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Old South, New South: Revolutions in the Southern Economy Since the Civil War.

From laborlords to landlords

Old South, New South: Revolutions in the Southern Economy Since the Civil War. By Gavin Wright. New York, Basic Books, 1986. $9.95, paper.

"The preeminent distinctiveness of the Southern context was the labor market," writes Gavin Wright, The regional labor market of the South provides the axis upon which this well-argued, well-written work turns. As a prism refracts light, so for Wright the changing southern labor market refracts the forces that have underlain the development of the southern economy. Wright deals essentially with two questions-why did the southern labor market retain its regional distinctiveness for some 80 years after emancipation; and what caused it eventually to become integrated into the national labor market?

The core of Wright's answer is that (1) the southern labor market's isolation resulted from the need to maintain a cheap agricultural work force; industrial wages in the South were linked to the farm wage; and the dominant planter interests resisted the wage competition which industrial development, with its attendant investment in education, would have involved; and (2) that with the introduction of farm (including cotton) price supports by the New Deal legislation, the mechanization of cotton harvesting became economically feasible, displacing farm labor even as job opportunities in the North opened up during World War II. The system upon which the economy of the post bellum South had been based thus disintegrated. The interest in keeping the southern labor market isolated disappeared, giving the forces that sought to promote industrial development the upper hand, and tending to integrate the southern labor market into the national one.

The separateness of the South's labor market was evident from the low average wages paid there; low investment in education; and low average value added in manufacturing per worker-nonfarm labor being concentrated in low-wage, low-skill sectors. It was a burden inherited from the slave economy. Slavery had retarded southern economic development-but how so? Wright strikingly conceptualizes the behavioral response of slave owners to the incentives available in a system of slave labor: they were laborlords rather than landlords, he argues. Their concern was with raising the value of their labor (which constituted an estimated two-thirds of their wealth), rather than of their land. Hence, in contrast to landed interests in the North, they exerted little pressure for "internal improvements." Population per square mile remained low, canal mileage and railroad mileage per 1,000 square miles was much less than elsewhere in the United States, and also the social groups seeking capital gains as the major benefit from owning land were virtually absent. The slaveholders, small as well as large, were footloose; unlike northern wealthholders, they frequently changed domicile. They lacked the interest in developing land-the banks generally would lend only with slaves, not with land, as security-as indicated by the neglect in using fertilizer, by soil exhaustion, and by failure to invest in the rich deposits of potash and coal found in the South.

The Civil War, however, turned laborlords into landlords, writes Wright. The planters had not been the great landowning class before the war that has often been written about; they became one after the war. Their new interest in land is documented by the campaigns they led in many States for fence laws, strict trespass laws, and enforcement-laws that were bitterly fought by smaller farmers who had earlier used the land freely for grazing, fishing, and hunting. Railroad building increased, and there was a population shift to smaller urban centers. But the dominance of cotton persisted and cotton planting expanded. It remained by far the most profitable crop in the agricultural South. "Cotton was not the totality of southern agriculture, but for most of the region it defined the opportunities and dictated the pace of economic life."

While per capita income rose, the rise remained linked to the fortunes of the world market demand for cotton: real hourly wages and farm labor rates were linked to one another (although the link began to weaken after World War I). The South could not compete for the immigrant labor that came to staff the northern industries, a low-wage region in a high-wage country." The kinship networks that immigrant labor built, and which were major channels of labor market information, remained confined in the South for southern workers, and this factor hindered their migration to the North. The southern textile mill village epitomized this kinship-based labor market system. While fostered by employers, and despite its vaunted exploitative character, it was accepted by textile worker families who had often to leave the land because of the decline in the size of their farms, the spread of tenancy, and other factors that marginalized their existence. Employers had little trouble in staffing the mills, despite the decline in the southern textile mill wage to one-half the New England level by 1900. Kinship was the vital ingredient in hiring and holding this work force. As Wright states, "Rather than thinking of kinship, ethnic, and linguistic loyalties as market 'imperfections,' it is more appropriate to consider these forces as part of the way the market functions and expands."

