Just what is Southern Economic Development Anyway–

As we saw with gifts and loan clause case study its not what you find in the textbooks. The various schools of post-Civil War southern history don’t help, except that they support the importance of ED as a critical theme throughout the period. That may be a first important observation in this Curmudgeon Tale of the Bi-Polar Economic Developer.

Rebuilding the burned cities and destroyed transportation infrastructure of the South is a start (postwar refugees fled to cities and some urbanization resulted), but what really is devastated is the pre-Civil War agricultural-export economy and the state and local policy systems that resulted from it. The South had to reconstruct its economic base and recast its politics. Whether of not the South possessed much of an economic base at war’s end is a key question. More than one-half of southern urban centers (towns and cities) were physically “conquered” by the Union army (New Orleans fell in 1862). Charleston, Atlanta and Richmond, leading cities were burned to the ground.

What infrastructure the South had was for all practical purposes destroyed–from bridges to rolling stock. By the war’s end transportation access was chaotic, with few workable “roads”, steamboats destroyed, and rail traffic impossible, export to external markets was near-impossible. Southern transport infrastructure was ruined and any return to the former export economy required massive and intense railroad-related infrastructure repair and upgrade.

About two-fifths of southern livestock was killed, and horses were in extremely short supply. Many plantations were burned, the remainder stripped of their slave workforce by the Emancipation Proclamation. In war’s immediate aftermath some Freedmen demanded of their former owners the proverbial “forty acres and a mule”–others fled to cities. Most plantation owners broke up their plantation and “struck deals” with Freedmen and poor whites to annually plant/harvest cotton for contracted acreage–evolving into a semi-formal low-wage, tenant-farming system (“sharecropping”).

Agriculture in these times was “people-intensive” and one-quarter of the southern white population of military age were killed or died during the war. An additional 200,000 were permanently maimed. The southern officer corps included many plantation owners and many were killed. Whites in southern pre-Civil War agriculture raised food produce for themselves, the plantations, and urban centers. Their small farms deteriorated and were frequently raided during the war. When soldiers returned, there was often little left to farm, no banks to lend–and no southern purchasing power to buy what could be grown. They too drifted into sharecropping, or engaged in hardscrabble subsistence farming. White per capita income, $125 in 1857, never recovered. As late as 1879, it was still only $80.

Accordingly, pre-WWII southern economic development elevated ED in most southern state and local policy agendas than did northern hegemonic states. This prioritization, I believe, not only reflects the desperate needs of the southern economy, but also reflects the relative affluence and economic growth enjoyed by the North which reduced the need for ED and permitted other policy areas to occupy prominent policy status. In the desperately poor, devastated post-Civil War South, we are not talking about decline, but rather devastation. The West is not devastated–it is undeveloped. It lacked everything, especially population. The distinction is vital in understanding how each region approached ED and defined its “tasks”, i.e. goals and strategies of ED. Obviously, the industrial hegemonic North/Midwest approached definitions and parameters from an entirely different perspective

Divided Minds, Industrialization and Colonies: Redeemer Economic Development  (See Below)

As horrible as Jim Crow racism was, our history of American ED necessarily dwells on economic development. In general, the South’s post-Civil War-19th Century policy system description and evolution is a complicated, unfortunately confusing affair. As always, the story is best told through individual urban and state examples, but given that the variety of policy systems, and evolutionary paths that characterized this period would not provide anything close to a clear message.

Nevertheless, it cannot be avoided, as short as it might have been, the Reconstruction-period policy systems and the reactionary emergence of Redeemer policy systems created an immense ED legacy that underlie the next fifty to seventy-five years of southern ED–at least until the arrival of “New South Redeemers” and chambers of commerce around the turn of the 20th century (1900). This period is in such contradiction to events and developments in the hegemonic north/Midwest and those in the Pacific Coast and western interior regions that it constitutes as the basis for understanding regional differences in our present-day Contemporary Era.

Those external to the South often think of southern politics in monolithic solidarity, simply miss, if not distort, much of what transpired. Outside of Jim Crow civil rights, there were several moving parts that shaped long-standing southern economic development during these troubled and volatile periods. From these hardscrabble post-Civil War beginnings one can follow the policy trail that leads to current economic and community development patterns.

