Okay, in the last class, quick review, just to get us back up to snuff, we looked at the economic tools that we're going to be using here as the key to understanding what was going on in historical episodes.
So to improve our understanding, we're going to use these tools to really make sense out of history.
Then we looked at politics as being a very important part of that and is the period leading up to the Civil War as a period of political realignment and more or less a massive type of political realignment, not just the election to election, what's going to happen to the Democrats, what's going to happen to the Republicans type of thing, but a different type of realignment where we saw all sorts of
Parties, minor parties, political groups, special interest groups gathering together.
We saw the Whigs, which were the descendant party of the Federalist Party, the Know-Nothing
Party, the Free Soil Party, more or less third, fourth level parties, as well as groups like
the Abolitionists and the Prohibitionists, all coming together really under the banner
of the Republican Party during the 1850s.
So prior to the Republicans forming,
the Democrats really were in majority control
of American politics.
And that meant that the South, which was more Democrat,
had political power.
And their philosophy was one that
was conducive to economic growth with free market
Economy. The Republicans, on the other hand, were a party of change. Now, that phrase is
often used, but they never specify whether it's change for the good or change for the
bad. I do want to mention a point that Harry brought up after class, appropriately so last
when he asked about wasn't the Republican Party's platform on distribution of the land more libertarian than the Democrats?
Remember, the Democrats wanted to sell the land to Americans, have the federal government sell the land,
where the Republicans wanted homesteading to give away free land to settlers.
And you have to admit, yes, the Republican approach was, in general, more libertarian.
Of course, we're not strictly concerned with the philosophies and who's right and who's wrong.
But this is a case where the Democrats were maybe less free market, in a sense.
But that's the nature of the game. We're not dealing with ideal types.
We're not dealing with black and white, yes or no, good and bad. We're dealing with political parties, which are organizations with a lot of different interests, and certainly not all in the interest of the general interest of society.
The third point we looked at was tariffs, trying to come to grips with the idea
that tariffs were the cause of the war. And we looked at various evidences, groups
of evidences, the Collier and Hoffler studies, which in examining other civil
wars find that it's almost never a matter of race and ethnic groups and
In different societies, different culture, it's almost always a battle for some key resource, which would lend credence to the idea that it was that key agricultural resource in the South that exported wealth, creating wealth in the form of cotton exports.
Two other things if you're more interested in this than we have time for here, two people
that have addressed this issue in more detail about tariffs being the cause of the war,
Charles Adams and his book, When in the Course of Human Events, a very interesting, very
Very good read, short, very historical, multifaceted, highly recommended.
The other is Thomas D. Lorenzo, D-I-L-O-R-E-N-Z-O, and Tom's book, The Real Lincoln, really addresses
Many topics about Lincoln from a historical factual point of view, but in particular the issue of tariffs versus slavery as a cause of the war.
And both of these fellows, their books are based on the historical facts as we still know them from that time period.
So, both of those books are really worth looking at, both highly readable, we sell them, but a lot of times I've seen both of those books, you know, not where they're sold out temporarily, but generally we do carry them.
Now, further evidence that we know from today. The first is that tariffs would protect Northern industry, in particular the iron industry centered in Pennsylvania and the textile industries in New England, just as today.
This is theoretical economic theory that we know that if you put protective tariffs, that's going to benefit the local industry.
They can raise their prices, they can sell more, they're protected from foreign competition.
So it's definitely in their interest to have this type of protectionism.
We also know that tariffs would hurt the southern farmer.
Even though they're not tariffs on cotton and tobacco, they're tariffs on imported goods,
like clothing, like iron goods, cookware, agricultural tools.
These are things that Southerners were buying, they weren't making themselves, and they had
to buy them either from Northern industries or European industries.
There was little industry in the South, in places like Richmond, Virginia, Nashville,
but not much, Birmingham, there was no Birmingham at this point, there was no Atlanta at this
point.
They were definitely the biggest, I think both before and during the war, and they ended up producing a lot of military goods for the Confederacy during the war.
But in any case, these tariffs would be harmful to southern people, southern farmers in particular, the trade between Europe, cotton for goods would be reduced, and so this was something that would definitely be favorable to the north and be unfavorable to the south.
It also creates revenue for the government to spend, and this is something the Republicans wanted to do.
The Republicans have traditionally supported public works projects where the Democrats, at least back then,
modern Democrats support just about everything in terms of spending.
But they were not pro-public works projects at the federal level. Democrats, like if you looked at the Georgia legislature, you would see them, Democrats supporting public works projects, but they didn't want the federal government to do it because they thought that they might not get their fair share.