The isolation of the southern labor market was perpetuated by low educational attainment, and the smallness or absence of a technical base in such fields as machine building, metallurgy, and so forth. Low educational attainment stemmed largely from inadequate funding of schools. As late as 1940, expenditures per pupil in such States as Virginia ran to only 54 percent of the national average; in Texas, 73 percent; in North Carolina, 49 percent. Wright does not believe such low spending is explainable by relative income. It resulted ftom the South's economic structure: " . . . as a low-wage region in a high-wage country, the South had no expectation that it could capture the return on investment in its own people." Wright cites the experience of Birmingham, AL, where, under the pressure of the steel industry located there and of interested local business circles, schools were better funded than rural schools, and schools attended by blacks were, as an exception, not underfunded. But no sooner than World War I stopped the flow of immigrants to the United States, "experienced miners and steelworkers of the Birmingham district were among the first ones to leave for the better paying jobs of the North." Employers in mining, sawmills, and lumber camps "could not block the mobility of workers to leave but they did not have to spend their money on an educational process likely to raise the probability of departure."

The South's industrial start came late; the latecomer may derive an advantage from his ability to adopt more up-to-date production equipment than that of competitors who started carlier. The preconditions to take such advantage were lacking in the post bellum South. The experience of southern labor built slowly, turnover and absenteeism remained high for a long period. No widely diffused community of technical experts existed-"the basic lack of an indigenous technology is observable in many . . . areas"-not only in steel and mining, but also in paper and textile machinery (although in time the textile machinery industry increasingly located in the South, and generated a group of innovative engineers). Moreover, the diffusion of technology was hampered by the failure to upgrade labor whose schooling, as noted, remained below the national norm.

Among the more important theses which Wright argues in this book is that market pressures were not hostile to racial segregation, that, on the contrary, they accommodated to it. Hence, segregation did not in itself impede southern progress. Competitive pressures indeed tended to equalize wages between whites and blacks, especially in unskilled work. But occupational advancement in industrial settings, being far more dependent upon personal relationships in the work environment than upon the impersonal market, perpetuated segregation by excluding blacks from promotional opportunities in nearly all those industries in which they did not constitute the great majority of workers in the lower job rungs (as in sawmills). There was, then, no "law of industrialization" in evidence which, as some economists have held, would in time eliminate racialist criteria in occupational advancement. Racial segregation, Wright shows, led not only to occupational but to experiental segregation as well. That is, blacks came to be identified with certain industries, such as tobacco and lumbering, and also to some extent with steelmaking-but they were unable to compete for the better jobs, for example, in textile mills because of the white milieu that stamped the work environment there.

Despite the long tradition of segregation, racial wage differentials did not fully emerge until the 1920's. Construction jobs came to be more distinctly associated with "white jobs" (being high wage), and "black jobs" (being low wage), in part from deliberate trade union policies. A comparable evolution occurred in other industries. A dualism developed, with both black and white workers often holding not merely different but noncompeting jobs with different base pay rates. Market pressures and industrialization thus did not lead to "convergence and equalization but to the opposite." The specific reasons for the emerging dual-wage structure are not clear; Wright traces this and other developments unfavorable to black workers to "the larger historical process of creating a segregated society."

We now turn to the second question which Wright poses. What were the forces that spelled the end of the South's low-wage economy? There were essentially two such forces, both receiving their impetus from the changing political constellations of the 1930's and 1940's, both rooted in New Deal policies. One was the upward pressure on wages first channeled through the National Recovery Act, and later institutionalized by the Fair Labor Standards Act. Both the NRA and the FLSA in part represented responses to the fears of northern labor of the low-wage competition of the South. The other force was the farm price support program, which stabilized the price of cotton, and eventually resulted in the elimination of tenantry in the South, and a shift to wage labor on cotton plantations. In addition, the economics of cotton planting began to favor mechanization. The need for cheap farm labor abated, and massive out-migration, particularly of blacks, ensued.

