The Origins of The American Civil War 1974

Economic History Association
The Origin of the American Civil War

Author(s): Gerald Gunderson
Source: The Journal of Economic History, Vol. 34, No. 4 (Dec., 1974), pp. 915-950
Published by: Cambridge University Press on behalf of the Economic History Association
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The Origin of the American Civil War
THE causation of the American Civil War has been one of the
largest issues in the historiography of this nation's past. Expla-
nations for the question have been offered, debated, and reinter-
preted ever since the time of the war; indeed, even before 1860
some individuals were setting forth reasons why an "irrepressible
conflict" must come. Furthermore, the debate among scholars does
not appear to be diminishing or approaching any consensus of in-
terpretation. New hypotheses and critiques appear to be emerging
as fast today as during preceding periods. Some of these proffered
explanations prove to be more popular than others but none has
won substantial favor to the exclusion of others and few have been
completely discredited. As a result, there now exists a large inven-
tory of previously suggested interpretations building upon such di-
verse mechanisms as slavery, sectionalism, political ineptitude, a
slave-power conspiracy, economic conflicts and abolitionist acti-
vism.' Many of these explanations have been thoughtfully prepared
and then further polished by cross-examination, yet when all these
efforts have been objectively considered they yield few definitive
conclusions.
The cause of the Civil War rests in a form of limbo. A number of
alternative explanations await evaluation, but there is at present no
recognized procedure by which a consensus on the actual cause(s)
can be reached. It is entirely possible that a large number of the
proposed interpretations describe genuine frictions which did con-
My thanks, without implication of responsibility for remaining errors, go to Galen

Burghardt, Ronald Ehrenberg, Stanley Engerman, Robert Fogel, Claudia Goldin,
and an anonymous referee of this Journal.
1 There are numerous anthologies and commentaries on the issue of the cause of
the Civil War, but the following are useful, representative statements containing
references for further reading: Thomas J. Pressly, ed., Americans Interpret Their
Civil War (Princeton: Princeton University Press, 1964); Edwin C. Rozwenc, ed.,
The Causes of the American Civil War (Boston: D. C. Heath, 1961); Kenneth M.
Stampp, ed., The Causes of the Civil War (Englewood Cliffs: Prentice Hall, 1965);
David M. Potter, "The Literature on the Background of the Civil War" in David M.
Potter, The South and the Sectional Conflict (Baton Rouge: Louisiana State Univer-
sity Press, 1968); and (a review of recent literature) Lee Benson, "Explanations
of American Civil War Causation: A Critical Assessment and a Modest Proposal to
Reorient and Reorganize the Social Sciences" in Lee Benson, Toward the Scientific
Study of History (Philadelphia: J. B. Lippincott, 1972).
915
916 Gd nderson
tribute to some sequence of pressures t
however, that all such actual forces w
If the relative importance of the vari
like so many other phenomena in the w
inequality-one would expect a small number of causes to dominate
in importance. With the relative importance of the various causes in
hand it would then be necessary to specify how large the total of
such causes must be in order to dominate all the alternative forces
opposing the resort to warfare. In short, evaluation requires some
form of comparative measurement, however crude it may be.2
Recent scholarship has been very active and productive in exam-
ining a subject utilized extensively in this study, the economics of
slavery.3 Three findings of importance to this paper have emerged.
First, slaves were profitable investments to southern owners; that is,
they repaid as high a rate of pecuniary return as available alterna-
tive uses of capital. Slavery can be explained entirely by its mone-
tary return without reference to other objectives which might have
encouraged slave ownership. Second, slavery was viable. In the ab-
sence of emancipation by such forces as the Civil War, it would have
been economically profitable indefinitely. One study estimated that
if emancipation had not occurred by 1890 an average slave would
have yielded his owner a net marginal product 52 percent greater
than in 1860 and the market price for his ownership would have
risen accordingly.4
In retrospect these results should not have seemed surprising.
Slavery's primary function was the provision of labor services, and
the efforts of labor in America, reasonably directed, have always
been relatively productive. Furthermore, the average productivity
of American labor has increased over time so that the laborer-or in
the case of a slave, his owner-has received correspondingly higher
rewards for his effort. Only if the pattern of abilities and experience
of Negro slaves diverged substantially from that of free citizens
2 A good statement of the conflicting objectives which each of the parties faced
and therefore the necessity of recognizing some trade-off or compromise between
them is contained in David M. Potter, "Why the Republicans Rejected Both Com-
promise and Secession" in George Harmon Knowles, ed., The Crisis of the Union
(Baton Rouge: Louisiana State University Press, 1965).
3 An excellent summary and explanation of this subject is contained in Robert W.
Fogel and Stanley L. Engerman, Time on the Cross (Boston: Little, Brown and Co.,
1974).
4 Fogel and Engerman, Time on the Cross, p. 96.
Civil War 917
relative to earlier periods could antebellum American slavery have
become unprofitable or nonviable.
Third, because slavery was an attractive employment of capital
and was expected to remain so, an enormous vested interest had
been developed in its ownership by 1860. Analogous to today where
factories, real estate and common stock are associated with wealth
and the income expected to emanate from it, antebellum southerners
had accumulated substantial holdings in slaves. Just as expropriation
(without compensation) of a steel mill would destroy that wealth
formerly claimed by its owners, so abolition of slavery (without
compensation) would similarly reduce the wealth of the (former)
slave holders.
The market value of slaves in the U.S. in 1860 equaled about 2.7
billion dollars.5 Even in modern terms that is a large quantity of
wealth but relative to prices and incomes of 1860 it represented a
substantial portion of both wealth and income in slave holding re-
gions. As will be shown below (Table 1), income from slaves repre-
sented more than thirty percent of the total income of free citizens
in the six states ("the Gulf Squadron") of the lower South. It repre-
sented more than twenty percent of annual income in the four lower
border states and Texas. Thus the reactions of slave owners to the
abolitionists, or for that matter to any program which implied some
reduction in the returns from slave ownership, was much more than
a gesture of regional identity or pride. It was a reaction propelled
by a substantial self-interest, self-interest of an amount much larger
than any minimum level at which resistance by the threatened
parties would reasonably be expected to develop.6
5 Claudia Dale Goldin, "The Economics of Emancipation" THE JOURNAL OF Eco-