On display, for example, are the cultural/demographic trends that differentiated southern urban areas and state politics creating regional and even intra-state variation. If one examines Memphis and Nashville, notably different stories would be told. They are at opposite ends of a long state, with the former an occupant of the “Black Belt”, and the latter one of the few places in the South with immigrant and ethnic cultural diversity. Tennessee state politics were an amalgam of these, and other, regional conflicts and power imbalances. Atlanta, on the other hand, was anything but typical, and dissimilar from Richmond, Charleston, San Antonio or Houston–each in their own way distinctive, while still operating within the Redeemer paradigm.

This, as brief as possible, section attempts a summary of the key trends that characterized the South in the most confusing of times. While much of Reconstruction can be described through race, civil rights and equality, there is a lot of Reconstruction that affected the formation and evolution of future southern state and local policy systems. With a few, small exceptions, the course of future southern economic development history–at least until the 1980’s reflects economic development strategies and goals that evolved from these state and local policy systems. They would look at economic development through very different lenses than western states and localities, and obviously northern hegemonic states and Big Cities.

Redeemer’s didn’t have a divided mind concerning the southern economy and economic development. Railroads were fine, indeed necessary, for a successful low-wage, agricultural-export economic base; planters playing politics in a one-party non-competitive state was fine also–over time in most states, planters delegated politics to supportive, if not dependent, professional politicians. Railroads were OK, but industrializing the southern economic base was NOT. Industrialization was a threat to agricultural dominance. Industrialization built cities, hired industrial workers, raised wage levels, and created alternative employment for low-wage sharecroppers. Fortunately for the planters, the 1870-80’s depressed inaccessible economic base, and the bankruptcies associated with Radical Republican industrialization/ Panic of 1873 left states, and cities especially in rather dire financial condition.

How to build railroads without money or expertise was the first hurdle. Remarkably, two factors came to their rescue. First, the brief Presidential and Radical Republican Reconstruction interlude had created an opportunity for surprising levels of northern business investment. Atlanta was a prime beneficiary–and in many ways was considered as a “northern city” with a non-Redeemer native elite, and reinforced with northern business class emigration.

As a practical matter northern influence was facilitated by Atlanta’s rather small (less than 10,000) population and a geographic location that predestined its development as a major railroad cotton logistics center despite the fact the area grew no cotton. Atlanta’s business community set up its chamber (1871) to tackle railroad development. In no time Atlanta, led by its great newspaper publisher, Henry O’Grady, developed considerable rail access, aspired to be leader of a “New South”, and pressed its case aggressively in northern Big Cities.

Birmingham was another beneficiary of the Radical Republican period. Pre-Civil War geologists had ascertained the area around present-day Birmingham AL had large deposits iron ore and coal–but lacked access to the outside world. Alabama entrepreneurs Frank Gilmer and John Milner wanted the rail hub to be located in nearby central Alabama, not far-off Chattanooga. Their initial attempts to start a railroad were blocked by rivals and it was only in 1869 that they were able to start laying track. They ran out of dough sixty-six miles from Decatur AL.

They were bailed out by the Louisville and Nashville Railroad (L&N) which sought access into Alabama. Track was completed to Decatur, and the City of Birmingham, incorporated in 1871, had by 1872 a rail linkage to the outside world. Then the Panic of 1873 hit and the L&N had some lean years in which it poured money into mines and foundries to develop ore and coal assets to ship. They also laid more track to connect it to Mobile, and eventually New Orleans. Henry Plant’s “Plant System” reached Birmingham in 1887. In 1894-5, J. P. Morgan bought out both Gilmer & Milner’s A&TR Railroad and Henry Plant’s Rail System.

In the meantime, U.S. constructed steel mills and factories in satellite suburbs surrounding the facility. The metro area became “an instant city”. Locals called Birmingham “the Magic City”–although its potentially rich tax base lay outside the city limits and less than 4,000 lived in it in 1880. By 1900, Birmingham had grown to 38,000, but was still frustrated that its rich suburbs controlled the industrial nexus. So in that year, it fabricated “the Greater Birmingham Plan”, lobbied it successfully through the Alabama legislature, and annexed the offending suburbs. In 1910, Birmingham’s population exploded to nearly 133,000.

