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UWBTS — Chapter 30:


Chapter 30 — The Cost of the War in Financial Terms

By Joseph Stromberg of Georgia, S.I.S.H.



You have just completed the chapter where the cost of the war is presented in terms of deaths and suffering by Federal and Confederate troops and sailors. Estimates of deaths and suffering by Confederate civilians were also presented. Now let us look at the cost of the war in financial terms. Here, you will learn that many men in the Northern states gained great wealth from the conflict, creating a class some called the “Robber Barons,” and you learned that war-time financial loss in the land of the Republicans was rapidly recovered. But the South was devastated! Of course, on the financial books of people who owned slaves, the uncompensated and immediate loss of control over those persons looked like a huge financial loss – but not really. The Southern culture was beginning to arrive at the situation where maintenance of a slave family from birth to death was costing more than the alternative of hiring laborers by the day or by the season. So, let us just mention the book value of slaves prior to the WBTS, and move on to other areas of financial loss. The war against Confederate civilians in the last two years of the war produced huge financial loss. The loss to the economy from Confederate dead and wounded was great. The Republican’s Political Reconstruction would intentionally produce further financial loss. You are fortunate to be reading this chapter at the hand of the learned Joe Stromberg. Be attentive as he tells this story.

History Relevant To Understanding the WBTS


In economic terms, the war of 1861-1861 pitted rising Northern industrial capitalism against an agrarian Southern economy resting on ownership of human labor (as of 1860, such property was the largest single capital investment in the United States). Those powerful Northern interests that political scientist Richard F. Bensel calls the Republican “developmental coalition” wanted to remove the South as an obstacle to their goals. Secession removed Southerners from (the U.S.) Congress, but separation was unacceptable to key Northern interests since it also removed Southern resources (land and labor) from potential Northern control. War was acceptable to key Northern leaders, especially if ordinary Northerners shouldered the costs, while they (leaders and entrepreneurs) escaped the hardships of battle. 

Total War

Lincoln’s theory of the Union (and of the war) implied total war. Treating secession as “rebellion,” the Northern government felt entitled to wage war on the Southern people (John C. Calhoun predicted this in 1833). Rather than simply engaging Confederate armies, Northern forces directly assaulted the entire Southern social structure, to render support for Confederate armies impossible. (Northern practicality included preventing medical supplies from entering the South.)

Historian Edward Hagerman notes that “Sherman and Grant … knowingly accepted indirect civilian deaths from the intensified total war strategy as inevitable and just.” These methods had the added advantage of inspiring terror. Southern morale was a target: hence the reckless bombardments at Charleston (shelled for 645 days) and Atlanta (with residential neighborhoods deliberately shelled). Criticized for his tactics in later Indian wars, Sheridan wrote defensively to Sherman in 1873: “Did we cease to throw shells into Vicksburg or Atlanta because women and children were there?”

Reckless Destruction

The move toward Total War began in mid-1862 with General Pope’s campaign in Virginia. His army was to live off the country, “foraging” or stealing. He deported “disloyal” persons and burnt their houses. Lincoln took an active role in devising rules for this and later campaigns. In Virginia, Union operations made life between Blue Ridge and North Mountain “utterly untenable” (as historian James L. Sellers writes), burning barns and mills (and their contents), destroying or carrying off cattle and sheep, and clearing out a 92-mile corridor from Winchester to Staunton. 

In Mississippi, Sherman looted and torched Jackson and Meridian. Farther west, A.J. Smith’s bummers, on loan from General Sherman for the Red River campaign, marked their retreat by burning everything along their path.  Wilson’s “Raid” burned Tuscaloosa, Ala. (including university buildings) and much of Columbus, Ga. In Georgia and South Carolina, Sherman’s forces used the same methods on a grander scale. Sherman estimated that his forces destroyed a hundred million dollars worth of property in Georgia, 80% of which was “simple waste and destruction.” Shortly thereafter, Columbia, SC, was gutted.

Everywhere one sees the same pattern, which included massive deliberate destruction of livestock owned by Southern plain folk. Such was the Northern way of war, across this small time and space. According to Historian Alan Nevins (writing in 1962) it amounted to “general depredation” in 1862, “wanton destruction” in 1863, and “organized devastation” in 1864. 

Plunder and Profit

For depriving the enemy of resources, confiscation worked as well as destruction and was very popular with its beneficiaries. Historian Ludwell Johnson describes the Northern government as conducting “a war of economic and political aggrandizement” – with profiteering and fraud “so pervasive that they seemed to be of the very essence” of the war. This “redeeming the South by stealing it” went forward under various legal doctrines. U.S. functionaries levied special taxes in captured territory and sold “abandoned” property to inside bidders. Hoping to grow cotton in conquered sections of Florida, using free (and cheap) labor, Boston textile manufacturer Edward Atkinson wrote in 1862 that if any former slave “refused to work, let him starve… still we must grow cotton.”