What Wright calls "The Assault on the Low-Wage Economy" proved indubitably effective. The impact of NRA, even during the brief period of its existence in the 1930's, was such as to sizably reduce North-South wage differentials in key southern industries-reductions that "were never really reversed." The reduced differentials, together with federally mandated minimum wages, had long been a goal of northern labor fearing its gains being undermined by the South. NRA and FLSA also found support among a majority of southerners. However, these wage policies eliminated many jobs, and the first to be laid off were blacks (with an estimated 500,000 of them being on relief in 1934 as a result of the minimum wage provisions of the NRA, by one official estimate). (Black newspapers dubbed the NRA as the Negro Removal Act.) The proportion of black workers in such industries as tobacco, where they had been the majority in 1930 (68 percent), dropped precipitately (to 37 percent by 1950). "A 1941 survey found that 95 percent of new job openings in Georgia were reserved for whites."

In cotton farming, displacement occurred by a more circuitous route. Under the Agricultural Adjustment Act (AAA), payments were made to owners for reducing cotton acreage. The payments were structured and administered so as to reduce tenant acreage rather than wage-Labor acreage. The percentage of farm families (mostly blacks) who were tenants shrank drastically; the proportion of wage labor increased. The real daily wage of the farm wage laborer dropped, and, in 1940, ran below the level of the 1920's. As noted, the expansion of wage-labor acreage, combined with the later shortage of farm labor from outmigration, made farm mechanization economically feasible. While the 1930's echoed with the protests of liberals seeking in vain a betterment in the conditions of southern tenants, the economic interests of the planters had turned against tenantry. "(It) was not the northern liberals but the southern planters who were perpetrating revolutionary changes in southern institutions," Wright writes in taking issue with the frequent complaints of southern farming interests, voiced during the 1930's, that lawyers in the U.S. Department of Agriculture were fomenting unrest in their region.

In consequence of these developments, interest on the part of dominant groups in the South in regionally isolated labor and capital markets waned. Wright distances himself from certain interpretations of the evolution of the "new" South after 1940-among them, the stimulation from military outlays; the importance of climate in the residential choice of professional and managerial personnel; the small membership of trade unions; and the absence of bureaucratic impediments to business development often encountered in northern States. These interpretations, Wright believes, are not wrong so much as they fail to answer the question as to why the South's transformation into an integrated region of the national economy did not occur earlier. His answer is essentially what his book is about.

Wright has much to say concerning the human suffering caused by the "speed and heartlessness" with which farm mechanization was undertaken and to whic"all-out research effort by public agencies . . . " contributed. He quotes Gunnar Myrdal's remark that the AAA represented an American enclosure movement, although he also points to some of the progressive results it had in terms of the eventually better lives for those who were displaced.

Moreover, that "enclosure movement," doing away as it did with the low-wage regional system, helped lay the social and economic bases of the civil rights movement of the 1960's. The movement did away with the dualistic wage structure, compelled the expansion of job opportunities for blacks, and lent urgency to the promotion of business and industrial development in the South. Again, Wright rejects the notion that this evolution arose from the "rationality" of industrial society. Here, as elsewhere in his book, his orientation is that of the political economist who views political and social forces as central to understanding economic events.

The book is rich and instructive as an economic history. There remains the question, however, how successful Wright's focus upon the southern labor market is. The labor market here constitutes a conditioning factor of the history he has written, not truly an agent. The greatest revolution in the history of the South was abolition. While labor was generally free to move after abolition, it did so within the ambit of the cotton economy: cotton remained king for decades still, and cotton planters imposed a lowwage labor market system that conformed to their interest. The demise of the system, again, was the work of agents or forces that cannot be subsumed within the analytical terms of the labor market. Wright's skill as a writer conceals the limitations of his approach. Yet, this is a minor criticism. It cannot detract from the quality of his work.
COPYRIGHT 1988 U.S. Bureau of Labor Statistics
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Author:Brand, Horst
Publication:Monthly Labor Review
Article Type:Book Review
Date:May 1, 1988
Words:2470
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