NOMIC HISTORY, XXXIII (March 1973). This estimate compares very closely with
the assessment of slaves (adjusted for the included populations) made by the Con-
federate government in July of 1861. See Richard Cecil Todd, Confederate Finance,
(Athens: Univ. of Georgia Press, 1954) p. 199.
6 An important corollary of this discussion is that the primary and predominan
effect of the abolition of slavery (without compensation) would most likely be a
transfer of earnings from slave owners to the freemen. Third parties, such as north-
erners, would be affected little on net. Slavery is implicitly a method of distributing
the returns from labor differently than the distribution of benefits which result from
free labor. In either case, however, the value of the labor effort is derived from the
resulting output. The demand for cotton or any other antebellum southern crop
should have been independent of the form of labor input except insofar as it affected
the price of the final product (cotton textiles, for example). One might conjecture
that slavery-as opposed to free labor-would produce cotton much cheaper because
the grower would need only to provide the subsistence for slaves while he would be
required to pay the (much higher) prevailing wage rates for free labor. That view,
918 Gunderson
A second general line of recent scholarship which sharpens our
understanding of the forces at work just prior to the Civil War is the
development of economic organizations.7 Much of this effort has
focused on the formation of such institutions but the findings of im-
portance for this study are concerned with a question implicit in the
primary issue: what decides whether institutions continue or atro-
phy? Our particular interest, of course, is in the leading institution
among possible Civil War causes, chattel slavery.
In essence, slavery was a property right, the right of one individ-
ual to own, sell, lease, rent, compel, direct and expropriate the re-
turns from another individuals labor. In the last century and a half
slavery has come to be viewed as an abnormal arrangement, a
"Peculiar institution" not acceptable in structuring the workings
a society. That aversion grows out of generally held views about th
ethics of the institution, however, not in response to any unusual
difficult problems (for social institutions) in its operation. Slavery
like most other institutions codified by government, functions rea-
sonably smoothly when its operation can be enforced through re-
course to the legal system.
"Enforcement" is a crucial characteristic. The literature on the
development of new institutions has stressed the necessity of wide-
spread benefits and its consequent general acceptance in order to
establish them. A similar environment is necessary for them to re-
main viable. In the context of the U.S., general support implies the
relatively broad base of the electorate, particularly for those insti-
however, is very misleading. The real cost of slave labor to its employer was slave
maintenance plus the opportunity cost of the investment in acquiring him. (The
same phenomenon appeared when slaves were hired by the year rather than pur-
chased. The hire rate was at least several times as large as room and board expenses
for the slave.) Furthermore the opportunity cost of using slaves tended to rise to the
level of free labor because, when it was less, potential employers had reason to pur-
chase slaves to capture those extra profits thereby bidding up the price of the slaves.
Thus the cost of producing cotton tended to be equalized whichever labor system
was employed in providing it and northerners had little economic stake in the insti-
tutions which the South utilized to organize its economy. This argument should
be hedged, however, by the possible existence of economies of scale in the utilization
of slaves not otherwise possible with free labor. See Stanley L. Engerman "Some
Considerations Relating to Property Rights in Man," Tim JOURNAL OF ECONOMIC IHS-
TORY, XXXIII (March 1973). Engerman's paper is the best comprehensive treatment
currently available of the role of slavery in its broader context as a property right.
See also Fogel and Engerman, Time on the Cross, pp. 232-246.
7 The basic framework is presented in Lance E. Davis and Douglass C. North,
Institutional Change and American Economic Growth (New York: Cambridge Uni-
versity Press, 1971).
Civil War 919
tutions, such as slavery, embodied in the legal code and therefore
implicitly subject to majority review.
Laws which prohibit activities which individuals find desirable
such as gambling or burning trash in the back yard are frequently
violated with impunity while activities prescribed, but not widely
supported, such as capital punishment and farm tax auctions are
seldom used. Stephen A. Douglas was simply articulating this point
applied to slavery when he observed that slavery could not survive
in a territory without the support of the population. Southerners
strongly objected to this statement-and to him for expressing it-
but their revulsion really came down to the desire that it should not
be true rather than disproving its validity. (The nature and evolu-
tion of slavery as a property right in the U.S. is examined in more
detail in Appendix I.)
Slavery was an all-or-nothing decision, but for the first part of the
nineteenth century that issue had been decided on a 'local option"
basis. True, the federal government enacted a series of compromises
partitioning the developing western regions into slave and free re-
gions. But because those boundaries generally paralleled the divid-
ing line which would have resulted from autonomous decentralized
choices, it was not a substantial intrusion into local affairs. Until the
1840's at least, slavery was an issue to be decided by the individual
states.
When Lincoln remarked later that the nation could not remain
"half slave-half free" he was expressing a sentiment that had only
recently become popular. The nation had remained "half slave-half
free" for some time prior to 1860-indeed, the usual condition of
much of the world up to the nineteenth century was "half slave-half
free"-and the conditions supporting that coexistence could have
persisted indefinitely into the future had they not been deliberately
altered. By the 1860 election, however, the environment controlling
slavery had been effectively transferred. The decision formerly dele-
gated to the states was now commandeered by the federal govern-
ment and the institution of slavery which formerly enjoyed the
relative serenity of local consensus was now torn by interregional
divisiveness. Northern elements, who believed that slavery was
wrong and must eventually be eliminated, advocated legislation
such as prohibition of slavery from the western territories. South-
erners countered by demanding a "slave code," a guarantee that the
920 Gunderson
federal government would protect property in slaves wherever lo-
cated in the nation. Given such conflicting positions, accommoda-
tion was obviously going to be very difficult if not impossible. The
deep South believed it had become much too costly in late 1860
when the Republican party, clearly antagonistic to slavery, gained
control of the federal government. If this property right was to be-
come dependent on national (and now hostile) support, the value
of slaves would be correspondingly reduced. The South, for reasons
which will be demonstrated more specifically below, chose to with-
draw from this national institutional framework. In the context of
the discussion of this article, secession can be interpreted as an at-
tempt to alter the political domain such that the large vested inter-
est in this specific institution can be maintained. In a sense it was
an attempt to formalize in political boundaries the de facto decen-
tralization governing the institution which had existed prior to 1860.
The reader has probably inferred from the foregoing discussion
that this study will develop an explanation of the Civil War based
on two forces, the South's vested interest in slavery and the North's
aversion to it. The reader may also be (rightfully) skeptical at this
point, however; this is hardly a new hypothesis. While the preceding
material provides some elaboration and the framework for subse-
quent work, anything better than a marginal advance in understand-
ing requires a specification of the mechanism whereby these interests
produced the war.
The first step is to develop a measure of the South's economic in-
terest in slavery. The vested interest of each of the slaveholding
states in slavery in 1860 is developed in Table 1. The per capita in-
come of all residents (including slaves) is shown in column 1. These
estimates are developed from Richard A. Easterlin's relative income
estimates and Robert E. Gallman's national estimates.8 The brack-
eted values for Texas, Maryland and Missouri are interpolated from
adjacent states because direct estimates are not available. Column 2
records the percentage of each state's population which was slave
8 Richard A. Easterlin, "Interregional Differences in Per Capita Income, Popula-