And tariffs were a key political battle for 40 years, at least. I mean really our entire history, but certainly in the decades before the Civil War, that was the prime political battle line and if you read the history of that time period, which most people don't read the history of that time period,
period, it's the period where we don't remember any of the presidents' names, the cowboys and Indians haven't really started up in full force, and so that's kind of, you know, it's not the interesting historical period for most people and television producers, so we don't get a good, but that's really the tariff of abominations, the tariff of 1824, the tariff of 1828 and 32, and so on. It was a big political
Battle. Economists and social scientists have looked at these issues and they found that it really is important that voting, for example, in Congress was decided on this basis. In other words, if you were from a district in Pennsylvania that had an iron factory, iron foundry, excuse me, you would be voting for tariffs. If you were representing
Cotton Plantations in Mississippi, you would be against it.
And the votes from that period really fall along those lines.
And you can look at the evidence from PINCUS, P-I-N-C-U-S, that's in the book.
It lays out where the congressmen and the senators were from, north, south, east and west, and how they voted yes or no.
Well, yes, in many respects, the generalized forces of how things go on in Washington, they don't change that much.
Now, industries do change all the time. Comparative advantage changes.
It's something that's very difficult for people to get used to, you know, especially if you've worked in an industry for 25 years and then all of a sudden, your job is in jeopardy, you know, you can't help but think that's unfair, but people gain and lose comparative advantages, and the South right now, for example, is losing its comparative advantage in the production of tobacco,
There's a lot of skeptics out there that say that we may lose our comparative advantage in cotton while at the same time sort of strengthening our comparative advantage in the production of pulp and paper and wood products.
So it happens all the time.
The state of Alabama, we had nothing to do with the automobile industry except producing maybe a little bit of steel for some parts suppliers.
Now, we're one of the fastest growing automobile producers in the nation.
At the same time, we've lost textiles. So those types of things do change, but the political...
Comparative advantage.
Comparative advantage, absolutely.
And that's really a very important key to understanding the first, excuse me, the second major chapter, the Union Blockade and Southern Strategy.
When the South seceded and the war essentially began,
Lincoln, of course, was calling up troops and consulting with his generals.
And the major general, the top general in the Union Army, was Winfield Scott.
And Scott developed what was called the anaconda plan.
It was actually first dubbed the boa constrictor plan,
but ultimately it came out as the anaconda, basically
a snake that surrounds the body and squeezes the breath out
of its prey until death ensues.
The Anaconda Plan was designed to give you
I'm going to give you some idea of what we're talking about here.
Let me see. Kentucky. What am I missing here? Arkansas.
Well, we'll throw that in there.
The idea of the Anaconda Plan was, it had several parts to it, but the first and main part was to establish a blockade around the Confederate states, around the rebelling states, so that boats would be stationed at all the ports,
Galveston, around the Confederacy, to prevent ships from coming in and to prevent ships
from going out.
And so the idea was to establish a blockade, like a snake, that would constrict the trade
and Trade of the Southern Economy, and then, of course, the Army would provide the full land area where they couldn't trade through, and then also, an interesting part of the plan is to send an Army down the Mississippi River and a Navy and Army
into New Orleans to essentially cut the Confederacy in two, okay, to increase the strangulation,
to prevent trade from crossing, and also, interestingly, to capture some of the best
cotton-growing land because the south, cutting the south out of the northern economy, we
who actually is hurting the northern textile industries.
They needed cotton as well, and so this was their basic plan to surround, to constrict,
to create economic pain, and hopefully union sympathizers in the South would throw the
fire eaters out of state government, and then the state governments would propel the Confederacy
to basically give up the war effort.
So that's the Northern Strategy, the Anaconda Plan, and the key thing in the Anaconda Plan
is this blockade.
The Southern Strategy is often referred to as the King-Cotton Strategy.
By 1860, southerners, cotton growers were growing very rich, very wealthy, production
was increasing, more land was coming under cultivation, cotton was king in terms of world
trade.
It was the fuel driving the Industrial Revolution.
We very rarely hear that connection, but the industrial revolution in Europe was basically
the Europeans taking the textile industry away from India and producing clothing for
Europeans and other people around the world using cotton from the south.
King Cotton's strategy was to say, okay, we got the power.
We're going to cut off cotton exports from the rest of the world and force the Europeans
to come over and smash up this blockade.
So both general strategies of the war were basically aimed at cotton, basically involving
either a blockade or having the blockade being torn apart by the Europeans, the French and
the English.
