Editor’s Note: We continue to explore the history of Alabama with a look at the heyday of free-market capitalism.
After a few days, I have read through the William Warren Rogers and Robert David Ward section in Alabama: The History of a Deep South State which covers the period from 1865 to 1920. At the outset of Colonial Alabama, it worth taking stock of what the defeat of Confederate Alabama in the War Between the States had cost our ancestors:
- Virtually the entire White male population of military age had participated in the war effort. Of the 126,587 who served, around 40,000 were killed and 35,000 were disabled. The war left behind about 20,000 widows and 60,000 orphans.
- According to Union General James H. Wilson, “The entire valley of the Tennessee having been devastated by two years of warfare was quite destitute of any supplies as the hill country south of it. In all directions, for a hundred and twenty miles, there was almost complete destitution.” The brunt of the war fell on North Alabama where Huntsville had been occupied several times, Athens had been brutally sacked and Decatur and Tuscumbia had suffered severe damage. Elsewhere in the state, Selma had been sacked and Tuscaloosa, Montgomery and Opelika had suffered severe war related damage.
- The state railroad system, 743 miles in total in 1860, was in shambles. 16 of the 17 blast furnaces in the Birmingham area were destroyed.
- The small farmers sunk from “merely being poor to being utterly impoverished.”
- The abolition of slavery alone wiped out $200 million dollars in capital which was compounded by a collapse in real estate values. Before the war, White Alabamians had invested the overwhelming majority of their wealth in land and slaves and now that was gone.
- The collapse of the Confederacy destroyed our currency and nearly all financial investments in the South. The Confederate debt was declared void. The banking system was in ruins.
- The demise of slavery meant the end of the “gang labor” system on Southern plantations which had given Southern cotton a comparative advantage over its free labor rivals in Egypt and India.
For the South, the War Between the States was comparable to Germany’s death toll in the Second World War. In many ways, it was even worse because the South’s economy had been based on slavery and it was far easier for the Germans to rebuild their country than to fix what was broken when the free-labor system was imposed on the South.
In the South, the former slaves were set free and the next 12 years of Reconstruction were consumed by what their final status would be. In 1867, Congressional Reconstruction began and Alabama was dissolved and the state was placed under federal military rule. The fraudulent state constitution of 1867 disenfranchised ex-Confederates and was adopted by a puppet government of blacks and a tiny White minority of Unionists. Even though it was rejected as illegitimate by the overwhelming majority of White voters who boycotted the convention, the Radical Republican Congress accepted the document and Alabama was “readmitted” to the Union on that basis in 1868.
The Reconstruction equivalent of the Morgenthau Plan – the Thaddeus Stevens plan to confiscate millions of acres of land from ex-Confederates and redistribute it to the former slaves and Northern settlers – was defeated. By imposing military rule and then black majority rule by disenfranchising ex-Confederates, Congressional Reconstruction left White Southerners with little choice but to turn to terrorism to recapture control of the state government.
The original Ku Klux Klan, which was an insurgency similar to the IRA, was unsuccessful in violently overthrowing the Reconstruction government and was suppressed by the Force Act of 1871. Alabama wasn’t “redeemed” until 1874 when the Democrats recaptured control of the state government by uniting virtually the entire White population after the Panic of 1873 led to a sharp nationwide economic downturn. In 1877, the last federal troops were withdrawn from the South, which brought an official end to Reconstruction but left the status of the blacks unsettled.
The specter of black supremacy loomed much larger than the actual reality of it during Reconstruction. Compared to Mississippi or South Carolina, the black political footprint wasn’t nearly as large in Alabama where carpetbaggers and scalawags had dominated the state government on the basis of the black vote. This brief period which lasted for only six years set the tone for everything that followed.
As Rogers and Ward admit, the Reconstruction government of Alabama was extremely corrupt and plunged the state into debt. This was done mainly by bankrolling the “internal improvements” that had been blocked in the antebellum era. There was bribery and financial mismanagement on a massive scale in both railroads and education.
The demise of the Reconstruction government empowered the pre-war conservatives – who were nicknamed the Bourbons – after the House of Bourbon which was restored to the throne in France after the fall of Napoleon. The Bourbon conservatives dominated Alabama politics for the next several decades. In a backlash to the Reconstruction government, the Constitution of 1875 banned internal improvements and imposed a strict tax ceiling on local governments.
