U.S. History

This year is the bicentennial of the birth of Alexis de Tocqueville, one of the most famous political commentators about America. 

Thomas Woods reflects on the response to his popular history book, a book written in-between two other works serving primarily academic markets. When they stop attacking you, he concludes, you have ceased to do real history.

Black reconstruction after the Civil War did much better than the dire predictions made. The black population recovered quickly. Many moved to urban areas. They deliberately had fewer children. Mortality declined. Income increased. No government assistance was handed out.

There was a sea change in money and banking in the U.S. as a result of the Civil War. Government became the primary regulator. Metal coins gave way to paper. Mistakes of one bank infected others – it was contagion.

The Confederate government blockaded the Southern economy by bad policies like impressment and trying to run the blockade themselves. The government declared that fifty percent of all cargo space had to be for the Confederate government.

Blockade boat owners turned to engines for speed instead of sails. Blockade running became more expensive as the blockade became stricter. Certain prices increased much faster and higher.  Most goods desired in the South had to be imported.

Tariffs were generally favorable for the North and unfavorable for the South. They were a key political battle for forty years. The Union General Scott developed the anaconda plan to squeeze the breath out of the South. The Union Blockade was the first part of that plan. This battle at sea won the war for the Union. The land battle was a stalemate.

Opportunity cost is the proper economic basis for specialization and trade in resources. Opportunity cost is the highest value you give up when you make a choice. It was Confederate government policy that caused misallocations on the part of the South, making it inefficient and wasteful. A few of those bad policies were: drafting soldiers, confiscating resources, and monetary inflation.

Recorded 15 January 2005 at The Trouble with Taxation Conference, Charlottesville, Virginia.

The Economics of the Civil War should instruct us in ways that the history of the Civil War might not. Cotton had much to do with what the war was about. Slavery as a cause of the Civil War is a modern development. How did the Union win the war? How did the aftermath of the war affect our own lives? What lessons can benefit us?