And so while again I've made this point very early on in the class about our emphasis on
and the land battles, and the cannons and the horses and the patriotism and the heroism and the generals and the leadership and the strategy on the land,
actually what we find is that the real key to the war is this battle at sea, which is almost an afterthought.
I took a course, an undergraduate course, in civil war history and it was absolutely fabulous.
We had maps and battles and all sorts of great stuff, very, very little emphasis on the war at sea.
But let's take a look. The land battle was a stalemate. For years, the land battle was a stalemate.
You basically had relatively equally-weighted armies, you had leaders, generals, who were all trained at West Point, you had the same tactics, you had the same strategies, roughly speaking, you had the same uniform design, the same weapons, the same bullets, the same carriages, cannons, roughly equal, and that land battle was generally a stalemate,
We see the war as this battle at sea, and it's the most unusual of all battles between the runners, the blockade runners, the rep butlers of the time, and the blockaders, the Union Navy, which gets almost no attention in the history
or the cinema of the Civil War. Both sides were ultimately profit motivated.
Blockade runners were of course private citizens. They wore no uniforms and they
shot, they didn't shoot guns at the enemy. I mean they may have had some guns on
on Board, but they didn't have cannons and they didn't try to shoot the Union blockade
fleet.
As a matter of fact, they usually gave up pretty quickly.
If a Union blockade-er saw a blockade runner, and typically what would happen is they'd
fire a shot across the bow and the blockade runner would usually stop and be taken over
without any kind of fuss because the sailors on the blockade runners would be returned
to a Union port where they would have a good time for a few days and then sign up with
another blockade running ship.
The ship itself would be sold in many cases to another blockade runner.
Why didn't they capture these guys in turn? Sooner or later they'd run out of a proficient cruise, wouldn't they?
and needed some of the faster boats to chase down the blockade runners.
Now the blockaders, another interesting story, the blockaders were also profit motivated.
If a blockader captured a blockade runner, the crew was paid bounties.
So the captain got so much, first mate got so much of a share,
and it went on down until you got to the lowest level of troops
who would get the smallest share
of whatever they could sell the cotton for and the boat.
So the blockade-ers captured the boat,
sell it and keep the profits essentially.
So they were very interested in capturing these boats
but they were not interested in destroying them. So they never like
and then rammed the blockade runner because that and that would mean that they wouldn't get paid.
So it's very interesting that both sides never fired at each other in the way that armies and people at war do
and that both sides were almost purely profit motivated.
So I think this is what enhances the role of economic analysis in this type of war.
Now, the blockade and blockades in general are very leaky affairs, and this one was called a leaky affair.
They're usually ineffective. Blockades in general don't work very well.
You know, the United States and the UN had a blockade of Iraq for years and years and years,
And every time we sent over newspaper reporters or TV reporters, they had goods from all over the world on their shelves.
They were still hungry and impoverished, but there was never any lacking of...
If you had enough money, you could still get medicines and radios and the latest DVD from the United States.
So if blockades are leaky, and if this one was leaky and ineffective as most others are, the Confederacy should have won, but it needed to be a leaky affair, it needed to be ineffective because the southern economy was so highly specialized, they had spent so many years concreting in their comparative advantage in cotton production based on plantation agriculture,
and Slave Labor, that if it wasn't ineffective, if the blockade was effective, it would be
highly detrimental to the southern economy and the Confederate war effort.
Of course, it wasn't one of the reasons why it wasn't very leaky. It was not leaky in the fact that the South was just gradually home from the market. It finally bought it, took it to Congress.
And so if that was not marketable, if someone could not come to our force and buy it, then we would have to recover to get it to Congress. It was really home and from the market.
Well, it certainly seems so in retrospect, but they were convinced that this king cotton strategy, that that was their real power, but they never actually organized it in an effective way.
The Confederate Congress set out to establish a cotton embargo, but they never really passed an effective cotton embargo at the national level.
States and local harbors passed legislation and resolutions calling for an embargo of cotton and there was a lot of extra-legal pressure where people would basically be threatened if they were aggressively exporting their cotton.
and exports did fall. I mean, whether or not it was enforced, whether or not they
passed it, exports officially fell dramatically during the first year of
the war. The official estimate is something like 99 percent, but it's
probably more likely that it had fallen by 85 to 90 percent. But this
This doesn't look good. I mean, in one sense, if you're advocating an embargo, well, and your exports are falling, you could say you had an embargo, but over in Europe there was still plenty of cotton.
