Chapter 11 - Two Economies at War

TAKEAWAY FROM GETTYSBURG

The inner meaning of Gettysburg was not immediately visible. It had been a fearful and clamorous act of violence, a physical convulsion that cost the two armies close to 50,000 casualties, the most enormous battle that had ever been fought on the North American continent, and all me knew that; but the deep mystic overtones of it, the qualities that made this, more than any other battle, stand for the final significance of the war and the war's dreadful cost - these were realized slowly, fully recognized only after Abraham Lincoln made them explicit in the moving sentences of the Gettysburg Address.

In that speech Lincoln went to the core of the business. The war was not just merely a test of the Union's cohesive strength, nor was it just a fight to end slavery and to extend the boundaries of human freedom. It was the final acid test of the idea of democracy itself; in a way that went far beyond anything which either government had stated as its war aims, the conflict was somehow a definitive assaying of the values on which American society had been built. The inexplicable devotion which stirred the hearts of men, displayed in its last full measure on the sun-scorched fields and slopes around Gettysburg, was both the nation's principal reliance and something which most thereafter be lived up to. Gettysburg and the war itself would be forever memorable, not merely because so many men had died, but because their deaths finally did mean something that would be a light in the dark skies as long as America should exist.

...Thus Lincoln, considering the tragedy with eyes of a prophet. Yet while the mystical interpretation may explain the meaning of the ultimate victory, it does not explain the victory itself. The Confederate soldier had fully as much selfless devotion as the Unionist, and he risked death with fully as much heroism; if the outcome had depended on a comparison of the moral qualities of the men who did the fighting, it would be going on yet, for the consecration that rests on the parked avenues at Gettysburg derives as much from the Southerner as from the Northerner. The war did not come out as it did because one side had better men than the other. To understand the process of victory it is necessary to examine a series of wholly material factors.

A DIFFERENCE OF ECONOMY

Underneath everything there was the fact that the Civil War was a modern war: an all-out war, as that generation understood the concept, in which everything that a nation has and does must be listed with its assets or its debits. Military striking power in such a war is finally supported, conditioned, and limited by the physical scope and vitality of the basic economy. Simple valor and devotion can never be enough to win, if the war once develops past its opening stages. And for such a war the North was prepared and the South was not prepared: prepared, not in the sense that it was ready for the war - neither side was in the least ready - but in the resources which were at its disposal. The North could win a modern war and the South could not. Clinging to a society based on the completely archaic institution of slavery, the South for a whole generation had been making a valiant attempt to reject the industrial revolution, and this attempt had involved it at last in a war in which the industrial revolution would be the decisive factor.

To a Southland fighting for its existence, slavery was an asset in the farm belt. The needed crops could be produced even though army took away so many farmers, simply because slaves could keep plantations going with very little help. But in all other respects the peculiar institution was a terrible handicap. Its existence had kept the South from developing a class of skilled workers; it had kept the South rural, and although some slaves were on occasion used as factory workers, slavery had prevented the rise of industrialism. Now, in a war whose base was industrial strength, the South was fatally limited. It could put a high percentage of its adult white manpower on the firing line, but it lacked the economic muscle on which the firing line ultimately was based. Producing ample supplies of food and fibers, it had to go hungry and inadequately clad; needing an adequate distributive mechanism, it was saddled with railroads and highways which had never been quite good enough and which now could not possibly be improved or even maintained.

The North bore a heavy load in the war. The proliferating casualty lists reached into every community, touching nearly every home. War expenditures reached what then seemed to be incomprehensible total of more than two million dollars a day. Inflation sent living costs rising faster than the average man's income could rise. War profiteers were numerous and blatant, and at times the whole struggle seemed to be waged for their benefit; to the very end of the war there was always a chance that the South might gain its independence, not because of victories in the field but because the people in the North simply found the burden too heavy to carry any longer.

Yet with all of this the war brought to the North a period of tremendous growth and development. A commercial and industrial boom like nothing the country had imagined before took place. During the first year, to be sure, times were hard: the country had not entirely recovered from the Panic of 1857, and when the Southern states seceded the three hundred million dollars which Southerners owed to Northern businessmen went up in smoke, briefly intensifying the depression in the North. But recovery was rapid; the Federal government was spending so much money that no depression could endure, and by the summer of 1862 the Northern states were waist-deep in prosperity.

A BOOM FOR INDUSTRY

In the twentieth century boom times often leave the farmer out in the cold, but it was not so during the Civil War. The demand for every kind of foodstuff seemed insatiable. Middle-western farmers, who used to export corn and hogs to Southern plantation owners, quickly found that government requirements more than offset the loss of that market - which, as a matter of fact, never entirely vanished; a certain amount of intersectional trade went on throughout the war, despite efforts by both governments to check it.

