May 29, 2017

Whites Did Not Benefit from Slavery (Not Even at the Time)

One common claim I hear floating around is that whites benefited from slavery, and that whites are as well off as they are because of slavery. Different people have different variations of this claim, some claiming more than others.

Obviously the United States is not made out of cotton, tobacco and indigo today. The argument is not that the 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 slavery were white), but that the profit off of their labor funded the industrial expansion.

We have data about the South, and the black population of all slave states, including those that did not secede, was 26%, or 30.8% of just the Confederacy. Obviously the Southern economy was a dead-end, and so this argument hinges on the South funding the Northern economy.

I’m not talking about morality, or even about the conditions of slaves. The topic is about whether or not WHITES, on the aggregate, benefited from slavery AT THE TIME.

And there are two aspects to this:

First, the “South funding US industrialization” argument.

The second is the direct expropriation of labor – how much did whites get directly from black slaves versus what they would have gotten doing other things?

  1. The South funding US industrialization

1A. Northern Agriculture was more valuable than Southern Agriculture

In 1860, 65% of all United States farm acreage was in the North. Now 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 give “king cotton” a run for it’s money. But the real value of US farm production in 1860 was cereals. I don’t know what percentage of farms in the North and South produced cereals, but I do know that they were more geared toward cereal (what, oats, barley, corn) than the south.

We also know that farmland in the North 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

There are lots of reasons land would cost more in the North, I’m not saying the additional cost was entirely a function of additional yield. But the fact that it did cost more makes the idea that Southern agriculture was, in aggregate, more valuable than Northern agriculture, seem unlikely. Or at least shows that there is no obvious reason to believe it would be more valuable.

And so if slavery was such enormously profitable exploitation, why wasn’t land in slave states 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 were paid 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

Now the fact at 80+% of all imports are going through these states each year doesn’t necessarily mean that they’re paying 80+% of the tariffs. But it probably does. And in the year 1859 the port of New York paid roughly 76.67% of all US tariffs. So for that one year, the imports roughly match the tariffs paid, and there’s no reason to expect that, barring minor fluctuations by year, the percent amount a state pays in tariffs is going to be about the same as the percent of all imports go through that state.

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:

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.

Now the keen observer will see that these are tariffs paid by ports. This doesn’t necessarily mean that the “real cost” of the tariff was paid by the north, as it is possible that these goods arrived in northern ports, where the tariff was paid, and this cost was passed on to southern farmers.

This is why I pointed out that Northern agriculture was bigger than Southern agriculture. And 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.

So no, 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.

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.

  1. The direct benefit of slavery for whites

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

And so we can see that the South did not build the US. And 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.

Now if you’re a free market autist and wondering why everyone didn’t just invest all their money in slaves – well why aren’t you finding the most profitable thing to invest in today and put all of your money in that?

But 12.61% profit means 87.39% cost. 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.

But 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 got compared to what they would have gotten if they invested elsewhere.

This, right here – this is what SOME whites got from slavery.

But because of these high profits, a certain amount of investments that could have been used on railroads, or shoe factories, or something good – were instead used on more slave plantations. This did two things:

  1. It diverted Southern investments into the short-term profits of slavery instead of the long-term profits of industry.

Say you build a shoe factory – that factory has a bunch of machines to work the leather and buckles and stuff, 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.

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 for it, they didn’t DO anything, they couldn’t do anything, but it is merely to say that whites would certainly have gone more in the industrial direction if they didn’t have slaves. I’m not alone in this speculation, and it is hypothesized that Rome would have industrialized if it didn’t have slaves.

  1. It diverted Southern investments away from things that employed white workers and toward things that “employed” black slaves. Any white who didn’t own slaves was made poorer by the fact that other whites did, because investments were diverted from say railroads, which he could be employed in, to slaves.

Now, whether the total dollar value of the short term extra profit (again about 4-5%) some white people got 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.

Intuitively, I think it absolutely made whites worse off. It certainly made working-class whites worse off, and it may have even ultimately been worse for the investing class who may have ultimately had higher profits in about 20 years if they invested in factories.

Conclusion

But that was 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 BIG argument about the South, through slavery, funding the tariff and thus industrial expansion in the North, is absolutely wrong. Dead wrong.

And really 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.

Now in this post I have not gone into the cost of the Civil War that was brought on 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 the CORE of it; the idea that whites gained significantly from black slavery.

And whites certainly did not gain significantly. 5% extra profit for the super rich in the South – that may add up to half a percent of GDP of the whole US? If that.

Whether whites in the US, on aggregate, gained AT ALL is more debateable and more sketchy. I strongly feel that we didn’t, but I don’t have any data to back it up, just economic theory and examples. Certainly the theoretical costs of slavery sound like they would dwarf that extra profit, which may add up to 2% of the GDP of the South.

But 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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  • I’ve been devouring everything your site has to offer. These are all must-reads for anyone on the alt-right. What a yuuuge contribution!

    The Neo-Confederate in me is compelled to counter-signal you on the economic incidence of the tariff, however. As you noted, the fact that the taxes themselves were paid in Northern ports doesn’t necessarily mean that the final cost of the tariff fell on the North: it’s possible that the cost was passed on to Southern consumers of imported farm machinery. You add, however, that most farm machinery was in the North, implying that even if the cost of the tariff were passed on to consumers, it would be predominantly Northern consumers.

    I would just add two things to this: 1) Yes, and Southern political economists like John Taylor of Caroline stressed that the tariff cost Northern farmers as well as Southern farmers, and 2) even though the majority of farm machinery was in the North rather than the South, much of that farm machinery was produced in the North (thus keeping that money in the Northern economy).

    In conclusion, the South dindu nuffin. Go to hell, Yankee cuck!

    • Marcus

      I also just discovered this site. It is a treasure trove of excellent articles. Although I wonder if our situation is ultimately terminal. Apologies for my pessimism, things in the states are not quite as bad as in Europe.