The Europeans were storing large amounts of cotton, just starting to get cotton from other sources, and so cotton wasn't really in short supply.
So while the Confederates were saying there was an embargo, the Europeans didn't really feel it all that much.
So it really wasn't effective in the sense that people could call for the British Navy or the French Navy to go and break up that blockade.
It also says something about the blockade itself, you know, if you call for a blockade as Lincoln did, and yet you can enforce it, then it can be declared illegal.
The British could have said, you know, you really don't have boats all along here.
so if you're not enforcing your blockade we demand the right to declare illegal
and to continue free and uninterrupted trade so the whole situation and the
Confederate King Cotton strategy made it so confusing so really as to make it
almost impossible for the Europeans to intervene. That was the southern strategy, is to get the Europeans to intervene on their behalf, but what was actually going on made it very difficult for the Europeans, because they're saying, well, you know, there's plenty of cotton over here, so there's no push from the public to intervene, and also, because there's no exports coming out
Now, then, we have to say, we can't say that the blockade is an illegal paper blockade.
It would have been far better if the South had either done one way or the other, if they had had a strict, strictly enforced embargo,
which they really would have had a hard time doing, or whether they had aggressively exported their cotton into Europe.
If they had aggressively exported cotton into Europe,
they would have demonstrated that the blockade was illegal
and permitted the Europeans to intervene.
Yes.
Is that the case? What would keep the British from ignoring whether there was a government-backed blockade or not, if they felt that they wanted to get cotton out of the horse?
The international maritime law of this period basically had these concepts of legal and illegal embargoes and blockades and things of that nature.
There was no United Nations or anything like that.
There were agreements and treaties to which nations signed on to, so the United States and Britain and France and other countries were basically signed on to international treaties which specified what was and what was not an illegal, see that's why they had to get, and I don't know the mechanism as to how that, if they needed a majority of the signers to agree or what, but basically there was this treaty
Those were big and fundamental issues in the War of 1812, on the War of 1812, the maritime trade, France, England, there were all kinds of treaties and definitions, legal definitions, I think it was time to say blockades.
South, which is this voluntary market economy, highly specialized and export-oriented.
There's almost nothing the Southerners can do with this cotton themselves.
It's basically not of value domestically.
And the union strategy of cutting off the South basically is, if it's effective, it's
going to force the South to become self-sufficient.
They're going to have to create either voluntary or coercive means to make the Southern economy
more self-sufficient.
What Mises, Ludwig von Mises, called autarky.
And I didn't see this, well, I probably did see this before we started working on this
issue, but Mises in his treatise, Human Action, okay, we have the Institute produced the Scholars
Edition, which is an embellished, updated version of the first edition of Human Action,
which was published in 1849. The Scholars Edition was published in 1999, I believe.
And on page 825 of the Scholars Edition, I want to quote you this commentary Mises has about the economics of war.
The European military experts slighted the study of the American Civil War. In their eyes, this war was not instructive. It was fought by armies of irregulars led by non-professional commanders.
Civilians like Lincoln interfered with the conduct of the operations. Little they believed could be learned from this experience.
But it was the Civil War that, for the first time, problems of the interregional division of labor played the decisive role.
The South was predominantly agricultural. Its processing industries were negligible.
The Confederates depended on the supply of manufacturers, manufactured goods, from Europe.
As the naval forces of the Union were strong enough to blockade their coast, they soon began to lack needed equipment.
The mini-ball was invented by a Frenchman, and nobody's going to tell me that they had the mini-ball, at least at first in the South, if the French weren't supplying them with ammunition.
I mean, that was that bullet with the hollowed out posterior part, and then the advantage of that was that they didn't have to put any ram, anything else down there, and then when the charge developed, it expanded enough to meet the right wing of the barrel and so forth.
Why couldn't Lincoln object to England building this ship and all that stuff?
The English built a ship which was then subsequently outfitted into a warship by subcontractors away from England.
from England. So in terms of rifles and mini balls and all that kind of stuff, that was not directly shipped from England to Charleston, that was shipped from England to maybe Spain to Bermuda, the Bahamas, or maybe from Spain to Cuba to the Bahamas, so that who was selling these goods to the Confederate government and into the southern economy
was not British contractors or French contractors and they were not selling, you
know, there was this limitation on them selling warships especially.
Right, right, that's a very good point, but, you know, technicalities work in the real world when money is concerned.
If there's money to be made, technicalities, yeah, they'll find them, they'll break the rules.