Not only were grain and meat in demand, but the government was buying more leather than ever before - marching armies, after all, need shoes, and the hundreds and thousands of horses and mules used by the armies needed harness - and the market for hides was never better. A textile industry which could not get a fraction of all the cotton it wanted turned increasingly to the production of woolen fabrics (here likewise government requirements had skyrocketed), and the market for raw wool was never livelier. Taking everything into consideration, there had never before been such a prodigious rise in the demand for all kinds of Northern farm produce.

This increased demand Northern farms met with effortless ease. There might have been a crippling manpower shortage, because patriotic fervor nowhere ran stronger than in the farm belt and a high percentage of able-bodied men had gone into the army. But the war came precisely when the industrial revolution was making itself felt on the farm. Labor-saving machinery had been perfected and was being put into use - a vastly improved plow, a corn planter, the two-horse cultivator, mowers and reapers and steam-driven threshing machines - all were available now, and under pressure of the war the farmer had to use them. Until 1861 farm labor was scarce and high-priced, and the farmer who turned to machinery could actually expand his acreage and his production with fewer hands.

The expansion of acreage was almost automatic. All along the frontier, and even in the older settled areas of the East, there was much good land that had not yet been brought into agricultural use. Now it was put into service, and as this happened the government confidently looked toward the future. It passed, in 1862, the long-sought Homestead Act, which virtually gave away enormous quantities of land, in family-sized chunks, to any people who were willing to cultivate it. (The real effect of this was felt after the war rather than during it, but the act's adoption in wartime was symptomatic.) Along with this came the Morrill Land Grant Act, which offered substantial Federal support to state agricultural colleges, and which also was passed in 1862. In the middle of the war the government was declaring that all idle land was to be made available for farming, and that the American farmer was going to get the best technical education he could be given.

As acreage increased, with the aid of laborsaving machinery, the danger of a really crippling manpower shortage vanished; indeed, it probably would have vanished even without machinery, because of the heavy stream of immigration from Europe. During 1861 and 1862 the number of immigrants fell below the level of 1860, but thereafter the European who wanted to come to America apparently stopped worrying about the war and concluded that America was still the land of promise. During the five years 1861-65 inclusive, more than 800,000 Europeans came to America, most of them from England, Ireland, and Germany. In spite of heavy casualty lists, the North's population increased during the war.

With all of this, the Northern farm belt not only met wartime needs for food and fibers, but it also helped to feed Great Britain. More than 40 percent of the wheat and flour imported into Great Britain came from the United States. The country's wheat exports tripled during the war, as if it was Northern wheat rather than Southern cotton that was king.

But if the farms enjoyed a war boom, Northern industry had a growth that was almost explosive. Like the farmer, the manufacturer had all sorts of new machinery available - new machinery, and the mass-production techniques that go with machinery - and the war took all limits off his markets. The armies needed all manner of goods: uniforms, underwear, boots and shoes, hats, blankets, tents, muskets, swords, revolvers, cannon, a bewildering variety of ammunition, wagons, canned foods, dressed lumber, shovels, steamboats, surgical instruments, and so on. During the first year industry was not geared to turn out all these things in the quantities required, and heavy purchases were made abroad while new factories were built, old factories remodeled, and machinery acquired and installed. By 1862 the government practically stopped buying munitions abroad, because its own manufacturers could give it everything it wanted.

The heavy-goods industries needed to support all of this production were available. One of the lucky accidents that worked in favor of American industry in this war was the fact that the canal at Sault Saint Marie, Michigan, had been built and put into service a few years before the war, and the unlimited supply of iron ore from the Lake Superior ranges could be brought down to the furnaces inexpensively. Pittsburgh was beginning to be Pittsburgh, with foundries that could turn out cannon and mortars, railroad rails, iron plating for warships or for locomotives - iron, in short, for every purpose, iron enough to meet the most fantastic demands of wartime.

There was a railroad network to go with all of this. During the 1850's the Northern railroad network had been somewhat overbuilt, and many carriers had been having a hard time of it in 1860, but the war brought a heavy traffic that forced the construction of new mileage. New locomotives and cars were needed, and the facilities to build them were at hand. The Civil War was the first of the "railroad wars," in a military sense, and the Northern railway nexus enabled the Federal government to switch troops back and forth between the Eastern and Western theaters of action with a facility the South could never match.