tion, and Total Income, 1840 to 1950," Trends in the American Economy in the
Nineteenth Century (Studies in Income and Wealth, Volume Twenty-four) by the
Conference on Research in Income and Wealth (Princeton, 1960) and Robert E.
Callman, "Gross National Product in the United States, 1834-1909," Conference
on Research in Income and Wealth, Output Employment and Productivity in the
United States after 1800, (Studies in Income and Wealth, Vol. 30, New York:
Columbia University Press, 1966).
Civil War 921
in 1860. Column 3 shows the average income which free citizens
received from slave earnings. These were calculated from Robert
Evans' hire rates of slaves for 1860 adjusted by the age/sex profile
of net slave earnings provided by Robert W. Fogel and Stanley L.
Engermnan.9 These average rates were then pro-rated among free
citizens in the respective states. The fourth column reports the aver-
age earnings of free citizens other than from slave ownership. It is
computed by apportioning the residual income not earned by the
slaves or spent on their maintenance (estimated at $20 per year per
capita) among free citizens. Column 5 gives the final necessary in-
formation, the percentage reduction in the average income of free
citizens from noncompensated abolition of slavery. This value is
calculated by taking the income received from slave ownership
(column 3) as a percentage of total income received by free citizens
(column 3 plus 4).
These estimates yield some immediate and interesting conclu-
sions. The first notable characteristic and the one mentioned pre-
viously above is the large vested interest which a substantial area
9 Robert Evans, Jr. "The Economics of American Negro Slavery, 1830-1860,"

