockade. The home he rented is passed on the “Confederate Wilmington” walking tour, see: www.cfhi.net.

Bernhard Thuersam, www.Circa1865.com

 

“Rhett Butler” and the Other Runners Speak

“Shortly after the various features of the 1864 legislation were put into effect, Captain Roberts, one of the most successful blockade-runners, ceased all activities, saying:

“The game, indeed, was fast drawing to a close. Its decline was caused in the first instance by the impolitic behavior of the people at Wilmington, who, professedly acting under orders from the Confederate Government at Richmond, pressed the blockade-runners into their service to carry cotton on Government account in such an arbitrary manner, that the profit to their owners, who had been put to enormous expense and risk in sending vessels in, was so much reduced that the ventures hardly paid.”

Another of the most famous blockade-runners – often believed to have been the real-life model for Margaret Mitchell’s character of Rhett Butler . . . was Thomas Taylor, who made twenty-eight trips through the blockade. Unlike Captain Roberts, Taylor continued to run the blockade because he had negotiated a secret profit arrangement with the Confederate Commissary-General that compensated him for the 1864 legislation.

Late in the war, despite his best efforts to the contrary. Taylor accurately predicted the downfall of the Confederacy. Writing to his superiors on January 15, 1865 [the date of the Northern attack on Fort Fisher], he said, “I never saw things more gloomy, and I think spring will finish them unless they make a change for the better.”

As he had put it, had blockade-running been encouraged, “instead of having obstacles thrown in the way, I am convinced that the conditions of affairs would have been altered very materially, and perhaps would have led to the South obtaining what it had shed so much blood to gain, viz., its independence.”

It appears that the blockade-runners could adjust to the advances of the Union blockade, but not to the economic constraints of the Confederate legislation. As Captain Roberts explained, “the enterprise had lost much of its charm; for, unromantic as it may seem, much of the charm consisted in money-making.”

Economic motives, however much we support or reject them ethically, morally, or philosophically, appear to have determined the outcome for the lifeline of the Confederacy.”

(Tariffs, Blockades and Inflation, the Economics of the Civil War; Mark Thornton and Robert B. Ekelund, Jr., Scholarly Resources Books, 2004, excerpts, pp. 53-54)

 

Unproductive Republican Economic Policies

April, 1865 witnessed the victory of Northern industrial capitalism over the conservative, agrarian South – no longer could Southern statesmen restrain the North in the halls of Congress. Post-1865 America saw the rise of corporations, the completion of Manifest Destiny and near-extermination of the Indians, and the gilded age of “evil robber barons.”

Bernhard Thuersam, www.Circa1865.com

 

Unproductive Republican Economic Policies

“Historians have tended to treat the Civil War as a boon to industry and the American economy. Thomas C. Cochrane cites several prominent historians . . . who variously praised the impact of the conflict on wartime production and its stimulating effect on postwar economic and industrial development.

Cochrane . . . examined statistical data on industrial production and found that, in general, there was not a strong case for a positive impact and that the war had a retarding effect on industry and the economy. Cochrane also found little support for the claims of beneficial effects of the Civil War on postwar development. He concludes with this speculation:

“From most standpoints the Civil War was a national disaster, but Americans like to see their history in terms of optimism and progress. Perhaps the war was put in a perspective suited to the culture by seeing it as good because in addition to achieving freedom for the Negro it brought about industrial progress.”

[Charles and Mary] Beard’s claim that the Civil War was a spur to industry and the rise of the American economy is based on the lasses-faire philosophy of the Republican Party and its success in implementing its major policy goals, such as subsidies to the intercontinental railroads, the establishment of a national currency and the protective tariff.

The Republican’s economic philosophy was not truly laissez-fair. In fact, their policy agenda was the opposite . . . in that it advocated special treatment for big business and a much larger role for the federal government. This can be seen in Republican policies to subsidize railroads, provide protective tariffs [for select private industries], and increase government debt and government control over money and banking as well as in their attitude toward labor.

