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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[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)
3500 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 . . .
miles of rails added
1855Railroad Investment and Added Mileage, 1850-56
75.0% 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 . . .
1856% Total and Added Rail Mileage in OH, IN, IL, MI, WI, IA
% change earnings %passenger receipts %passenger
1855/56 to 1859 1855/56 receipts 1859
(ME, NH, VT, MA, CN, RI) 18 52 46
(NY, NJ, PA) -4 41 37
(OH, IN, IL, MI) -16 50 45
(DE, MD, VA, SC, NC, GA, FL) 26 32 35
(KY, TN, AL, MI, LA) 209 47 46
Tennessee 43 58
(TX, MO) 1500 40 51
Banking Call loans Specie reserves
Most suspended Few suspended
Commerce Depressed prices Stable prices
Failure rate 3.24% Failure rate 1.21%
$142 million loss $15 million loss
RR Stocks Speculators Local investors
High volatility Low volatility
Depressed prices Quick 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
Govt Physical Lost Total Per
exp. destructn human cap. capita
South 1032 1487 767 3286 376
North 2302 1064 3366 148
Total 3334 1487 1831 6652 212
Lost L mkt Cotton Total Per
cons. adj. mkt. adj. capita
South 6190 -1960 -1670 2560 293
North 1149 1149 51
Total 7339 3709 118
Overall per 1860
cost capita population
South 5846 670 8.73
North 4515 199 27.71
Total 10361 330 31.43
Source: Ransom, (1998: 51, Table 3-1); Goldin and Lewis. (1975; 1978)