Birmingham was the outstanding example of northern and foreign investment in the southern iron industry. New England investors like Truman Aldrich and Daniel Pratt (Pratt Coal and Coke Company), the latter attributed to be the South’s counter to Andrew Carnegie. Working with some southern capital he consolidated a number of furnaces into the De Bardeleben Coal and Iron Company (1889) with seven coal and seven iron mines, quarries, several railroads, and nine hundred coke ovens. In the lean 1890’s, however, De Bardeleben ran into hard times, and was eventually bought out by, guess who, J.P. Morgan. But during those twenty or so years between 1879 and mid-1890’s southern pig iron production increased by seventeen times and Carnegie was quoted as saying “the South is Pennsylvania’s most formidable industrial enemy” (Woodward, p. 127). Southern iron competed with northern iron in cost and quality as late as 1889.

Despite Redeemer opposition, foreign and northern investment injected considerable rail and iron/steel industrial development into the south in the 1880’s especially. During these golden years, some southern entrepreneurs worked their magic as well–along with limited southern investment capital (left untold in this article in the development of the South’s tobacco industry–with southern entrepreneurs and investment–and the South’s initial development of textile mills–see Woodward pp. 129-35). Southern entrepreneurs sold out in hard times to northern financiers–J.P. Morgan the most notorious. Northern finance capital bought proved to be the exit strategy for London FDI, and Wall Street by the turn of the century had secured control of a serious southern industrial capacity.

Internal Configuration and Dynamics of a Redeemer Policy System

The basic starting point to discuss southern policy systems in these periods is the South, on the whole, chose to return to its pre-Civil War non-manufacturing agricultural/export economy–and to reconstruct its former “way of life” as much as possible. That choice was partly instinctive, and simple inertia of the past, and it certainly was led by a “planter”, former plantation-owner elite. But it also reflected a political culture best described by Almond as “traditional” in which lower, and even middle-class participation in policy-making was limited.

The planter class got its way previous to the mid-1880 largely because the quasi-anarchy and past-system degeneration that accompanied military conquest/occupation elevated them to about the only indigenous political force capable of affecting southern policy systems. But having informally decided to recreate the past to the extent possible, post-Civil War planter-dominated southern policy systems were led mostly by the most conservative, almost medieval political elite on the continent. It is worth keeping in mind, that planters thought of themselves, despite their political activities, as fundamentally “private”, a business leadership in an agricultural economy, protecting a southern way of life.  Almost inadvertently, however, ED became necessary to achieve these goals.

They wanted a predominately, but not exclusively agricultural economic base–were consciously threatened by industrial development which would inevitably change their way of life and economic base–but on the whole knew that, at minimum, a viable southern transportation system was essential to agriculture, export, prosperity, and social order. That would change during the course of these periods as “New South” business/chamber elites, northern absentee corporate managers, and even chronic “populist” movement(s) tore at the planter class’s political dominance.

The planter class goals of a revitalized rural, agricultural-export economy, with a low-wage, politically-passive workforce, with a reasonably modern transportation infrastructure did little to challenge the northern industrial hegemony–except in civil rights, and Republican dominance over federal government policy (and tariff was still a wedge issue in these years). The total lack of southern investment capital, the devastation of southern cities and transportation infrastructure meant a rebuilt agricultural economy was impossible–unless investment capital to rebuild the latter could be found.

Jacksonian to the core, desiring weak/ fragmented local and state government, low service levels to keep taxes down, planters and their allies dominated the initial period of Presidential Reconstruction. Instead of paying reparations, Southerners wanted the reverse: federal investment in southern infrastructure and business development. The North wanted revenge and radical change in southern state and local policy systems, however; the bloodiest war in American history was only over by months. Black Codes, recourse to violence, and, on the other hand, a breakup of the plantation into a land/tenancy/ sharecropper production system prompted a northern Radical Republican reaction that led to a second Congressional-led Reconstruction which imposed direct military control, and ended the planter state and local policy system dominance. This is the Reconstruction described in most textbooks; it started in 1867-8.