Aspects of Labor Economics (Princeton: Princeton Univ. Press, 1962), p. 216, also
available in Robert W. Fogel and Stanley L. Engerman, "The Economics of Slavery,"
p. 325, in Robert W. Fogel and Stanley L. Engerman, eds., The Reinterpretation
of American Economic History (New York: Harper and Row, 1971). Robert W.
Fogel and Stanley L. Engerman, Time on the Cross, pp. 67-78. Because Fogel and
Engerman's earning structure was calculated for the period approximating the 1850
level of slave income, all net positive incomes of slaves were increased by a factor
of 1.18 (the ratio of Evan's hire rates for 1860 to the average of those for 1846-50
and 1851-55).
Proportion of Net Yearly Earnings Net Yearly Earnings

Slave Age Total Slave 1860 Old South* 1860 New South*
Groups Population (both sexes) (both sexes)
0- 4 .166 -20 -20
5- 9 .146 -4 -4
10-14 .138 28 33
15-19 .114 59 74
20-29 .178 89 117
30-39 .112 102 142
40-49 .071 86 128
50-59 .040 56 95
60+ .035 23 55
$43.08-average, $60.65-average,
Old South New South
* Old South: Delaware, Maryland, Virginia, North Caroli

tucky, Missouri; New South: Florida, Alabama, Mississi pi, Louisi-
ana, Arkansas, Texas; Tennessee and Georgia were considered to be
boundary states, one-half of each group.
922 Gunderson
TABLE 1
THE LOSS OF INCOME TO FREE CITIZENS OF THE SLAVE STATES
FROM NON-COMPENSATED ABOLITION OF SLAVERY IN 1860
(1) (2) (3) (4) N

