Tariffs, Blockades, and Inflation: The Economics of the Civil War by Robert B. Ekelund Jr.
Read: June 23 - June 26
Format: Trade paperback 132 pages
Source: Barnes & Noble
Category: Who/What/When/Where/How/Why? - Bios/history
Challenges: 101020, 75 Book, RTT, TIOLI, BOSC
The Civil war was a highly complex event in history and observing how economics impacted the nation should enlighten the reader. For 136 pages this was pretty heavy reading. I'm not expecting other casual readers to pick up this book so therefore this review will be somewhat detailed.
Tariffs had been a major issue prior the war. The South wanted low tariffs while the North wanted high because of the difference between the agrarian society in the South and the industrial in the North. Throughout the early 1800's the tariffs fluctuated to keep the sections happy. Toward the end of the 1850's the tariffs were running high.
When the book moved on to the discussion of Blockades, it became a bit more interesting (flashes of Rhett Butler). The Majority of the discussion was about the different commodities and how the blockade runners chose to bring over luxuries rather than necessities because of higher profits.
The south injured themselves by not controlling prices of goods brought through the blockades. If they had had more necessities they may have been in better position to withstand the Union forces.
Inflation was the main issue for the downfall of the Confederacy. Financing a war can be done in several ways or a mixture of ways - taxation, borrowing, confiscation, conscripting, and inflation.
Borrowing from foreigners to buy foreign goods, protects the economy and spreads the costs of the war over more years. However, getting loans can be difficult if the lenders doubt the ability of the borrower to repay the loan. The Confederacy borrowed very little.
Conscription/Confiscation was also used little by the Confederate government because of the political dissatisfaction of those affected - compelling labor and capital out of its citizens with reduced compensation for such, didn't bode well in the South.
During the war, labor and capital were redirected from normal processes to military purposes. Labor forces went to fight the war and death and injuries reduced current and future production. Production went from civilian goods to military requirements - i.e. plows to cannons - and capital goods were switched to military use - railroads.
The government of the Confederacy issued new money which distorted prices and wages while hiding the cost of the war and giving an appearance of prosperity. Studies have shown that the Union also used inflation but not as much and that printing "greenbacks" increased the cost of the war by $528M. The South's rate of inflation in the 4 war years was 100%.
In the North, Abraham Lincoln attempted to moderate the impact of inflation and created his own "New Deal" during his administration. Some of the legislation he enacted was related to the first Income Tax, Homestead Act, land grants for Yosemite as well as the railroad, National banking Acts, and regulation of mail delivery both Urban and by Railroad, while modifying the central government to include the Department of Agriculture, Comptroller of the Currency, National Academy of Science, and the Office of Immigration.
There were many effects of the war - emancipation was primary but there was also the establishment of the US as a global power, 3 amendments to the Constitution(slavery, citizenship, suffrage), intercontinental Railroad, industrial revolution. While these were improvements there were also detrimental effects such as decreased workforce, financial and commercial ties severed, fallow farmland, reduction of assets for the Railroad and shipping industries.
My editorial would read that the Introduction is filled with so many 5+ syllable words that it would turn off the general reader. The main work was way too stuffy and high-handed and reads more like a thesis than a book for the general public. I think that it should be noted that scholars or economists may find it fascinating, the general reader would most probably not even get to Chapter One. That said, I'm still glad that I read it so that as I get farther into my Civil War reading I will understand the background of this impact.