The Radical Republican Reconstruction period witnessed the establishment of new southern state constitutions, new political players in their policy systems, and a distinctive political coalition that established state and local policy systems with a very distinctive economic development policy agenda. These policy systems were as radical a departure from past southern state and local policy systems as one could imagine.

Blacks, for instance, were about one-third of the elected political elite. Varying in proportions across the South, the Radical Republican coalition was composed of: (1) Freedmen Blacks newly enfranchised and emancipated; (2) northern emigres, often former Union soldiers and a few northern free Blacks–but sadly a large opportunistic element that lacked commitment to the local community; and finally (3) repressed southern Whigs (Republicans) out from wartime hiding, and businessmen who closely resembled northern business leaders who dealt with political machines such as Tweed (who BTW was in the process of going to jail during these years).

In the meantime, the openness of northern Democrats to a southern wing (Bourbon Democrats), needed by the latter to regain power in Congress and Presidency prompted a partisan/ideological policy battle to readmit southern states to the Union, and, pushed the various southern political elites into a “big tent” Democratic party leading to a “Solid South”, and one-party state and local policy systems. The Redeemers were what emerged from that “big tent”–and in the aftermath of the Panic of 1873, they broke the fragile Radical Republican state and local policy system installed during the Congressional Reconstruction.

Victorious, the coalition won elections, wrote and approved new state constitutions, and backed by the military government ran state and local governments. The Freedman’s Bureau, a federal agency, was a major player in local governments. Radical Reconstruction policy systems decisively moved to industrialize southern cities by encouraging local manufacturing startups, and working with northern companies to import branch firms. They were decidedly business-friendly, so friendly in fact many cities quickly mirrored the rather corrupt use of public funds to finance businesses and investment that to put matters nicely, had weak business plans and complex flow of funds that somehow got lost in transit.

Southern Radical Republican policy systems shared, on the surface, the planter class southern transportation infrastructure strategy. Repairing and installing railroads was arguably their top-ranked policy/strategy of both. Railroad startups in many Radical Republican southern jurisdictions were a prominent strategy with public funds an essential element. But it was all in the details–how implemented, who benefited from installing railroads, and who ultimately would dominate future state and local policy decisions. Like sausage in the making, this was not pretty to watch. The onslaught of the destructive Panic of 1873 could not have come at a worse time. These public/private investments, even those of merit, collapsed, leaving the taxpayer with the bill. This added fuel to the fire of the newly-formed Redeemer Democratic coalition.

While newly installed Radical Republican policy systems were taking root, the openness of northern Democrats to a southern wing (Bourbon Democrats), needed by the latter to regain power in Congress and Presidency, prompted a partisan/ideological policy battle to readmit southern states to the Union, and, pushed the various southern political elites into a “big tent” Democratic party leading to a “Solid South”, and one-party state and local policy systems. Redeemers were what emerged from that “big tent”–and in the aftermath of the Panic of 1873, they broke the fragile Radical Republican state and local policy system installed during the Congressional Reconstruction.

Redeemers took over every state and local southern policy system by the end of the decade (1879)–most sooner. They sought “redemption” which mean ousting carpetbaggers, and Blacks, ending military districts and Freedman’s Bureau, implanting a one-party non-competitive policy system, reestablishing to the degree possible the previous “way of life”, and economic development-wise ending Radical Reconstruction policy system’s southern industrialization strategy, while finding a way to tackle railroad infrastructure, while institutionalizing the land tenancy system of agricultural production. All of this was no easy set of goals, but Redeemers wanted to do this “privately” where possible–not through government which they still wanted to be Jacksonian, low tax, low service levels, with considerable dispersion of power. That’s where the above discussion concerning a new round of post-1873 gift and loan clauses were injected into a new round of southern state constitutions.

By the time Redeemers acquired dominance, the South was in desperate economic straits. While economists can provide some small indicators of early growth, little of it had reached into the pockets of the average white or black southerner. The Panic, as all good panics are, was long-lasting, ending only in 1879. Southern poverty, economic/political volatility and instability, violence and economic depression became entrenched into the southern fabric. In contrast, northern immigrant standard of living, not great by our standards, was appreciably better than that of the average rural southerner. For its day, the post-Civil War South should be considered as a third-world nation. The South became the nation’s poorest region–a distinction it still holds today.

