10

In discussions with a colleague of mine many years ago, concerning the American Civil War (aka the War Between the States), he mentioned that “... the North left/gave all the [financial] debt to the South”.

He has since passed on but I’ve often wondered what he meant by that statement. Has anyone a clue to this reference? To its meaning and validity?

I believe this is what my colleague was referring to. But there’s no exact quote I could find.

  • 7
    Apparently the South will never cease to w̶h̶i̶n̶e̶ nurse its Lost Cause grudges. – Felix Goldberg Dec 27 '17 at 14:12
  • Felix, modern politics don't really belong in a historical discussion. – Tombo Nov 29 '18 at 15:43
11

Short Answer: While their was no blanket push to saddle the South with the Unions war debt; that could be an interpretation of what happened. The CSA debt/burden was larger than the Unions, and mostly held by southerners was not assumed by the North. The Unions debt, largely held by northerners took more than 30 years to entirely repay and the South re-incorporated in the Union did pay a proportion of that debt as part of the newly reunified United States.

Long Answer: To give your buddy the benefit of the doubt. The Union did refuse to assist the Confederate States with their war debt. The Union further refused to pay reparations for slaves freed. Also of course the Union refused to cover any of the former CSA's war debt all of which were significant hits to the former Confederate States and the citizens in those states who financed the insurection. Furthermore as the former confederate states were reincorporated into the Union, they did participate in paying for the Unions debt, as it took 30+ years for the Union to pay down their debt and all that time former Confederate states were contributing to the federal income. So while I would say your buddy was mostly wrong, I could see how such a claim might be justified. While it's arguable not accurate, what is accurate is the citizens of the insurrection states who financed succession paid a huge financial burden.

War Debt was the political football which the North and South kicked around for years following the Civil war. I think your friend was mistaken about the Union saddling the south with it's war debt suggesting the northern States didn't share in the burden.

In the years following the Civil war the South was bankrupt. It's industry and farms were unserviceable and their credit was depleted. Making the South pay unilaterally for the Norths debt would have been the same as defaulting. It was not an option. The Union was much more concerned with the "repudiation crisis" / scenario.

below based on Repudiation! The Crisis of United States Civil War Debt, 1865-1870

In the Constitution slaves counted for 3/5ths a person for the purposes of representatives in congress. When the Union passed the 14th amendment the fear was they had just handed the South a huge increase in congressional votes. Which according to the fear of the day could be used by the south to (1) cause the Union to default on it's war debt. or (2) make the Union assume the confederate war debt. This fear and what occurred in the name of that fear is called the "Repudiation Crisis of 1865".

Both the North and South had significant war debt. The Unions debt had raised from $65 million dollars in 1860 to 2.7 Billion in June of 1865. debt per capita had increased from $2.06 in 1860 to $75.01 in 1865.

The South had even more debt. Individual Confederate States owed 67 million dollars. The CSA owed about 1.4 billion. Compensation for freed slaves in 1860 amounted towards 1.7 billion, ( which the Union feared might be the price of peace).

The North feared since there was no Constitutional amendment which said the US couldn't repudiate it's debt, the South would try to make the Union default as the CSA had defaulted. Union debt was mostly held by Northern Investors. To make matters worse the Secretary of Treasury Simon Chase, thinking the war would be a short war, had the majority of the Unions debt in short term vehicles which needed to be paid or refinanced. Refinancing that debt would require congressional approval.

In 1868 there was a further Repayment Crisis (The Ohio Idea) over whether Union Debt should be paid in greenbacks or gold. The US had gone off the gold standard during the Civil war, and issued script called the greenback. After the war the greenback was trading below gold values. So paying the debt in devalued script was a mini repudiation strategy proposed by several Southern sympathizers including then President Andrew Johnson. Hence the 14th amendment to the Constitution which took effect in 1868 contained a section on civil war debt.