Rules? Sure, I mean, that's one of the realities of war. That's one of the realities of immense amount of profits, and the fact that the South was being shut off from trade meant higher prices, and higher prices in here mean that there's a
There's a lot of profits to be had out here. So if you're in Bermuda, and you're still buying bacon at 10 cents a pound, and you can sell it here for a dollar a pound, and you know it doesn't take you 90 cents a pound to transport bacon for 90 miles.
And if you can slip in there at the right time, and then you've got it made, otherwise...
You're in Fat City, pun intended.
So, you know, prices in the Confederacy were rising, steadily, persistently, extremely painfully for Southerners.
I mean, prices were going up much more per month than inflation has been per year in our lifetimes.
So, inflation was, even at the best stages, at least ten times as worse than what we're having now,
and in many periods, much worse than that.
So, prices were skyrocketing.
Now, a lot of this we're going to see is a result of just the printing press in Richmond running off more money.
But on top of all that, on top of the monetary inflation, you also have the effect of this blockade,
which basically means that what Southerners are producing isn't worth as much.
And what they're trying to buy from outside is getting more and more and more expensive because of the blockade.
and you know the reason that there's a 90 cent pickup here and that's not a that's not an exact estimator that's just for illustration purposes is that these blockade runners they might lose their boats there's a risk of being captured and losing your boat was a tremendous capital investment to be able to borrow or to have a hundred thousand
$200,000 or $200,000 in order to buy a ship was a huge amount of money, so it was a big risk, and also, of course, they were putting in, you know, initially they used whatever they had, even sailing ships they would use, but they realized that over time they would need smaller, faster boats.
Power boats.
Power boats, that's right, steam power, coal-fired, small, sleek, where you had to carry a lot of coal, and when you carry a lot of coal, every pound of coal you carry means you've got one less pound for cargo, and so smaller, faster boats mean higher costs, it's a higher cost to ship a pound because you're using smaller, faster boats with more need
for machinery, more need for coal to run that ship.
So that has to figure in the prices.
Actually, prices determine cost.
So basically, as prices for these things
were going up in the Confederacy,
that created profit opportunities
for these blockade runners, so they
They were willing to incur more cost. They were willing to invest in these blockade running vessels at tremendous cost because of the high prices.
That's the sort of the elementary economic mistake, and even I have to fight this, is to think that cost determine prices.
The actual relationship is that prices determine cost.
In other words, if the price is right,
entrepreneurs will engage in higher cost
to get more of the product.
So if the price of oil goes up because of our consumption,
or the Chinese consumption, or European consumption,
entrepreneurs will go out there and look
for more oil in more difficult parts of the world
This is where they have to dig down deeper through ice and snow and so on and so forth, or in the ocean, deep in the ocean.
So it's these prices that are generating the higher cost of the boats.
This is Mark, I think the concept or the fact that it is largely overlooked by most people in many economies.
The importance of price in all economic activities does not get the treatment and attention that it deserves.
that fact enough. And it is a thing that even economists get wrong. On our blog this past week, you know, there was a discussion that where an economist in his book was sort of making the argument that cost influenced prices, where the reality was that prices ultimately generate those higher costs.
Mark, George could not sell the ads sold at any price. Is that not true?
He sold a lot of them, I think, didn't he?
No way. He had to quit selling them.
But isn't what you're saying ever intuitive in the context of a free market?
I mean that, of course, the other element between the difference between price and cost and profit, and I guess I would argue that profit is the price of all.
Yes.
Yes, I mean, but you had the right mechanism there. It's the profit that's ultimately involved there, but it's the movement in prices that is going to cause profits to be either lower or higher,
and therefore quantities to be adjusted and costs to be adjusted as well so
that if prices are falling and profits are falling then costs have to fall
as well and therefore the highest cost producers will be leaving the industry so
it works going up and going down unless they're protected that's right
I mean, the price goes up, sure oil companies go up with oil, but we go up to 5,000 feet of water in Mexico,
it's going to take us five years to find the oil, it's going to be another five, ten years minimum before that oil gets marketed.
There's tremendous lag time, and so if the price drops down, that's when you see people getting laid off.
No, you're absolutely right. I mean, there's a big difference between bubble gum and gunboats and all that process.
But if we keep our eye on the ball, that prices will be the motivating factor and cost is the catch-up factor,
then we'll ultimately be able to figure it out a little bit better.
Especially before the Civil War, most navies were private and that except for Great Britain and to a lesser degree France, nobody had what you would call a navy.