Earnings Reduction
Other In Income
Slave Than From Of Free
Per Earnings Slaves Citizens
Capita N Per Free Per Free From
State Income Slave Citizen Citizen Abolition
Alabama $75 45% $50 $ 70 42%

South Carolina 80 57 57 102 36
Florida 89 44 48 95 34
Georgia 84 44 40 96 29
Mississippi 125 55 74 179 29
Louisiana 131 47 54 175 24
Texas (100) 30 26 108 24
above
seven states $97 - 46% $50 $113 31%
North Carolina 79 33 21 87 19
Tennessee 75 25 17 76 18
Arkansas 95 26 21 100 17
Virginiaa 88 32 20 100 17
above
eleven states $91 - 38% $35 $100 23%
Kentucky 83 19 10 88 10
Maryland (90) 13 6 94 6
Missouri (90) 10 5 93 5
a Excludes counties which later formed West Virginia.

Sources: Richard A. Easterlin, "Interregional Differences"; Robert E. Gallman, "Gross
National Product"'; Robert Evans, Jr., "The Economics"; Robert W. Fogel
and Stanley L. Engerman, Time on the Cross. See text for details of the
computations.
of the South had in the institution of slavery in 1860. For some states
such as Alabama it may be that an understatement in the per capita
income estimate employed leads to an overstatement in the calcu-
lated vested interest in slavery.10 Such individual deviations, how-
ever, cannot possibly negate the general pattern of reported slave
wealth. (Nor will these results be used below in any way by which
such possible overstatements affect the resulting conclusions.) All
of the states in the South had enough of their income dependent on
slavery that they could certainly be expected to protest, agonize,
resist and organize against any threats to its existence.
The second observation is the correlation between the degree of
dependence on slave income and the behavior of individual states.
In Table 1 the states are ordered by decreasing dependence on slave
10 Gerald Gunderson, "Southern Antebellum Income Reconsidered," Explorations