The Fourteenth Amendment of the Constitution Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The repayment crisis wouldn't be resolved until President Grant would take office. In 1870 President Grant's Secretary of the Treasury Boutwell finally got a strategy through congress to retire ( refinance ) the nations Civil war Debt. Congress authorized the Secretary, to issue $500 million in 10 year bonds at 5 percent, $300 million in 15 year bonds at 4.5 percent, and $1 billion in 30 year bonds at 4 percent. These bonds were to be paid in gold and exempt from local and Federal taxation. Though it would require more than 30 years from the end of the war for the Union to pay off it's Civil War Debt, the 1870 act closed the book on the repayment and refunding crisis which followed the war.

  • 1
    "In the years following the Civil war the South was bankrupt." That is an oversimplification. There was not an institution called "The South" that filed for and received bankruptcy. Nor did every single business and individual person in the south file for and receive bankruptcy. Your statement is a metaphor and thus a somewhat misleading oversimplification. In this stack exchange one is expected to write like a historian, not a politician running for office. – MAGolding Dec 28 '17 at 17:32
  • 4
    There may not have been a country called the south, but their was a political, economic, and cultural block called the south which remained a powerful alliance for generations after the civil war. Also “The Bankruptcy act of 1867” played a prominent role in reconstruction. And as a historian it is perfectly reasonable to refer to the south as a collective still bound in common experience even if it is a generality. I refer you to “Reconstruction of Southern Debtors: Bankruptcy after the Civil War ” by Elizabeth Lee Thompson – JMS Dec 28 '17 at 18:13
6

Your link says that the South had to pay its pro rata share of the taxes needed to service the (mostly war-induced) debt of the United States, as if the Civil War had been fought on its behalf, (rather than against it). Most holders of this U.S. debt were northerners. Southerners who had financed Confederate debt were not paid back. And "veterans benefits" paid for by these taxes meant Northern (and not Southern) veterans.

The Union didn't push "all" or even "most" of the debt on the South, but neither was the South absolved from paying its "share" even though it received none of the benefits. Meanwhile, the South got less than its share of public works spending.

  • Not to mention the vast amount of wealth dissolved, uncompensated with the 13th-15th amendment. – Tombo Nov 29 '18 at 15:40
5

Tom Au's statements that the war had been fought against the South and that the South received none of the benefits from the Union victory are somewhat misleading over simplifications.

At least during his answer, he assumed that everyone in the South had the same interests and stood to benefit equally from Southern victory. That is not the case.

Four million people who lived in the South found themselves much richer after the Union victory than they had been before or they would have been after Confederate victory. They now owned themselves.

Former Rebel soldiers mostly felt humiliated about being defeated. But they could have - and maybe some actually did - consoled themselves by thinking that their humiliating defeat was actually a blessing for their sons, grandsons, great grandsons and remoter descendants. Their defeat meant that their descendants would never have to suffer, as they had suffered, in hypothetical future wars between the USA and the CSA. The Union victory ensured that no poison gas nor atomic bombs would ever be dropped on Southern cities during future wars between the CSA and the USA. That was one very important benefit resulting from Union victory that everyone in the South shared in.

And there were other groups in the South that benefited in various ways from Southern defeat, who were better off losing than winning the Civil War.

Thus it is an oversimplification to say that the South gained no benefit from the Union victory.

  • Some sort of reference to your conclusions would be helpful. – Tombo Nov 29 '18 at 15:45
0

If the South was completely devastated, decimated, and bankrupt; how can you claim that the North and the South shared the debt evenly? The North paid from an economy that was in much better condition than the South. The debt that was levied from the Southerners was consistently high enough to prevent the South from rebuilding for decades.

Even if your claim that the debt was paid off evenly are true on the ledger, it is not arguable that the debt imposed on the South had a far greater impact on the Southern economy. The reconstruction was postponed for far too long; old Southern Cities, like Charleston, still exist today unchanged because of their crippling poverty. To say, nonchalantly, "Eh, it was about even." is an absurd misrepresentation of the facts. Of course, it is 'technically' true. Just like if prison labor is 'technically' not slavery.

  • 3
    Hi Alex and welcome to History SE. Adding sources to your answer would greatly improve it. – Lars Bosteen Nov 29 '18 at 6:36

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.