The South, the Nation, and the World: Perspectives on Southern Economic Development

Published by EH.NET (November 2003)

David L. Carlton and Peter A. Coclanis, The South, the Nation, and the World: Perspectives on Southern Economic Development. Charlottesville, VA: University of Virginia Press, 2003. ix + 234 pp. $49.50 (cloth), ISBN: 0-8139-2184-8; $19.50 (paperback), ISBN: 0-8139-2185-6.

Reviewed for EH.NET by William H. Phillips, Department of Economics, University of South Carolina.

In this work of collected essays, David Carlton of Vanderbilt University and Peter Coclanis of the University of North Carolina outline the Southern economy’s struggles since colonization. As history professors, they present an argument that Southerners had the same economic motivations as people anywhere, but faced constraints that conditioned their responses in ways detrimental to economic growth. They feel that this is a more satisfying assessment of the South’s past and present than using “pre-modern” or “pre-capitalist” mentality to explain Southern uniqueness. Although this approach will be more attractive to economics-trained economic historians, this is not a story in which every decision collectively made by the Southern economy worked out for the best. It is rather a tale of “lock-in” mechanisms, asymmetric information, unbalanced growth and risk aversion. Readers will likely judge the results based on how much they believe in “path dependence” versus comparative advantage.

After a brief introductory chapter, Coclanis presents an essay comparing Northern and Southern paths to economic development. Slavery and plantation agriculture was initially a profitable choice, but it subsequently locked the South into an economy of high income inequality. It encouraged an over-reliance on producing goods that did not require flexibility to meet changing market conditions. Finally, it discouraged investment in human capital, transportation, and vital urban centers. The next paper by Coclanis switches to the micro issue of why the production of rice in the Carolina and Georgia low-country used a different form of slave organization. The author turns to asymmetric information and high monitoring costs to explain the use of “task” labor rather than the more common gang system.

Carlton then contributes a chapter on Southern antebellum urbanization. The South was not only less urbanized than the North, its cities were different. They were organized around an exporting economy, and as a result, the major cities dwarfed other towns within the tributary area. Plantations did not need a small city nearby, because slave labor could make most of the needed provisions during off-season slack time. Notable is a comment by the author that the ability to expand output through additional slave labor discouraged the development of a Southern agricultural implement sector. One such industry that did develop, however, was the production of cotton gins. Of interest is the fact that the major producers of cotton gins in the South did not locate in the larger towns. Daniel Pratt, Samuel Griswold, and Benjamin Gullett all built factories in rural locations, importing Northern machinists as needed to supply their wares. It would seem that even if Southern plantations had demanded more manufactured goods, it may not have spurred urban growth.

In Chapter 5, Coclanis chronicles the decline of the Carolina-Georgia rice sector. In the vernacular of our time, it was a victim of globalization. British control of Bengal produced an increased supply of Asian rice into European markets that started to push North American exports to Latin America. After the Civil War, Asian rice poured into the Untied States, and survival of the domestic industry required a shift in production to Louisiana, Arkansas, Texas and California. In contrast to the American low-country, Italian rice producers were able to expand in the face of these market developments, while production in South Carolina and Georgia ceased.

Carlton follows with a reprinting of his notable article on North Carolina industrialization. He argues that like the South in general, it followed an unbalanced growth path that concentrated on mature industries that were severely constrained by external markets. Lack of marketing expertise led to reliance on outside selling agents, such as occurred in textiles. A joint article then looks at capital mobilization in the Carolina Piedmont. The authors demonstrate the heavy burden placed on Southern entrepreneurs by the need to raise considerable funds from small local investors. This resulted in a premium placed on steady dividends and avoidance of risk. Industries meeting these criteria were not going to be major growth sectors in the American economy.

The eighth chapter is joint work in which Coclanis and Carlton compare Southern patents with its level of urbanization and share of capital goods manufacturing. As expected, the South is in the “periphery,” although in this instance joined by Maine and Vermont. The geographical approach continues in the next essay by Carlton on unbalanced growth in South Carolina. Just prior to the Southern textile boom, industrialization in South Carolina seemed concentrated along the coast, rather than inland. By 1930 however, the state had clearly formed its own “core” of Piedmont industrialization, while the low-country languished as one of the South’s poorest regions. Besides exogenous factors, Carlton adds the positive feedback of the Duke Power Company, whose search for a high load factor led it to build South Carolina power lines into the emerging core and avoid areas below the fall line.

The work concludes with two new papers by Carlton. First he looks at the historical origins and present-day impact of Southern entry into the American defense industry. The American military initially found the South as a convenient locale of large amounts of unproductive land that could be converted into training facilities. Over time, however, some major industrial contract centers have developed, with their accompanying jobs and spin-offs for the local economy. Finally, Carlton looks at the changing relationship between the Northern manufacturing belt and the South. Initially the manufacturing belt was a source of industrial goods with which Southern firms could not compete. Over time, the relationship evolved, and after World War II, was given the journalistic description of the “Sunbelt” versus the “Rust Belt.” Carlton argues that both regions now face similar problems, which leads to the ultimate question: is the American South still different?

It should be apparent, given the breadth of these essays, that the authors take the South seriously, and no doubt will have more to say on the subject in the coming years. In the meantime, the current book provides an example of a historical approach to the South that is not romantic and not accusatory.

William H. Phillips is Associate Professor of Economics at the University of South Carolina. He is currently researching the development of the Southern cotton gin manufacturing industry and more generally, patents issued to Southern inventors before World War I.