Most of us figure that because the Civil War ended slavery and devastated the South in general, the wealthy Southerners who controlled the plantation slavery system must have emerged from the war with their wealth devastated as well. Some scholarship over the past several decades, though, has indicated that that’s not true—the wealthiest Southerners, at least in some spots, seemed to see their financial status spring back to health not long after the war was over.
A new research paper published by the NBER, drawing on a much wider pool of Federal census information, finds that the war did cause much more economic upheaval among rich Southerners than rich Northerners in the decade between 1860 and 1870.
The bright way to look at this is: Civil war enhances economic mobility! Something that America sorely lacks today. First, from the paper by Brandon Dupont and Joshua Rosenbloom, an illustration of the wealth that the plantation slavery system afforded the rich down South:
The 1860 data illustrate in striking detail the enormous fortunes that the slave system permitted the wealthiest southerners to accumulate. The median wealth reported by those between the 99th and 100th percentile of southern wealth distribution in 1860 was a staggering $122,250, more than three times the median wealth of the top 1 percent of northerners...
In the North, real estate was the principal vehicle of wealth accumulation, accounting for two-thirds or more of property ownership among the top 45 percent of wealth holders. In contrast, personal property (which included slaves) made up close to three-fifths of wealth in the top 10percent of the Southern wealth distribution and was still about half of total property wealth for those between the 55th and 90th percentiles.
How did that change over the course of the decade, during which the Civil War was fought and lost by the South?
While northern wealth holders above the 55th percentile experienced an approximately 50 percent increase in property holding over the 1860s,the value of property owned by southerners fell by nearly 75 percent. The drop was especially pronounced for personal property; above the 90th percentile, southern wealth holders experienced a 90 percent drop in the value of personal property, while real property wealth was cut approximately in half. As a result, after the war the relative shares of real and personal property in the South converged toward those in the North, with real property making up 60-70 percent of wealth, at least among the wealthier household heads...
While more than half of the those in the top 5 percent of northern wealth holders had been in the same group in 1860 just one-third of top southern wealth holders in 1870 had enjoyed a similar status in 1860.
It is almost tempting to say that the Civil War hurt those rich white slaveowners worse than anyone, until you consider the fact that they were still left with much more than those who began the Civil War poor. Including their former slaves. Still, it represents a fairly drastic shakeup in the field of economic inequality over the course of a mere decade. Burning down an entire region of the country is probably not the most efficient way to enhance economic mobility, I admit. But it happened.
File this under “cautionary tales for the rich.”