in Economic History, X (Winter 1973).
Civil War 923
income. The first seven states with the highest stake in slavery se-
ceded in response to Lincoln's election.11 The next four states, North
Carolina through Tennessee, decided not to withdraw from the
Union when the deep South did, but that clearly was a temporizing
stance. When the outbreak of hostilities forced them to unequivo-
cally choose, they opted for the side which was attempting to pre-
serve slavery. The last three states elected to remain in-and fight
for-the union, notwithstanding their mixed feelings about the
course.
The above results suggest that addressing the question of Civil
War causation in the relatively amorphous context of "North" and
"South" conceals a good deal of helpful information. Individual
states, at least the southern ones so far detailed, responded differ-
ently to given alternatives and those decisions appear to be system-
atically related to the returns each specific state could expect to
receive from its chosen course. Granted, this observation can be ex-
tended within individual states which were also heterogeneous col-
lections of groups and interests. In all southern states, for example,
some individuals had an enormous interest in preserving slavery
while others gained little or nothing from its perpetuation. Such
diversity can be controlled and bypassed, however, if it occurs
throughout the states in question. While substantial inequalities in
slave holdings existed among individuals within states, the average
value of slave wealth by state may still be usefully correlated with
the response of the state to decisions affecting slavery.12
11 These figures are strong evidence against the "slave-power conspiracy" hypoth-
esis. They state that the aggregate vested interest in slavery for each of the states
which initially seceded is sufficient to explain their actions; that is, it is not necessary
to resort to an explanation of a contriving minority. This will be formalized in
inequality (7) below.
12 The obvious advantage of using numbers to express these interests is that it
bypasses the morass of explaining whether some, a majority, most, or all individuals
believed and acted in such a way. Hereafter when such groups as the North or the
South are used they refer to the weighted averages of their preferences or costs as
revealed in their actions. It should definitely not be taken as implying that all in-
cluded parties agreed with a given decision or held preferences of equal intensity
about it.
The very strong relation between the ownership of slaves and the vote for secession
within states has been demonstrated by Ralph A. Wouster in his The Secession
Conventions of the South (Princeton: Princeton University Press, 1962). Another
important observation relevant here was made by Otto H. Olsen when he showed
that by any reasonable relative standard, slave ownership was widespread in the
South. See his "Historians and the Extent of Slave Ownership in the Southern United
States," Civil War History, XVIII (June 1972).
924 Gunderson
In addition to the vested interest in slavery of the various south-
ern states, it is also necessary to obtain estimates of the other basic
alternatives implicit in the decision to go to war. One is the cost of
some form of peaceful compromise, such as compensated emanci-
pation of the slaves. A representative form of the cost of such an
alternative would be to assess the $2.7 billion market value of slaves
in 1860 equally among the total population of the U.S., including
the freedmen. That nonrecurring charge would be $90 per capita or
about 90 percent of a single year's national income of an average
individual's income in 1860. To make this value comparable to
the form in which the vested interest in slavery is expressed above, i
can be converted into a perpetual charge against future income. If
an interest rate of seven percent is used,13 the cost of freeing the
slaves through emancipation (hereafter: T) equals slightly more
than six percent of future income (@ $100 per capita) in perpetuity.
In principle either formulation is equivalent. For example, one could
calculate the total taxes necessary to finance redemption of all slaves
in 1860 or one would assume that the owners of slaves were given
federal bonds equal in value to the slaves' market valuation and
that the principle and the interest thereon would be repaid gradu-
ally from future taxes.14
13 Railroad bonds were yielding 7% percent in January of 1860. Call rates on the
New York stock exchange for all of 1860 averaged 6 percent. See Alfred H. Conrad
and John R. Meyer, The Economics of Slavery and other Studies in Econometric
History (Chicago: Aldine, 1964), p. 55. The sensitivity of the results of this study
to this particular rate is reduced by using the same value for other capitalizations
such as the respective costs of the war.
14 Using the income level of 1860 as the fixed base for calculating the various
annuity costs raises the possibility that growth after 1860-or decreases, for that
matter-might affect the results of this study. While a general evaluation is very
complicated, an over-all appraisal suggests that this is not likely to be an important
factor within the range of (known) post-war economic change. For this complication
to exist, increases in output must be dependent on the existing level of income. If,
for example, growth results from maximizing behavior in the face of foreseen oppor-
tunities for innovation independent of the level of income, post-war growth rates
could be unaffected by wartime losses. Even when the growth and the incremental
gains to output are positively correlated, however, the probable amount of the effect
appears to be insufficient to affect the results of the study. (The following explana-
tion will be more comprehensible after reading through the appropriate sections
of the text below.) All the parameters of the study with the exception of the cost of
the war are stated as fractions of the income level and therefore automatically
adjust to any changes in it. It is only changes in income relative to the cost of he
war that could endanger the results of the analysis. In the (most likely) case of
increasing incomes, that effect would be most likely to appear in inequality (6).
Generally, paired combinations of F and D in which F is relatively small and D
relatively large are most vulnerable. For "middle values" of the pair, however, it
would require relatively large growth rates after 1860 to violate this inequality. For
Civil War 925
A variety of such programs for achieving peaceful emancipation
could be specified simply by varying the respective benefits and/or
costs among different groups in the economy. Such differences
would probably not have had much net impact on the results of this
study, however, because the different relative gains or losses would
be counteracted in the other alternatives.'5 The basic problem is the
huge accumulation of wealth in a form which is offensive to other
elements of the society. That opportunity cost will be necessarily
expressed in some form in the conflict over the institution's fate.
This procedure assumes that the South values slavery only for its
direct economic return. Implicitly, therefore, the use of the institu-
tion of slavery for other objectives, such as race control (as suggested
by Allen Nevins in his major work on the Civil War, The Ordeal of
the Union), are posited to be nonexistent. If such extra economic
factors are present, "T" would be correspondingly larger than the .06
value which this study employs. This factor does not appear to be
a major detriment to this study because, to a large extent, its results
are sensitive to relative, not absolute, parameter values. An increase
of T above .06 tends to increase each of the parameter values for the
South proportionately.' Of course, the possible use of slavery for
example, for the mid-point of the locus of F and D combinations, D A 13.3%,

