Understanding and Teaching the Roots of the Civil War, part 3 EDS 112 Summer Institute 2009. Jenny Wahl Economics Department Carleton College.
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Understanding and Teaching the Roots of the Civil War, part 3EDS 112 Summer Institute 2009
[I]t is the opinion of the court that the Act of Congress which prohibited a citizen from holding and owning property of this kind in the territory of the United States north of the line therein mentioned, is not warranted by the Constitution, and is therefore void . . .
-- Dred Scott v. Sandford (1857), 19 How. 393,452 (1857)
Number and Price of Acres, Public Land Offices, 1850-60
miles of rails added
% change earnings %passenger receipts %passenger
1855/56 to 1859 1855/56 receipts 1859
(ME, NH, VT, MA, CN, RI) 1852 46
(NY, NJ, PA) -441 37
(OH, IN, IL, MI)-1650 45
(DE, MD, VA, SC, NC, GA, FL)2632 35
(KY, TN, AL, MI, LA)20947 46
(TX, MO)150040 51
BankingCall loansSpecie reserves
Most suspendedFew suspended
CommerceDepressed pricesStable prices
Failure rate 3.24%Failure rate 1.21%
$142 million loss$15 million loss
RR StocksSpeculatorsLocal investors
High volatilityLow volatility
Depressed pricesQuick recovery
When the abuse of credit had destroyed credit and annihilated confidence; when thousands of the strongest commercial houses in the world were coming down, and hundreds of millions of dollars of supposed property evaporating in thin air; . . . what brought you up? Fortunately for you it was the commencement of the cotton season, and we have poured in upon you one million six hundred thousand bales of cotton just at the crisis to save you from destruction. That cotton, but for the bursting of your speculative bubbles in the North, which produced the whole of this convulsion, would have brought us $100,000,000. We have sold it for $65,000,000 and saved you. Thirty-five million dollars we, the slaveholders of the South, have put into the charity box for your magnificent financiers, your "cotton lords," your "merchant princes." . . . The South have sustained you in great measure. You are our factors. You fetch and carry for us. . . . Suppose we were to discharge you; suppose we were to take our business out of your hands; -- we should consign you to anarchy and poverty.
Source: “King Cotton” Speech by S.C. Senator James Hammond, 4 March 1858, quoted at http://www.sewanee.edu/faculty/Willis/Civil_War/documents/HammondCotton.html.
Escalating prices for Western real estate
Pyramid of debt, new investment vehicles
Shocks: Dred Scott, Bad info about RR
Long-reaching effects on multiple interlocking markets
Sound enterprises recover quickly,
shady operations experience stock price declines,
South is emboldened
GovtPhysicalLost Total Per
LostL mkt CottonTotalPer
Source: Ransom, (1998: 51, Table 3-1); Goldin and Lewis. (1975; 1978)