Growth in the Postbellum Economy: Trends Between the Economies of the North and South - 1840, 1880, and 1900

Richard A. Easterlin’s “Interregional Differences in Per Capita Income, Population, and Total Income, 1840–1950” is an economic history study published in a volume by the National Bureau of Economic Research titled Trends in the American Economy in the Nineteenth Century. Easterlin uses historical census data and financial estimates to analyze long-term trends in regional economic development across the United States. He used this census data to determine per capita income, population distribution, and total income to track how regions such as the South, Midwest, and Northeast contributed to and benefited from national economic growth over a century. Easterlin demonstrates that while the U.S. economy expanded, the gains were uneven across regions, with the industrial North and agricultural Midwest advancing rapidly, and the postbellum South only seeing a modest increase.

For the sake of our research using the data provided by Easterlin, we will be looking at the trend in growth between the antebellum and postbellum periods between 1840, 1880, and 1900. Of course, the number of states increased significantly between 1840 and 1900; for our sake, we will look only at the data pertinent to the two sides of the American Civil War. Taking the data provided by the author (See Appendix A, Tables of Basic Data, 1840, 1880, and 1900) we aggregate the numbers associated with various regions and assign them to their respective side. For example, New England, Mid Atlantic, East North Central, and West North Central - states aligned with the Union- and South Atlantic, East South Central, and West South Central - states aligned with the Confederacy - will become our two sides in this comparison; henceforth referred to as the North and South, respectively.

Consolidated Numbers for Regions Associated with the North (Union States) and the South (Confederate States) from Easterlin's Appendix A, Tables of Basic Data, 1840, 1880, and 1900. The numbers between census dates within columns represent the scaling factor between two census points.

Looking at the differences in total income for the North, we can see a fivefold increase in total revenue between 1840 and 1880 compared to the South’s increase of two and two-thirds. The North's total income encompasses the income from agricultural revenue, just short of fourfold, and non-agricultural income, just short of sixfold. As valuable as the South's production of agricultural goods was to its economy, it only saw an increase of a little more than double by 1880. This could allude to the impact that the destructiveness of the war and the loss of slave labor had on the South’s agricultural production overall. From 1880 through 1900, however, agricultural income appeared to have increased equally for both the North and South, but only by a slight one-third increase.

Regarding non-agricultural income, we see a steady increase in the South of just short of a threefold increase in both the periods between 1840 and 1880 and between 1880 and 1900. The previously mentioned sixfold increase in non-agricultural income experienced by the North between 1840 and 1880 was only followed by a doubling between 1880 and 1900. That the North’s non-agricultural income trended greatly upwards at first and then only modestly, while the South’s trend was rather consistent could be interpreted in several ways. It could reflect an initial booming manufacturing industry in the North shifting from private commercial production to wartime production, and then transitioning back. At the same time, the South’s gradual upward trend could be from an initial increase in wartime production being countered by the North’s destruction of Southern industry and rail, followed then by a steady upward trend as the South’s economy recovered and was sustained.

Regarding population and the labor force, the author had to adjust the numbers to consider the relationship between census numbers and the institution of slavery. While the census data did account for an individual slave as a whole person, rather than three-fifths of a person, it didn’t necessarily account for the labor of slaves. In that case, Easterlin had to make an educated guess, based on the available data. He stated, “I assumed 100 per cent labor force participation for all white males from age fifteen through fifty-nine and for all colored males, free and slave, from age twenty-four through fifty-four, and 50 per cent participation for all colored males from age ten through twenty-three (Easterlin 1960, 129).” Based on that consideration, when looking at the data, he saw a threefold increase in the North’s population with an equal threefold increase in the labor pool from 1840 to 1880, while the South saw a little more than a doubling for both. It should be noted that the North’s non-agricultural labor pool saw a four-and-a-half times increase, which trends greatly with their sixfold increase in non-agricultural income. Population and labor forces increased one-and-a-half times between 1880 and 1900 for the North and the South. Still, the South's non-agricultural labor almost increased threefold while the North’s non-agricultural labor barely came under a twofold rise by 1900.

Finally, ratios between total income and labor force numbers show the difference in the value of labor per capita between the North and the South. From 1840 through 1880, the North saw nearly a doubling of its labor output value, which barely increased heading into 1900. For the South, we see a small reduction in output value between 1840 and 1880, and then a commensurate increase along with the North moving into 1900. Easterlin must also note that the South’s output value of labor needs to take into account that slaves, being treated as assets with annual upkeep costs, drive down the net value of labor. If the estimated costs of supporting a single slave in 1840 were approximately $30 (Easterlin 1960, 92), and the average value generated by the slave’s agricultural labor was $673, then overall there is a reduction in the total net value of 4.5% for each slave in the agriculture income data set.

While the information provided doesn’t state anything definitive about the statistics of income, populations, and labor on the nature of the war and postbellum reconstruction, it does provide data points that may illuminate other discussions. From the information we can see the North had greater trends leading up to and after the Civil War, while the South had lesser improvement overall and sometimes stagnated relative to the North. We can allude to the nature of the lack of significant growth in the South between 1840 and 1880 to the destructiveness of the war and the upending of the institution of slavery; however, we can see upward trends on par or slightly better heading into the 1990s potentially reflecting the stabilizing effect of interstate trade improving.

Source:

Easterlin, Richard A. “Interregional Differences in Per Capita Income, Population, and Total Income, 1840–1950.” In Trends in the American Economy in the Nineteenth Century, edited by William N. Parker, 73–140. Princeton: Princeton University Press for NBER, 1960.