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Essay The American Civil War in Economic Perspective: Basic Questions and Some Answers by Peter A. Coclanis No event has so captured the historical imagination of Americans as the Civil War. Ask Ken Burns, creator of the acclaimed PBS series, or better yet one of his accountants. What else—other than the occasional middlebrow blockbuster sent over by the BBC—could get a respectable number of normal, red-blooded Americans to suffer through public television for long stretches of prime time? Nor is this case limited to television. Civil War books are devoured by both professional historians and that most elusive quarry, the general reader. Each summer, millions of bermuda-clad Americans trudge over Civil War battlefields, and thousands of military buffs reenact the war's major engagements. Despite this huge interest, however, until recently, little has been written on the war's monetary costs, and even today no agreement exists on its overall economic effects.1 To estimate the war's cost is a difficult and slightly unseemly business.2 Not only do questionable assumptions, interpolations, and extrapolations arise, but one is forced to price the priceless—setting a monetary value on human life. Not surprisingly, for generations after the Civil War, scholars skirted the issue of the war's costs. Instead, they stated with gravity that the war had cost a lot, but acted as though the only charge worthy of close study was General George Edward Pickett's. All this changed with the publication in 1975 of a pioneering essay by Claudia D. Goldin and Frank D. Lewis in the Journal ofEconomic History.3 Directly and succinctly, the authors conveyed their essay's scope in its title, "The Economic Cost of the American Civil War: Estimates and Implications ." Goldin and Lewis were familiar, but dissatisfied, with the standard economic literature on the war. They knew that more than 600,000 lives had been lost in the conflict, that vast amounts of property had been diminished or destroyed, and that during the war, governments had spent and spent, then spent some more. What they didn't know was exactly what all this added up to. Despite the difficulty of their enterprise, they were determined, though, to come up with figures on the monetary cost of those four years of state-sanctioned violence known as the Civil War. 164Southern Cultures Table 1._____________________________________________________________ The Direct Cost of the Civil War________________________________________________ NorthSouth Government Expenditures$2,291,270,000$1,011,158,000 Decrease in the Value of Physical Capital-------- 1,487,241,000 Human Capital Loss1,319,656,000945,170,000 Additional Costs due to the Draft11,035,00020,368,000 Less Risk Premiums in Soldiers' Wage Bills-256, 115,000-178,037,000 Totals___________________________________$3,365,846,000_______$3,285,900,000 Source: Goldin and Lewis, "The Economic Cost of the American Civil War," 304, 308. To arrive at their figures, Goldin and Lewis systematically broke down the costs incurred during the war, then prepared two distinct sets of estimates based on different procedures. In one, they attempted to measure the "direct costs" of the war; in the other, its "indirect costs." The two economists defined the Civil War's direct costs as "all Union and Confederate war expenditures, and human and physical capital destroyed in military actions." They used estimates of lost potential lifetime earnings of those killed and wounded during the war as a proxy for direct human capital costs.4 According to Goldin and Lewis, the war's direct costs amounted to about $3.4 billion for the North, and $3.3 billion for the South, for a combined total of almost $6.7 billion in 1860 dollars."* (See Table 1.) A lot of money, to be sure, but Goldin and Lewis felt their figures were too low and did not adequately capture the war's overall costs. Therefore, they attempted a second broader tally that they hoped would improve their "direct cost" measure. The second tally, which they called the "indirect costs" of the war, grew out of a single question: What would have happened to the American economy had the Civil War not intervened?6 In attempting to answer this question and to capture...


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