They would have some boats to show off with. But when you went to war, you just said, okay, we're offering bounties and rewards and things of that nature
and private people would get commissions and get papers from the War Department and of course promises to pay and it was basically, by and large, even for some of the big maritime powers like Britain and France,
Most of those historic naval wars fought by the European powers, most of the ships, most of the sinkings, most of all that was done by private people.
And they were just, you know, they would arm them out and get the sailors, you know, to go out to do battle.
and but when there wasn't a war the navies were of course all the private
people were decommissioned and the ships of the line would be stored which often
meant that they were depreciating.
And they were lucky to get a ship and get back on, but could I ask a question there, what about the drug wars in China, where the British ports, the Chinese ports open to dope and stuff and I think Franklin Roosevelt's grandfather was right in there with the British.
Delano was his name. His grandfather Delano was that's where he made all, that's where he made his profits.
A lot of Americans, a lot of them in New England were invested in that war.
And the same thing would have happened in the Civil War if Lincoln hadn't been there.
I mean, these guys were ready to, you know, profiteer.
Mm-hmm. Well, there was plenty of that going on, plenty of profiteering.
Of course, one man's profit is another man's profiteering.
Yeah, they still had letters of mark where they let a lot of these ships go out and take, like take a Confederate ship or,
and, but not as much as it was like in the 18th, back in the 18th or 12th, I mean, in the last century.
Yeah, that was a major disadvantage for the South is that because of the blockade, their ships of that nature had a very difficult time claiming prizes.
So they could go out, I mean they had some very successful ships go out and capture a lot of union commerce,
but they had a very difficult time once captured of claiming their prize in a prize court.
So that was a major disadvantage that the South really, the Confederate government never really addressed that problem.
I didn't hear of anything or read of anything where they were actively trying to address that imbalance.
and Balance. As a matter of fact, what we're going to see is that most of what they did was to make blockade running harder to do, and so the entrepreneur, the blockade runners, did not receive any assistance. Their efforts were made more difficult.
the private Navy option was not helped along in any major way and so the
entrepreneurs on the south side were in a very difficult position and of course
they were widely criticized for selling at high prices for bringing in luxury
and luxury goods, failing to bring in certain necessities and medicines and things of that nature, things for the war effort.
And so, you know, this was a very difficult business to begin with, a very risky business to begin with.
As a matter of fact, one prominent calculation of the profitability of running the blockade found that, over the entire war, that the blockade running wasn't very profitable at all, but such calculations are kind of suspect.
But nonetheless, other calculations done by individual blockade runners find that the blockade running was very, very profitable.
But a key factor in this was the capture rates. How many ships were actually being captured?
And we have some darn good data on the ships that ran the blockade, who was successful, who was captured, who was sunk.
Some wonderful scholarship done by a man named Marcus Price painstakingly detailed all the ships that ran the blockade as best as possible.
Anything that was reported in the newspaper or to Confederate authorities and that sort of thing.
And then his work has been updated by later scholars.
The capture rates represent how many ships successfully ran the blockade.
In 1861, the rate of capture was pretty low.
in your book in figure 2-2 on page 37 gives this graph and so the capture rates
for inbound and outbound were less than 5% in 1862 as more and more Union ships
take to the seas and also when more and more ships are actually running the
Blockade. The percentage of captures in 1862 of inbound goes up to about 25% and
the combination of inbound and outbound capture rate is more like 35% now the so
So initially, the ability of the Union to capture blockade runners increases significantly.
Now both sides are beefing up their perspective fleets.
The Union is beefing up its fleet.
It's taking over ports in the south, establishing beachheads on islands, capturing blockade
Blockade Runners and Converting Them into Blockade-ers. The Union has, by the end of
1862, they have New Orleans, they capture Galveston, they have Pensacola, they have
troops in the Georgia coast, and other places, so that they're tightening this blockade.
And yet the blockade runners are also adjusting as well. They're getting better ships. They've stopped using sailing ships entirely.
They're starting to bring on these upgraded boats into the fray. And so after 1862, as we go into 1863, the capture rate on inbound and outbound actually declined.
So it sort of stabilizes and yet the blockade runners are doing a little bit better.
And that trend, 63 to 64, continues at least on the inbound, the capture rate declines on the outbound, it actually goes up.
The inbound is more important for the southern economy, because that's the stuff they're going to get to consume.
The outbound is actually more important to the blockaders, because the outbound ships are almost entirely loaded with cotton, and cotton is selling at great prices.
much, much higher than normal because of the union blockade.
