Overview of Post 1880 Redeemer Policy Systems
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 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 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 (Woodward, p. 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.
Ron W. Coan 