Altogether, it is probable that the Civil War pushed the North into the industrial age a full generation sooner than would otherwise have been the case. It was just ready to embrace the factory system in 1861, but without the war its development would have gone more slowly. The war provided a forced draft that accelerated the process enormously. By 1865 the northeastern portion of America had become an industrialized nation, with half a century of development compressed into four feverish years.

One concrete symbol of this was the speedy revision of tariff rates. Southern members had no sooner left the Congress than the low tariff rates established in 1857 came in for revision. A protective tariff was adopted, partly to raise money for war purposes but chiefly to give manufacturers what they wanted.

FINANCING THE WAR: THE NORTH

The North had little trouble financing the war. As in more modern times, it relied heavily on war loans, to float which Secretary Chase got the aid - at a price - of the Philadelphia banker Jay Cooke. Cooke sold the bonds on commission, with a flourish very much like the techniques of the 1940's, and during the war more than two million dollars' worth were marketed. Congress also authorized the issuance of some four hundred and fifty million dollars in "greenbacks" - paper money, made legal tender by act of Congress but secured by no gold reserve. The value of these notes fluctuated, dropping at times to no more than forty cents in gold, but the issue did provide a circulating medium of exchange. More important was the passage in 1863 of a National Bank Act, which gave the country for the first time a national currency.

Wartime taxes were moderate by present-day standards, but the Federal government had never before levied many taxes, and at the time they seemed heavy. There was a long string of excise taxes on liquor, tobacco, and other goods; there were taxes on manufacturers, on professional men, on railroads and banks and insurance companies, bringing in a total of three hundred million dollars. There was also an income tax, although it never netted the Federal treasury any large sums. One point worth noting is that the supply of precious metals in the country was always adequate, thanks to the California mines and to lodes developed in other parts of the West, notably in Colorado and Nevada.

It remains to be said that the North's war-born prosperity was not evenly distributed. Prices, as usual, rose much faster than ordinary incomes: in the first two years of the war wages rose by 10 per cent, and people who lived on fixed incomes were squeezed by wartime inflation. In such places as the Pennsylvania coal fields there was a good deal of unrest, leading to labor troubles which, in the eyes of the government, looked like outbreaks of secessionist sympathy, but which actually were simply protests against intolerable working conditions. There were many war profiteers, some of them men apparently devoid of all conscience, who sold the government large quantities of shoddy uniforms, cardboard shoes, spavined horses, condemned weapons imperfectly reconditioned, and steamboats worth perhaps a tenth of their price, and these men did not wear their new wealth gracefully. The casualty lists produced by such battles as Stones River and Gettysburg were not made any more acceptable by the ostentatious extravagance with which war contractors spent their profits. Yet it was not all ugly. Some of the war money went to endorse new colleges and universities, and such war relief organizations as the U.S. Sanitary Commission and the Christian Commission got millions to spend on their work for the soldiers.

Thus it was in the North, where an economy capable of supporting a modern war was enormously expanded by war's stimulus. In the South the conditions were tragically reversed. Instead of expanding under wartime pressures, the Southern economy all but collapsed. When the war began, the Confederacy had almost nothing but men. The men were as good as the very best, but their country simply could not support them, although the effort it made to do so was heroic and ingenious. The South was not organized for war or for independent existence in any of the essential fields - not in manufacturing, in transportation, or in finance - and it never was able during the course of the war to remedy its deficiencies.

FINANCING THE WAR: THE SOUTH

Until 1861 the South had been almost strictly an agricultural region, and its agricultural strength rested largely on cotton. The vain hope that England and France would intervene in order to assure their own supplies of raw cotton - the hoary "cotton is king" motif - kept the Confederacy from sending enough cotton overseas during the first year of the war to establish adequate credit, and the munitions and other manufactured goods that might have been imported then appeared only in a trickle. When the government finally saw that its rosy expectations were delusions and changed its policy, the blockade had become effective enough to thwart its wartime aims. As a result the South was compelled to remake its entire economy. It had to achieve self-sufficiency, or something very close to it, and the job was humanly impossible.

A valiant effort was made, and in retrospect the wonder is not that it failed but that it accomplished so much. To a great extent the South's farmers shifted from the production of cotton to the growth of foodstuffs. Salt works were established (in the days before artificial refrigeration salt was a military necessity of the first importance, since meat could not be preserved without it), and textile mills and processing plants were built. Powder mills, armories, and arsenals were constructed, shipyards were established, facilities to make boiler plate and cannon were expanded, and the great Tredegar Iron Works at Richmond became one of the busiest factories in America. Moonshiners' stills were collected for the copper they contained, sash weights were melted down to make bullets, all sorts of expedients were resorted to for saltpeter; and out of all these activities, together with the things that came in through the blockade and war materiel which not infrequently was captured from the Yankee soldiers and supply trains, the South managed to keep its armies in the field for four years.