Their policies [of tariffs and subsidies] . . . are now considered economically wasteful . . . and considered nothing more than special interests seeking a handout from the taxpayer through the government. [That Republican policies were productive] ignores the negative effects on the agriculture, service and cultural sectors. The Republicans’ policy would be better labelled as mercantilist in that it facilitated rent-seeking behavior.

Capital diverted to railroad building would surely have been put to good use elsewhere in the economy . . . [and] Moreover, had railroads not been highly subsidized, a better built, lower cost, and more timely system could have been put in place.

Tariffs were a centerpiece of Republican policy. They reversed a relatively free-trade policy . . . [and] protectionism forced consumers to pay higher prices for both imported and domestically produced goods protected by the tariff – that is, they purchased fewer of these products, used less desirable substitutes, and had a lower standard of living.

On net, the losses to consumers and the overall economy are greater than the gains to the protected producers and the tax revenue that accrues to the government.”

(Tariffs, Blockades and Inflation, the Economics of the Civil War; Mark Thornton and Robert B. Ekelund, Jr., Scholarly Resources Books, 2004, excerpts, pp. 84-87)

Corporate Tricks and Devices

Few, if any, Gilded Age tycoons were expert economists – but all understood theories of supply and demand, the law of diminishing returns, and assumed that every man was motivated by the selfish love of gain. Most also believed in unfettered competition, theoretically, unless bribed government officials could be used to handicap competitors. U.S. Grant’s notorious administration of corrupt and bought politicians helped pave the way into the Gilded Age – the predictable outcome of Lincoln’s revolution.

Bernhard Thuersam, www.Circa1865.com

 

Corporate Tricks and Devices

“Nobody expounded the folly of tampering with the laws of economics more eloquently than Yale’s great teacher of political economy, the dynamic William Graham Sumner. In his book What Social Classes Owe to Each Other, published in 1883, he had put the reformers to rout.

“The yearning after equality,” he had written, “”is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization.”

This emphatically did not mean that Sumner was opposed to a better life for everybody. On the contrary, as a man of high and generous principle – he had begun his working life as a clergyman – he was heartily in favor of it. But he believed in the wider extension of opportunity, not in changing the rules under which business was conducted. He argued that:

“[Instead] of endeavoring to redistribute acquisitions which have been made between the existing classes, our aim should be to increase, multiply, and extend the chances. Such is the work of civilization. Every improvement in education, science, art or government expands the chances of man on earth. Such expansion is no guarantee of equality. On the contrary, if there be liberty, some will profit by the chances eagerly and some will neglect them altogether. Therefore, the greater the chances, the more unequal will be the fortune of these two sets of men. So it ought to be, in all justice and right reason.”

Sumner would not have argued that there were not some ways in which legislation could protect the economically helpless. But he thought that most reform legislation was conceived in ignorance and drafted in folly.

“You need not think it necessary,” he would tell his Yale classes, “to have Washington exercise a political providence over the country. God has done that a good deal better by the laws of political economy.”

The irony of the situation lay in the fact that for generations men have been tinkering with economic law to their own advantage, and in the process had produced institutions which were emphatically not God’s work – as most of Sumner’s hearers presumably supposed them to be – but man’s.

The corporation, for instance, was not an invention of God’s. It was an invention of man’s. It was a creature of the state . . . [and] one of the great inventions of the nineteenth century . . . Yet be taking adroit advantage of the legislative acts which defined its privileges, one could play extraordinary tricks with it. Corporate devices could be used to permit A to rob B – or, let us say, more charitably, to permit A to drain off all the gravy in sight and leave none for B.

It was largely as a result of the discovery of tricks that could be played with corporations, and particularly with their capital stock, that the wealth produced in such a tremendous spate at the turn of the century flowed in large proportion into a few well-placed hands.”

(The Big Change, America Transforms Itself, 1900-1950, Frederick Lewis Allen, Harper & Brothers, 1952, pp. 67-69)