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Divided Minds, Industrialization and Colonies –Check with Topic Above

Redeemer’s didn’t have a divided mind concerning the southern economy and economic development. Railroads were fine, indeed necessary, for a successful low-wage, agricultural-export economic base; planters playing politics in a one-party non-competitive state was fine also–over time in most states, planters delegated politics to supportive, if not dependent, professional politicians. Railroads were OK, but industrializing the southern economic base was NOT. Industrialization was a threat to agricultural dominance. Industrialization built cities, hired industrial workers, raised wage levels,  and created alternative employment for low-wage sharecroppers. Fortunately for the planters, the 1870-80’s depressed inaccessible economic base, and the bankruptcies associated with Radical Republican industrialization/ Panic of 1873 left states, and cities especially in rather dire financial condition.

How to build railroads without money or expertise was the first hurdle. Remarkably, two factors came to their rescue. First, the brief Presidential and Radical Republican Reconstruction interlude had created an opportunity for surprising levels of northern business investment. Atlanta was a prime beneficiary–and in many ways was considered as a “northern city” with a non-Redeemer native elite, and reinforced with  northern business class emigration.

As a practical matter northern influence was facilitated by Atlanta’s rather small (less than 10,000) population and a geographic location that predestined its development as a major railroad cotton logistics center despite the fact the area grew no cotton. Atlanta’s business community set up its chamber (1871) to tackle railroad development. In no time Atlanta, led by its great newspaper publisher, Henry O’Grady, developed considerable rail access, aspired to be leader of a “New South”, and pressed its case aggressively in northern Big Cities.

Birmingham was another beneficiary of the Radical Republican period. Pre-Civil War geologists had ascertained the area around present-day Birmingham AL had large deposits iron ore and coal–but lacked access to the outside world. Alabama entrepreneurs Frank Gilmer and John Milner wanted the rail hub to be located in nearby central Alabama, not far-off Chattanooga. Their initial attempts to start a railroad were blocked by rivals and it was only in 1869 that they were able to start laying track. They ran out of dough sixty-six miles from Decatur AL.

They were bailed out by the Louisville and Nashville Railroad (L&N) which sought access into Alabama. Track was completed to Decatur, and the City of Birmingham, incorporated in 1871, had by 1872 a rail linkage to the outside world. Then the Panic of 1873 hit and the L&N had some lean years in which it poured money into mines and foundries to develop ore and coal assets to ship. They also laid more track to connect it to Mobile, and eventually New Orleans. Henry Plant’s “Plant System” reached Birmingham in 1887. In 1894-5, J. P. Morgan bought out both Gilmer & Milner’s A&TR Railroad and Henry Plant’s Rail System.

In the meantime, U.S. constructed steel mills and factories in satellite suburbs surrounding the facility. The metro area became “an instant city”. Locals called Birmingham “the Magic City”–although its potentially rich tax base lay outside the city limits and less than 4,000 lived in it in 1880. By 1900, Birmingham had grown to 38,000, but was still frustrated that its rich suburbs controlled the industrial nexus. So in that year, it fabricated “the Greater Birmingham Plan”, lobbied it successfully through the Alabama legislature, and annexed the offending suburbs. In 1910, Birmingham’s population exploded to nearly 133,000.

Birmingham was the outstanding example of northern and foreign investment in the southern iron industry. New England investors like Truman Aldrich and Daniel Pratt (Pratt Coal and Coke Company), the latter attributed to be the South’s counter to Andrew Carnegie. Working with some southern capital he consolidated a number of furnaces into the De Bardeleben Coal and Iron Company (1889) with seven coal and seven iron mines, quarries, several railroads, and nine hundred coke ovens. In the lean 1890’s, however, De Bardeleben ran into hard times, and was eventually bought out by, guess who, J.P. Morgan. But during those twenty or so years between 1879 and mid-1890’s southern pig iron production increased by seventeen times and Carnegie was quoted as saying “the South is Pennsylvania’s most formidable industrial enemy” (Woodward, p. 127). Southern iron competed with northern iron in cost and quality as late as 1889.