From the Redemption of Alabama in 1874 until the Constitution of 1901, blacks were still able to vote in large numbers. Whereas before the war there had been two parties, the Democrats and Whigs, the threat posed by black supremacy warped our political system into the frame of one party rule. Henceforth, white solidarity was necessary to maintain white supremacy, which the 14th and 15h Amendments had put on the line. Ironically, the Bourbons had no problem though using the captive black vote to defeat the Populists in the 1890s. More on that later.
The Plessy decision in 1896 and the Constitution of 1901 that resulted from it laid the foundation of Jim Crow in Alabama. After 1901, blacks were formally segregated into their own institutions and were reduced to only token numbers in elections, but not until two generations of White Alabamians had grown up since the war under a system that was neither segregation or integration. At the same time, the non-racial means of disqualifying black voters disenfranchised around a quarter to a third of the White population which was used to suppress the Populist movement.
Alabama entered the Progressive Era by establishing the Jim Crow system. Around 1900, Black Belt planters began to lose power to Birmingham industrialists and businessmen – later nicknamed the Big Mules – who had been their longtime allies. For the next 20 years, state politics was dominated by various reforms – railroad rate regulation, child labor reform, education reform, women’s suffrage and especially Prohibition. Finally, America’s entry into World War 1 under President Woodrow Wilson brought an unprecedented level of government intervention in Alabama’s economy as the War Industries Board established precedents that would have major consequences in the years ahead.
I’ve only provided a very brief summary of Alabama’s politics from 1865 to 1920 above. That’s not my primary interest here.
From 1865 until 1920, Alabama remained a very rural state. 78.3 percent of the population still lived in rural areas in 1920. Alabama’s economy was still based on agriculture, specifically cotton monoculture, at the end of this period. 56 percent of farms were worked by sharecroppers and tenant farmers in 1920. By 1935, that number had grown to 65 percent, a majority of whom were landless White farmers.
In 1860, Alabama’s total population was 964,201, which included 437,770 blacks and 526,271 Whites. By 1920, Alabama’s population had grown to 2,348,174, which included 900,652 were blacks and 1,477,032 Whites. Meanwhile, cotton acreage had grown in Alabama from 977,000 acres in 1860 to 3 million acres in 1920. It took thirty years for Alabama’s cotton production to exceed its 1860 level of 843,012 bales, but cotton production peaked at 3,800,000 bales in 1914 as the boll weevil, which arrived in 1910, tore its path through the state.
The price of cotton was 13 cents a pound in 1861, 8 cents a pound in 1878, 7 cents in 1894, 9 cents in 1911, 7 cents in 1914 and peaked during World War I at 35 cents in 1919 before plunging to 15.9 cents in 1920. At the same time, the size of the average farm in Alabama shrank from 346 acres in 1860 to 93 acres in 1900 to 79 acres in 1910 to 76 acres in 1920.
In a nutshell, the Cotton Kingdom peaked in Alabama in 1914, not in the 1860s as so many people erroneously assume. In the 1910s, far more cotton was being produced on far more acreage. Yet the rural landscape had been utterly transformed from a world of wealthy planters running large plantations in the Black Belt and Tennessee Valley to a whole state given over to cotton monoculture. Instead of black slaves picking cotton on large plantations, Alabama had become a world of black and White sharecroppers and tenant farmers – with their children as a labor force – chopping cotton on ever smaller plots of land.
It should be emphasized here that 1.) the abolition of slavery didn’t end the plantation, 2.) didn’t end blacks picking cotton, and 3.) that sharecropping and tenant farming, which ultimately trapped more landless Whites than blacks in debt peonage, lasted far longer than slavery had in Alabama. There were also some key tradeoffs: unlike slaves and convicts, sharecroppers and tenants weren’t “driven” by overseers in gangs and worked autonomously with their families, but due to their extreme poverty lacked all the other advantages of plantation slavery.