But it was attempting a job beyond its means. It was trying to build an industrial plant almost from scratch, without enough capital, without enough machinery or raw materials, and with a desperate shortage of skilled labor. From first to last it was hampered by a badly inadequate railway transportation network, and the situation there got progressively worse because the facilities to repair, to rebuild, or even properly to maintain the railroads did not exist. From the beginning of the war to the end, not one mile of railroad rail was produced in the Confederacy; when a new line had to be built, or when war-ruined track had to be rebuilt, the rails had to come from some branch line or side track. The situation in regard to rolling stock was very little better. When 20,000 troops from the Army of Northern Virginia were sent to northern Georgia by rail in the fall of 1863, a Confederate general quipped that never before had such good soldiers been moved so far on such terrible railroads. Much of the food shortage which plagued Confederate armies and civilians alike as the war grew old came not from any lack of production but from simple inability to move the products from farm to ultimate consumer.

To make matters worse, there was constant and increasing Federal interference with the resources the South did have. The Union armies' advance up the Tennessee and Cumberland rivers in the winter of 1862 meant more than a simple loss of territory for the Confederacy. It put out of action a modest industrial network; there were ironworks, foundries, and small manufacturing plants in western Tennessee which the South could not afford to lose. The early loss of such cities as New Orleans, Nashville, and Memphis further reduced manufacturing capacity. Any Union army which got into Confederate territory destroyed railway lines as a matter of course. If the soldiers simply bent the rails out of shape, and then went away, the rails could quickly be straightened and reused; as the war progressed, however, the Federals developed a system of giving such rails a spiral twist, which meant that they were of no use unless they could be sent to a rolling mill... of which the Confederacy had very few.

Increasingly, the war for the Confederates became a process of doing without. Until the end the soldiers had the guns and ammunition they needed, but they did not always have much of anything else. Confederate soldiers made a practice of removing the shoes, and often the clothing, of dead or captured Federals out of sheer necessity, and it was frequently remarked that the great elan which the Southern soldier displayed in his attacks on Federal positions came at least partly from his knowledge that if he seized a Yankee camp he would find plenty of good things to eat.

As in the North, there were war profiteers in the South, although there were not nearly so many of them, and they put on pretty much the same sort of display. The blockade-runners brought in luxury goods as well as necessities, and the Southerner who had plenty of money could fare very well. Few people qualified in this respect, but the ones who did qualify and who chose to spend their money on themselves found all kinds of things to buy.

Perhaps the shortage that hit the Confederacy hardest of all was the shortage - or, rather, the absolute lack - of a sound currency. This compounded and intensified all of the other shortages; to a nation which could neither produce all it needed nor get the goods which it did produce to the places where they were wanted, there came this additional, crushing disaster of leaping inflation. As a base for Confederate currency the new government possessed hardly more than one million dollars in specie. Credit resources were strictly limited, and an adequate system of taxation was never devised. From the beginning the nation put its chief reliance on printing-press money. This deteriorated rapidly, and kept on deteriorating, so that by 1864 a Confederate dollar had a gold value of just five cents. (By the end of 1864 the value had dropped very nearly to zero.) Prices went up, and wages and income were hopelessly outdistanced. It was in the South during the Civil War that men made the wisecrack that was reused during Germany's inflation in the 1920's - that a citizen went to market carrying his money in a basket and came home with the goods he had bought in his wallet.

Under such conditions government finances got into a hopeless mess. One desperate expedient was a 10 per cent "tax in kind" on farm produce. This did bring needed corn and pork in to the armies, but it was one of the most unpopular taxes ever levied, and it contributed largely to the progressive loss of public confidence in the Davis administration. To supply its armies, the government at times had to wink at violations of its own laws. It strictly prohibited the export of raw cotton to Yankee consumers, for instance, but now and then it carefully looked the other way when such deals were made: the Yankees might get the cotton, but in return the Southern armies could sometimes get munitions and medicines which were otherwise unobtainable.

By the spring of 1865, when the military effort of the Southland was at last brought to a halt, the Confederate economy had suffered an all but total collapse. The nation was able to keep an army in the field at all only because of the matchless endurance and determination of its surviving soldiers. Its ability to produce, transport, and pay for the necessities of national life was almost entirely exhausted; the nation remained on its feet only by a supreme and despairing effort of will, and it moved as in a trance. Opposing it was a nation which the war had strengthened instead of weakened - a nation which had had much the greater strength to begin with and which had now become one of the strongest powers on the globe. The war could end only as it did end. The Confederacy died because the war had finally worn it out.