Despite Redeemer opposition, foreign and northern investment injected considerable rail and iron/steel industrial development into the south in the 1880’s especially. During these golden years, some southern entrepreneurs worked their magic as well–along with limited southern investment capital (left untold in this article in the development of the South’s tobacco industry–with southern entrepreneurs and investment–and the South’s initial development of textile mills–see Woodward pp. 129-35). Southern entrepreneurs sold out in hard times to northern financiers–J.P. Morgan the most notorious. Northern finance capital bought proved to be the exit strategy for London FDI, and Wall Street by the turn of the century had secured control of a serious southern industrial capacity.

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But aside from loose ends that flowed from Radical Republican ED investment climate and the externally-financed industrial/railroad development of the 1880’s several other flies landed in the Redeemer ointment.

First, a persistent Populist Movement (which we shall not dwell upon), uneven and irregular appeared across the South. In a few instances (South Carolina’s “Pitchfork” Ben Tillman) it took over state government. Characterized by a nativist white supremacy racism, it afflicted blacks most severely. From an ED perspective, it also was anti-railroad, anti-urban, anti-finance,  and anti-business, and its desire for a silver-backed currency added unwanted complexity regarding tariffs and protectionism.

Northern industrial firms, especially in the apparel and consumer goods sectors saw opportunity in expanding their markets and setting up small production/distribution facilities to take advantage of cheap labor. Northern entrepreneurs saw opportunity amid economic rubble (see C. Vann Woodward’s, Origins of the New South, 1877-1913, Chapter V).

Northern investment followed many of the same lines as foreign investment, and was not the result of any formal southern ED initiative or strategy. Rather it was more a natural manifestation of capitalist growth. Northern and foreign investment, both beyond Redeemer control, injected an important source of manufacturing and commercial redevelopment into southern cities especially. Urbanization was nourished and it provided a limited alternative to agricultural employment for both whites and blacks. And, as we shall discuss below, it also conflicted with the Redeemer agricultural-export strategy, resulted in a northern railroad-investment that brought in its own industry, and laid the basis for a southern perception of the South as a “colony” of the North.

It was the fourth fly, however, that proved especially important to the historical evolution of the South’s economic development. Following an movement described best by Professor Don Doyle (New Men, New Cities, New South) a post-Civil War generation of young, mostly southern-born, entrepreneurs moved to cities from the countryside, started businesses, joined and eventually took over chambers of commerce, and then followed a conscious strategy of emulating northern industrial capitalism and bringing it to the South.

They did not appear overnight as one might expect (over two decades into the mid-1880’s), encountered some resistance from planters especially–especially before 1900, were more successful in some cities than others, but to them we can attribute a growing southern urbanization, a political force that consciously used as its model the northern Big City, copying much from the streetcar to early forms of Progressive community development. A second manifestation of a particular strain of New South business was the development in the 1880’s of a tobacco and a textile industry. Both industries, initially at least, were southern financed–by young New South bankers and a fledgling investment capital sector.

As defense for their rival paradigm, and a not-too-unreasonable description of the economic environment in which they operated, New South business elites described in no uncertain terms the South as a colony of the North–proverbially providing only the body at a southern funeral. The perception became engrained into the belief system of New South businessmen and their chambers, and after the turn of the century would support and justify their advancement of a northern industrial attraction/promotion strategy to diversify further the southern economy.

In a later issue of this series, I will further describe the ED/CD antics of the post-1900 New South business class and their revolutionary impact on American economic development–and southern urbanization. For the moment, the reader should appreciate New South businessmen provided an attractive alternative path to the dominant nineteenth century Redeemer ED rural agricultural-export paradigm. The New South alternative increased its power and persuasiveness, however, and after 1900 became arguably as important in describing southern ED as were planter class Redeemers.