Under slavery, blacks had access to better healthcare, social security, and above all else a far superior diet. Under sharecropping and farm tenancy though, the average life expectancy of Whites and blacks declined. Nothing symbolizes this better than the pellagra epidemic of the early 20th century which was caused by extreme malnutrition due to the sharecropper diet of molasses, fatback, cornbread and corn mush. Whereas slaves had been allowed to manage their own gardens and typically had access to abundant supplies of wild game and fresh vegetables, sharecroppers and tenants were often forbidden by landowners from maintaining garden plots in order to squeeze as much profit as possible out of their small farms.
By 1935, the majority of White farmers in Alabama were trapped in a world of perpetual debt peonage to landlords and merchants. Not only had they been left behind by the 20th century, their standard of living was worse than it had been in the 19th century. Few sharecroppers or tenants owned an automobile or enjoyed access to electricity, sewer systems, or running water. Virtually none owned a tractor or countless modern conveniences produced by the Industrial Revolution.
Even the average IQ of White Southerners was depressed by an economy based on sharecropping and farm tenancy. Since so many sharecroppers and farm tenants were unable to afford toilets and shoes for their children under free-market capitalism, every county in Alabama was infested by hookworms. In the 1910s, the Rockefeller Foundation embarked on a epic public health crusade that eradicated hookworm infection with epsom salt and thymol.
How did this insane, retarded system of agriculture come into existence in Alabama in the first place?
As with so many things, the origins of sharecropping and farm tenancy can be traced back to the destruction of the Confederacy. For the South, the abolition of slavery meant the triumph of the North’s allegedly superior free-market, laissez-faire economy and the introduction of the free-labor system to Alabama’s cotton plantations.
A few key facts on the ground determined the course that was followed:
- First, the emancipated slaves no longer wanted to work in gangs.
- Second, planters retained their land, but lost all their wealth which had been invested in slaves, which meant they simply did not have the cash or specie to pay wages.
- Third, the poor White farmer had also lost everything when the Confederacy’s currency and financial system collapsed.
The cash poor postwar economy was the culprit:
“In truth, Alabama had nothing to do with academic investigations after the fact. Was a wage system even possible? Was sufficient currency in circulation in Alabama – and available to the planters -to support the payment of money wages? There was an unknown amount of specie, but it was unlikely that planters either had enough specie or were willing to pay wages with it. Most specie was hoarded. There were national bank notes that were introduced to Southerners when the war was over. In 1869 the state of Massachusetts had five times the national bank note circulation of the entire South. Bridgeport, Connecticut, had more than Texas, Alabama, and North Carolina and South Carolina combined. Alabama could not have sustained a wage system with that paper currency.”
In the “Crime of ’73,” silver was taken out of circulation and the United States went on the gold standard, which further reinforced the Republican Party’s “sound money” deflationary monetary policy and concentrated banknotes in the East and Midwest.
The South and West were starved of currency and a major result of this was the sharecropping and farm tenancy system, not just in Alabama, but across the South as a whole. Southern and Western farmers were outraged by a monetary policy that favored their creditors and challenged the system in a series of movements: the Greenbackers, the Grange, the Agricultural Wheel, and the Farmers’ Alliance.
The revolt reached its climax in the 1890s with the founding of the Populist Party. Reuben F. Kolb, a Jeffersonian Democrat whose agenda mirrored the Populists, would have been elected governor of Alabama in 1892 and 1894 had it not been for massive fraud with the black vote in the Black Belt. The Populists campaigned for the eight hour day and the income tax, free silver over the gold standard, the nationalization of the railroads and better roads and schools.
In 1896, the Populists endorsed William Jennings Bryan, the Democratic nominee for president, who attacked Eastern bankers and the gold standard in the famous “Cross of Gold” speech. After decades of propaganda, conservative and lolbertarian “populists,” including many Southern Nationalists, ironically advocate abolishing the income tax and returning to the gold standard, restoring the “Money Power” their own ancestors fought against in the late 19th century!
By 1920, Alabama was the fourth most industrialized Southern state behind the Carolinas and Georgia. Textile manufacturing had become an increasingly important part of Alabama’s economy with textile mills concentrated in Huntsville, Birmingham, Montgomery, and especially Central Alabama and the Lower Chattahoochee Valley. From 1860 to 1920, employment in textile mills shot up from 1,312 to +17,000.
