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SECESSION AND SOUTHERN BANKS Larry Schweikart OPINIONS ABOUT THE condition of the antebellum South on the eve of the Civil War are as numerous and as diverse as snowflakes. Historians have commonly concentrated on the South's lack of industrialization and, frequently, suggested that much of the "backwardness" of the South could be blamed on its inadequate financial system and capital markets. Some critics even imply that the banking network of the South represented a homogeneous group, whose positions mirrored those of the secessionists. However, not only were Southern bankers diverse in their support of the secession movement, but they also faced an economic crisis that exacerbated their differences. Nevertheless, as the Confederacy became a reality, bankers tended to unify, and with unity came a certain blindness . The Confederacy needed vast amounts of capital, and even after Southern bankers demonstrated their support, they were the objects of a host of state taxes and regulations, and were requested to purchase state and Confederate bonds, all of which tended to undermine the solvency and stability of Southern banks.1 The author wishes to express thanks for support from several organizations: the Regents of the University of California for a Regents Fellowship, the Institute of Humane Studies for an F. Leroy Hill Fellowship, the Economic History Association for an Arthur H. Cole Grant, and the Earhart Foundation in cooperation with the Institute for Humane Studies for a research grant. 'For interpretations of the causes of Northern victory, see David Donald, ed., Why the North Won the Civil War (Baton Rouge: Louisiana State Univ. Press, 1960); Stanly Lebergott, "Why the South Lost: Commercial Purpose in the Confederacy, 1861-1865," Journal of American History 70(June 1983): 58-74. Also see Emory Thomas, The Confederate Nation: 1861-1865 (New York: Harper & Row, 1979); Bray Hammond, Sovereignty and an Empty Purse (Princeton, N.J.: Princeton Univ. Press, 1970); Karl Marx and Frederich Engels, The Civil War in the United States (New York: International Publishers, I96I); William Coker, "Cotton and Faith: A Social and Political View of Mississippi Wartime Finance, 1861-1865" (Ph.D. diss. University of Oklahoma, 1973). For a revisionist interpretation, see Larry Schweikart, "Banking in the American South, 1861-1865" (Ph.D. diss., University of California, Santa Barbara, 1983). Monetary data and statistics on Southern banks appear in the appendix, tables 6.1 through 6.10 and figures 6.1 through 6.29. For the view that Southern banking was inadequate for growth, see Eugene Genovese, The Political Economy of Slavery (New York: Random House, 1961), and Susan Feiner, "The Financial Structures and Banking Institutions of the Ante Bellum South: 181 1 to 1832" (Ph.D. diss. , University of Massachusetts, 1981). A more positive view of Southern banking, using Louisiana as an example, appears in George Green, Finance and Economic 112CIVIL WAR HISTORY Charges that the Southern banking system was inadequate must undergo a severe revision. To judge the assertion that the Southern banking system operated as little more than an adjunct to the slave-based plantation system (Eugene Genovese's argument, for example), or that it was poorly developed and contributed little to the region's economic growth, one should consult data compiled for annual reports to Congress. J. Van Fenstermaker made such a study, but only to 1837—before many of the Southern states entered their growth periods and prior to reforms in the banking systems of other Southern states. When a complete series of the data is used, it shows that all of the South's banking statistics grew at rates conducive to economic growth and were sufficient to supply the population with capital. Loans grew at a rate of almost 4 percent annually, circulation and deposits increased at a rate slightly above 4 percent, and specie surged at better than a 5 percent rate. The specie growth especially suggests that while the South may have been able to increase circulation and loans even more than they actually did, the Southern money supply was sound and uninflated. Moreover, in such indicators as banking density and other ratios of money or loans to manufacturing capital, Southern banks again kept pace. Although Southern bank density (the ratio of bank offices to population) fell into...


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