So what we find is the blockaders, the people forming the blockade, are setting their targets on the outbound ship because they know they can get more money, basically.
1865, the blockade becomes even less effective in terms of capture rates,
But because so many ports have been taken over by the Union at this point, the amount of goods running through the blockade, inward and outward, is probably much less.
But the risk that these blockade runners face is relatively small. They've got great boats, they know exactly what they're doing, they're very experienced, they have experienced crews, they've got fast boats.
and so the capture rates are are not too bad but the traffic is drying up and one
of the problems that basically they're facing at this point is that
This is the lifeline, the economic lifeline of the Confederacy and it's being strangled and at the same time the need for military goods is increasing because they've used up basically everything they have that was already available.
Things are wearing out and need to be replaced and yet, you know, things are also coming through the blockade that are not quite as necessary, even things like perfume, jewelry, liquor, fancy clothes, the ladies of Atlanta are still holding balls, you know, and so there's a major problem of perceiving
There's a big problem here of luxury goods being run through the blockade
instead of the necessary goods that are running through the blockade.
And, of course, this is a sort of a sideshow that we see in Gone with the Wind,
where Rhett Butler has access to all these things as he's running the blockade.
So he's got cigars and whiskey and parasols and fancy dresses.
And everything. Well, the fancy ladies were already here.
The fancy ladies are actually domestic.
They're not being run through the blockade, although you never know.
Did they have maps and stuff to land their stuff on shore without going to a port or was that a considerable advantage or not?
They knew all these inlets and these bays and everything, some of them that the Union never even knew about. They could go in there and dump their stuff.
Well, it is true that by the end of the war, a lot of harbors had been captured or shut off by the Union.
And basically, the Confederacy made no attempt to really open up the blockade or even really to defend the blockade.
They had taken so many troops away from the home front, essentially, and were keeping them on the periphery that there was no one really to defend a lot of these ports, and so you had, you know, home militias made up of teenagers and senior citizens.
through the Navy or the Navy, start with.
How's the value of Confederate money?
A large spec of that decline too, did it?
There's no way that war was going, and it's diminished value of money?
Well, the cotton was traded in gold prices.
So, that, I mean, they weren't getting depreciated,
well, it was being depreciated currency, but they were getting a regular compensation for it.
But it is correct, and Wilmington was the last major port, although Galveston was liberated near the end of the war.
And, you know, it seems that a lot of these harbors that were captured by the Union could have been liberated.
The city was not really deliberative. They just, you know, they never really tried to do much to defend these ports or to reopen them or to do anything to help the blockade runners.
Only in the case of Wilmington was the city properly defended and were the guns in place to keep the blockaders from really entering the harbor inlet.
And so now your last question Ozzie, you say you've got one question, but you actually usually get about three or four in there.
That's the way he plays it.
Yeah. Well, did they have any maps? Did they have any? Well, this is a very tricky business and that's why I refer to the fact that they were getting better at it.
Typically ships would not run into harbors in the middle of the night but during the blockade it was much more advantageous for these blockade runners to slip in at night so that they couldn't be seen or they couldn't be seen until it was too late.
late you know so that at night when you're out in the Gulf or in the
Atlantic for example you can't see a ship far away so the blockade runner
comes up going fast and by the time you actually see him it's too late for you
If they had guns in place there, the blockaders couldn't go in far enough, because they couldn't mass these big, a lot of times they had captured Union cannons, the Dauber guns, they could really, practically one broadsider, one broadsider would blow a ship out of the water.
And that was really only true in very few places, Wilmington being one of them, where the guns were in a place where they could sort of scatter off the smaller, wooden, the iron clads wouldn't be really hurt by those guns,
But they unless they tried to get into the harbor
Yes, that's absolutely true, but actually the blockade running ships were of shallow draft precisely for that reason, so that they didn't have to run the main channel, but still, you know, when I had that map up there of the south, it looked like a humongous barrier, but you're absolutely right, the number of places with harbor facilities was actually quite limited, and
And there were other places, like Apalachicola, for example, which exported a large amount of cotton.
Most people have never heard of it, but at one point in the antebellum days, incredibly wealthy city and region of the United States, fascinating history,
But it was basically set up to export cotton, and there was no facilities really for importing goods that could somehow be used to get it to the troops, essentially.
That was one of their biggest problems, is how to...
The goods were heavy. I mean, they had to have something dressed out and draft. They had to have enough draft to get in there and deliver them.
But Wilmington was actually very well situated in the sense that you could run from Bermuda and the Bahamas into Wilmington with a protected harbor with two ways into the harbor.