The New England textile industry relocated to Alabama and the Carolina and Georgia Piedmont to take advantage of cheap labor. The textile industry started out by employing White women, but it grew over time to employing whole White families in textile villages. In 1903, Alabama passed a law that limited the employment of children to 12-year-olds and above, with the exception of orphans, and no child under 10 could be employed. These 12-year-olds were limited to a 66 hour work week while children under 13-years-old were forbidden from working at night.
Child labor was attacked in Alabama by reformers over the next few decades, but it wasn’t wiped out until the victories of the labor movement during the Great Depression.
Heavy Industry & Coal Mining
Unlike the rest of the South, the story of Alabama from 1865 to 1920 involves the rise of heavy industry in the Birmingham District. The rise of Birmingham as a major industrial city was very different from the course of Georgia, Florida and Mississippi:
“In 1870, Jefferson County had a population of 12,345. By 1880 it was 23,272 and by 1890 it had grown to 88,501. Alabama mined 13,000 tons of coal in 1870. In 1892 the figure was 5,500,000 tons valued at $5,788,898. In parallel growth, Alabama’s pig iron production was 11,000 tons in 1872, 800,000 tons by 1890, and over 1,000,000 tons by 1900.”
Alabama’s iron and steel industry came under the control of New York investors. In 1907, TCI came under the control of J.P. Morgan and Pittsburgh’s US Steel:
“While native Alabamians played a role in the early iron industry, the growth and consolidation in iron and coal tended inexorably toward the establishment of a “colonial industry.” In 1900, the ruling Tennessee Coal and Iron Company had 210,000 shares of stock outstanding. Ninety-one percent of the stock was owned by New Yorkers as against 0.3 percent by Alabamians. When TCI was acquired by United States Steel in 1907, new capital and management were infused into the company. Even so, the new arrangement removed control even further away, and it subjected Alabama interests to the primary concerns of Pittsbugh.”
Although it was cheaper to make steel in Birmingham, TCI’s absentee owners imposed the “Pittsburgh Plus” freight rates in order to eliminate Birmingham’s comparative advantage. Thus, Birmingham became a supplier of raw material for Northern industry and was unable to compete effectively in its own home market.
Coal mining in the Birmingham District replicated the worst features of Central Appalachia: company towns, low-wages paid in scrip, terrible working conditions, and the use of the Alabama National Guard to break up strikes. Unlike Central Appalachia though, the majority of coal miners in North Alabama were black. Henry F. Debardeleben, a founder of Birmingham and Vice President of TCI, wanted to create a “Negro Eden” in the coalfields to stifle unionization. Coal miners were a mix of native Whites, blacks and immigrants and the heterogeneity of labor was fostered to strengthen the bargaining position of owners. When all else failed, convicts were leased from the state and used to break strikes and the Alabama National Guard was used to restore order.
It would be an understatement to say that free-market, laissez-faire economics failed in Alabama between 1865 and 1920:
- Although this went unmentioned, Northern timber companies clearcut the virgin forests of much of Alabama during this period. The profits flowed outside the region to Northern investors.
- The sharecropping and farm tenancy system immiserated Alabama farmers for generations before it imploded during the Great Depression. By that point, the price of cotton had sunk to 4 cents a pound.
- With only a few exceptions, coal miners and iron and steel workers failed to reap the benefits of industrialization.
- Women and children were similarly exploited in the textile mills.
- The Constitutions of 1875 and 1901 banned internal improvements and put strict tax ceilings on local governments. Even today, Alabama has a state constitution made for the world of the horse and buggy.
- By 1900, the railroad system had fallen under the control of Northern investors and differences in shipping rates – the Pittsburgh Plus being one example – retarded the Southern economy.
In sum, it was a world which benefited Northern investors who owned the timber and textile companies, the iron and steel industry and the private railroad network. The “sound money” monetary policy based on the gold standard choked the lifeblood out of Southern economy by keeping banknotes concentrated in the East and Midwest. Lack of cash and access to credit perpetuated the sharecropping and farm tenancy system to rob the farmer in Alabama for generations.
The lack of regulation in the Southern economy illustrated free-market capitalism at its worst in every corner of the state. This world was finally wiped away by the Great Depression and Second World War. It has retreated so far into the past that the present generation has grown ignorant of the conditions their ancestors lived under from the end of the War Between the States to the Great Depression. The present generation has been raised on the lie that it was free-market capitalism which made their world.