From this diversity of elites the South was aptly described, particularly in reference to economic development, as having a “divided mind”. That the “divided mind” was real and durable, is confirmed when as late as the Depression era 1930’s, by the famous and infamous southern “BAWI” economic development revolutionary strategy/program/tool: “BAWI”–an abbreviation for the name of its legislation “Balance Agriculture with Industry”. BAWI, an innovation from a minuscule Mississippi cotton town, fired a shot similar to that on Fort Sumter, starting a shadow war between North and South, the battlefields of which were as economic as political, and which exploded in 1975 into the Second War Between the States.

Post-1800 expansion into the South Central interior, Alabama and Mississippi being the powerhouse cotton belt states meant export ports like Charleston and New Orleans were hard to reach–few roads, and river/steamboat access was expensive and time-consuming. Mobile lacked access to its own interior. New Orleans, historically a top-ten American largest city–and an outlier in Redeemer politics (machine vs. business reformer policy system) was laid waste by a 1878 yellow fever epidemic (as was Nashville), and in the same year went bankrupt taken over by the State. The cotton-shippers were feeling competitive pressure from Galveston. In fact, while exports through southern ports increased 95% (Woodward, p. 125-6) in volume between 1880 and 1901, Charleston and Norfolk lost tonnage, and export shipments were shifting to the Gulf Ports, especially Galveston, whose export value grew by 125% in the same period.

Despite the spasm of Radical Republican state railroad charter startups that launched Atlanta and Birmingham rail investment, the South as whole, particularly its interior, South Central states were woefully undeveloped transportation-wise. In 1870 east-of-the Mississippi South had only 10,600 miles of functioning track–by 1880 it increased to only 13,250 miles. The South (east and west of the Mississippi) had only 16,600 miles compared to the North’s 144,500 (Woodward, p. 120). Redeemer states had pulled away from leading any public investment, and major cities were laid low financially by bankruptcies, yellow fever, and depressed tax bases. Congress in the main did not live up to its end of the 1877 Compromise, and despite the end of military occupation, little federal infrastructure or business development assistance flowed South. The principal exception was a series of a major river and harbor (Corp of Engineers) infrastructure investments along the Mississippi especially below New Orleans, Mobile, and Galveston

Into this vacuum poured investment capital from non-southern financiers. When the 1873 Panic finally let up in 1879, a behind-the-scene foreign capital investment (FDI), mostly London-based, saw southern industrial development as an excellent location for speculative capital investment (railroads, timber acreage, mining. The North at the time was wracked with a series of violent union strikes and violence, while the South, poor as it may have been, had been beaten into passivity.

Between 1879 and 1881, nearly $150 million was invested in east-of-the-Mississippi southern railroads by foreign and northern investors. Over the decade approximately 180 new railroad startups formed in the same geography. In 1882, New Orleans through the Southern Pacific was linked by rail to San Francisco. Consolidation followed as small and inefficient lines, plus those that went belly-up, linked the major cities of the South through stronger more efficient rail companies.

By 1890 the South had nearly 40,000 miles of track, half of which was under control of a dozen railroads–and by that time if not owned directly, were virtual subsidiaries of Wall Street moguls J.P. Morgan and Jay Gould. A Connecticut entrepreneur, Henry Bradley Plant, heavily relying on foreign investment (Woodard. 126) purchased a number of Georgia, Virginia, Atlanta, and connections to the Mississippi River, and operated the mélange as a “unified system” (New Georgia Encyclopedia). The Panic of 1893 provided an opportunity for Wall Street to take over anything else of value (Woodward, pp. 118-126). Woodward labels Plant as “the great empire builder of the [Birmingham] Alabama mineral region, noting that by 1887 the L&N had invested more than $30 million in mines, furnaces, and rail. Woodward further notes, the L&N “founded towns and scattered agents over the country and abroad to bring in immigrants” (Woodward, pp. 126-7).

Who built southern railroads: Wall Street and London FDI between 1879 and 1893.

The railroad had become the dominant EDO not only in the South, but across the nation–despite any 1887 Interstate Commerce Commission. As a sort of railroad coup de grace, Henry Flager. Founder/lawyer to Rockefeller’s Standard Oil, opened up southern Florida with his coastal railroad and hotels, founding in the process nearly every major city from St. Augustine to a hole-in-the-wall Miami (1895). His investment laid the foundation for Florida’s Gold Coast tourism–an alternative non-manufacturing economic base.