And then once you got to Wilmington, it was a train ride not along the coast into Richmond through the back door, so to speak.
to speak. Of course, they protected that harbor fairly well, but ultimately they didn't protect
enough harbors because we weren't exporting cotton out of Wilmington, of course. We had
to move the cotton up to Wilmington if it was going to be sold out of there, while at
the same time the railroads have to be used to move troops and other things and all the
I thought I heard something that seems to be crucial and sounded contradictory but maybe not. I think earlier in the afternoon you mentioned that you were talking about a huge resource allocation problem.
that the price of cotton in Europe didn't go up dramatically and that because of that, the French and the British, etc., didn't have a strong motivation to get involved in blockades.
That's a very good question, very perceptive indeed.
to go up, there was ample supply elsewhere, then that was going to happen anyway, so the Southern economy was destined to have trouble if the world supplied cotton, or in fact rising rapidly and the intervention of civil war would get the foam of the road along the way, but they were destined to have trouble and they were relying only on cotton as an export.
What we have going on here is that the Europeans, I mean this was not a surprise to anybody and basically the Europeans always stockpiled cotton, they always warehoused cotton, but particularly so in 59 and 60, there were large crops, decent prices and they were
Stockpiling Large Amounts
The Civil War breaks out and cotton prices start to move up immediately at that point.
So that Europeans who are holding cotton at that point are making money.
I mean, if you're holding 4-cent cotton and all of a sudden it's 9-cent or 11-cent per pound, that's big time.
It also means that if your member of parliament votes to break the blockade, you're going to be mad because you've just doubled or tripled your money.
So, they had the cotton, but the market price was rising on the constriction of new supply from the United States into Europe, and perceptively so.
I mean, there was a good reason for that, because even though there was a lot of cotton being produced in the United States,
not a lot of it was getting out, and a lot of the stuff that was getting out was being diverted to the north.
How did you catch the stockpile? In the Civil War, they had stockpiles.
Okay, you mentioned in your book that they weren't the other sources also, like the Egyptians, they weren't the other sources, so they sort of filled in that short supply from the state.
Cotton was, had already been started to be grown in India, Egypt and some other places,
and the beginning of the war and the blockade caused a rapid development of that as farmers
in these other areas quickly switched from one crop to another. But the amounts of cotton coming
coming from these other sources was slow really to develop, you know, if you miss one crop that's a whole another year before you can start and you're talking about in many cases farmers who have never farmed that product or harvested that product so the results were slow but by the end of the war the cotton growing industry had been firmly established in other parts around the world, yes, that's definitely true.
Was there a classification of cotton, long, fibrous and short, and they grew a type of short in Egypt.
The Egyptian cotton was somewhere I read that it was superior, but not nowhere near the quantity that it could be supplied by the South.
and then of course and I mean I don't know for sure but I think I read
somewhere that the Egyptian cotton was rated real high but they couldn't
produce it like yeah yeah the growing conditions for the long cotton is is
limited especially at this time to very small areas Sea Island cotton was grown
in the United States and I think it's a long fiber and very similar to what the Egyptians
now grow as Egyptian cotton and so if you want to get the best sheets and towels and
things like that, you go up to West Point and you get Egyptian cotton whatever and it's
supposed to be the softest, most longest lasting, most absorbent and so on and so forth.
But most of the cotton, I guess, that's grown in the south, is grown for just other uses.
Utilitarian.
More utilitarian stuff, exactly.
And that's what the Industrial Revolution was all about.
The Union captured, I think, a lot of the area where the Sea Island cotton was being
grown.
And again, the Egyptians were, I think, fairly slow in coming on board there.
But of course now, now they're, I think they're growing and selling a lot more of that kind of cotton, it's really, it's the hot thing right now, definitely, definitely.
Will you tell us in order, presumably toward the end of the class, what happened to terrorists after the war, immediately after the war, and how were some of these things resolved after the war, if they were, that had given the South a great concern part of the war?
Yes, I will. We will deal with what comes after the war as well as how does that legacy might even still bump up to today.
There is a remnant, a very important remnant that is in some trails to follow through history of the Civil War
and its aftermath that I think are very important and you know I don't want to
claim too much for a book that's less than 150 pages but I think we learn a
lot about American history by going to this pivotal event in the American
experience and see those trails of influence up to the modern time not just
and just the other historical events that it influenced but what remains with us yet today.
So we're definitely going to get to that. I hope to spend a great deal of time on that.
So we'll see you next Tuesday.