Cotton was the item most demanded, whether confiscated, stolen, or obtained by trading with the enemy. (Lincoln personally issued special licenses for such trade.) Historian Clyde Wilson concludes that no more than ten percent of thirty million dollars worth of “legally” confiscated property ever reached the U.S. Treasury: “The rest was stolen by Republican appointees.” Yet, Wilson adds, historians fully aware of such facts, still suggest that wartime and postwar corruption “mysteriously appeared after Lincoln’s death, and somehow miss the obvious conclusion that it was implicit in the goals of the Lincoln war party.”

Some Statistics

For the South as a whole, estimated wealth fell between 1861 and 1865 by about 40%, even without counting the value of slave property. Real estate values were down, as was livestock, 32 to 42%. As of 1870, farm tools were worth 55% of their 1860 values. Bank capital fell from sixty-one million dollars in 1860 to seventeen million in 1870. (See below.) More recently (1975), economic historians Claudia D. Goldin and Frank D. Lewis have estimated direct war costs in terms of expenditures, lost wages, etc., as $3,365,846 for the North and $3,285,900 for the South.

As reported in the previous chapter, the loss of lives in the Southern states was horrific.  For many years the biggest item in the state budget of Mississippi was artificial limbs.

The New Economy

As historian Richard F. Kaufman puts it, the war brought about a “new industrial order … composed largely of war profiteers and others who grew rich on government contracts … and … were able to influence the economic reconstruction.” Many lasting capitalist fortunes arose from wartime contracts, e.g. those of J. P. Morgan, Philip Armour, Clement Studebaker, John Wanamaker, Cornelius Vanderbilt, the du Pont family, and Andrew Carnegie, to name some famous Robber Barons. The Republican Party’s alliance of capitalists and farmers held together for a few decades, if only because ever-bigger pensions for Union veterans (America’s first major welfare program) offset the costs of high tariffs and deflation to mid-western and western farmers. (A pension could come to four months’ wages.)  

War and Impoverishment

In 1937, Texas historian Walter Prescott Webb complained that railroads, which were built only in the North between 1860 and 1875, killed off Southern river traffic. Down toward the present, the North enjoyed major bounties: high tariffs, Union Army pensions (seven eights of which went to the North), Northern ownership of most industrial patents, and finally, the modern corporation as such, whose financial-capitalist “feudalism” was sustained by the U.S. Supreme Court’s invention of corporate personhood in the 1880s (which in turn rested on the Fourteenth Amendment, a product of Political Reconstruction). Historian C. Vann Woodward added in 1951 that – ground down by tariffs and patents – the South had been reduced to a mere exporter of raw materials. Along with the famous freight-rate differential (lasting into the 1940s), these levers worked effectively to maintain the South as an economic colony of the North.

Another crucial piece of leverage involved banking and credit. Economic historian Gerald D. Jaynes notes that the capitalized value of human property had been central to the pre-war Southern credit. With emancipation, that credit system collapsed. Before Southerners could develop a substitute, U.S. national banking rules favorable to Northern interests “stifled recovery of the South’s credit markets,” as historian Jeffrey Hummel writes. Southerners’ taxes helped to pay interest on the U.S. national debt (most of which went to Northerners) and to fund Union army pensions (29% of the Federal budget by 1875). On top of this northward net outflow, Southerners paid for state-level Confederate pensions and (for a while) interest on the debts accumulated by former Reconstruction state governments.   

Historian Eugene D. Genovese commented in 1965: “Since abolition occurred under Northern guns… instead of under internal bourgeois auspices, the colonial bondage of the economy was preserved, but the South’s political independence was lost.” And Bensel has added: “The [American] developmental engine left the southern periphery to shoulder almost the entire cost of industrialization. … The periphery was drained while the core prospered.”


The War of 1861-1865 impoverished the South for long decades to come. Much of this damage resulted from plunder and reckless destruction which was not militarily necessary, even from the other side’s point of view.

Suggestions for Class Discussion

Pursue the comparison between damage to the South in the 1860s and damage to various countries in World War One. Discuss what proportionate damages to the South would be like in terms of current population and other figures. 

Recommended Reading

  • “Economic Incidence of the Civil War in the South,” by James L. Sellers, Mississippi Valley Historical Review, 14 (September 1927), 179-191.
  • “Economic Cost of the American Civil War,” by Claudia D. Golden and Frank D. Lewis, Journal of Economic History, 35 (June 1975), 299-326.
  • “The Plundering Generation: Uneasy Reflections on the Civil War,” by Ludwell Johnson, Continuity, 9 (Fall 1984), 109-119.