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The South's Economy Previous Next
Digital History ID 3558


Although slavery was highly profitable, it had a negative impact on the southern economy. It impeded the development of industry and cities and contributed to high debts, soil exhaustion, and a lack of technological innovation.

The philosopher and poet Ralph Waldo Emerson said that “slavery is no scholar, no improver; it does not love the whistle of the railroad; it does not love the newspaper, the mail-bag, a college, a book or a preacher who has the absurd whim of saying what he thinks; it does not increase the white population; it does not improve the soil; everything goes to decay.” There appears to be a large element of truth in Emerson’s observation.

The South, like other slave societies, did not develop urban centers for commerce, finance, and industry on a scale equal to those found in the North. Virginia’s largest city, Richmond, had a population of just 15,274 in 1850. That same year, Wilmington, North Carolina’s largest city, had only 7,264 inhabitants, while Natchez and Vicksburg, the two largest cities in Mississippi, had fewer than 3,000 white inhabitants.

Southern cities were small because they failed to develop diversified economies. Unlike the cities of the North, southern cities rarely became processing or finishing centers and southern ports rarely engaged in international trade. Their primary functions were to market and transport cotton or other agricultural crops, supply local planters and farmers with such necessities as agricultural implements, and produce the small number of manufactured goods, such as cotton gins, needed by farmers.

An overemphasis on slave-based agriculture led Southerners to neglect industry and transportation improvements. As a result, manufacturing and transportation lagged far behind in comparison to the North. In 1860 the North had approximately 1.3 million industrial workers, whereas the South had 110,000, and northern factories manufactured nine-tenths of the industrial goods produced in the United States.

The South’s transportation network was primitive by northern standards. Traveling the 1,460 overland miles from Baltimore to New Orleans in 1850 meant riding five different railroads, two stagecoaches, and two steamboats. Most southern railroads served primarily to transport cotton to southern ports, where the crop could be shipped on northern vessels to northern or British factories for processing.

Because of high rates of personal debt, Southern states kept taxation and government spending at much lower levels than did the states in the North. As a result, Southerners lagged far behind Northerners in their support for public education. Illiteracy was widespread. In 1850, 20 percent of all southern white adults could not read or write, while the illiteracy rate in New England was less than half of 1 percent.

Because large slaveholders owned most of the region’s slaves, wealth was more stratified than in the North. In the Deep South, the middle class held a relatively small proportion of the region’s property, while wealthy planters owned a very significant portion of the productive lands and slave labor. In 1850, 17 percent of the farming population held two-thirds of all acres in the rich cotton-growing regions of the South.

There are indications that during the last decade before the Civil War slave ownership became increasingly concentrated in fewer and fewer hands. As soil erosion and exhaustion diminished the availability of cotton land, scarcity and heavy demand forced the price of land and slaves to rise beyond the reach of most, and in newer cotton-growing regions, yeomen farmers were pushed off the land as planters expanded their holdings. In Louisiana, for example, nearly half of all rural white families owned no land. During the 1850s, the percentage of the total white population owning slaves declined significantly. By 1860, the proportion of whites holding slaves had fallen from about one-third to one-fourth. As slave and land ownership grew more concentrated, a growing number of whites were forced by economic pressure to leave the land and move to urban centers.

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