F < 11.4% (See Figure 1), it would require a growth of real per capita income in
excess of two percent to reverse the behavior modeled in inequality (6). This is
greater than any long-term growth in per capita income in the latter half of the
nineteenth century which begins at 1860-the relevant initial year for this study.
15 Suppose compensated emancipation was financed by taxing only northern citi-
zens. Now T as seen by the North would rise from .06 to .09 and as seen by the
South would fall from .06 to zero. Clearly the North would find other alternatives,
such as war, relatively more attractive now while the South would obviously favor
compensated emancipation. This would now establish conditions which would en-
courage the South to compensate or "pay off" the North to move it away from its
favored action, such as war, toward the course favored by the South, compensated
emancipation. In other words bargaining between the two regions could adjust the
terms of such a program if there was any interest by either side in doing so.
Another emancipation program occasionally suggested would have freed the
slaves and then taxed them by the amount necessary to pay off their purchase price.
One problem with this procedure would be to induce the slaves to work sufficiently to
pay such taxes. After the war the freed men showed a strong preference for the
leisure which had been previously denied them and such a program would only rein-
force their incentive not to work. Probably more important, however, this program
would simply switch ownership of the slave from his former master to the federal gov-
ernment. If the price of the slave approximates the present value of his expected
future earnings net of subsistence, the federal government would need to extract that
identical stream of earnings to pay off his purchase price. Such a program would not
alter the basic nature of the institution or the primary source of objections to its
propriety.
16 The implications of a value of T greater than .06 for the South will become
926 Gunderson
objectives other than direct economic gain is an important historical
question in itself, well worthy of additional study. The framework
developed here opens up some possibilities below for measuring any
such elements.17
It is also necessary to estimate the total costs of the war to the two
regions. These include direct military costs, the implicit manpower
costs of conscription and the costs of the blockade of the South to
the respective regions. The South, in addition, experienced costs of
destruction and of expropriation of materials for military purposes.
The monetary values in the respective years must be deflated by
price changes and the opportunity cost of capital to obtain their
net cost as of 1860-the base for the estimates in this study. Because
the construction of these estimates is both extensive and complex
they are detailed in Appendix II of this paper.
The total costs to the Union are estimated at $2.188 billion or
$96 per capita while the Confederacy experienced expenses of
$2.017 billion or $380 per capita for free citizens. Converted into
charges against perpetual income (to make them comparable to the
form of the other estimated alternatives above) the costs become
seven percent for the Union (hereafter Wu) and twenty-six percent
for the Confederacy (We).
These estimates emphasize how large and expensive the war
eventually became. The cost to the North represents nearly a full
year's income while that to the South is nearly as large as the total
income they could have earned if peace had prevailed during the
duration of the war. In other words, the South made almost no
net income during the war and the (greatly reduced) consumption
it did achieve was drawn from its stock of capital. This is reflected
in the twenty-six percent charge (We) against future income and is
an obvious factor to incorporate in an explanation of southern in-
come in the post-bellum period.
These three estimates are: T = .06; Wu = .07; and W, = .26. T,
more obvious below as the paper unfolds. An increase in T first increases the upper
bound values of the pair of D and F, the expectation of the South being subjugated
and the size of the war respectively. This, in turn, (through inequality (3)) implhes
an increase in SL, the reduction in the present value of slaves that continue to be kept
in the Union. The sum of these changes do not affect any of the conclusions of this
study other than increasing the indicated parameter values by a scaler factor.
17 A test for extra-economic motivation by the South in maintaining slavery can be
developed in the following way. Below in the study some possible independent
measures of the value of SL are suggested. These should suggest whether SL is
adequately explained by direct losses in slave values or is sufficiently large to indicate
other factors as well.
Civil War 927
Wu, We, and the vested intere

states are necessary components in the decisions) to go to war but
they do not, in themselves, specify all the components implicit in
that choice. The basic decisions) to resort to war were necessarily
reached before the eventual size of the war could be known with
certainty. Indeed some of the relevant choices were made even
before it was certain that an armed conflict would occur. In other
words, while certain relevant alternatives such as T were established
when the important decisions were reached, others, such as the cost
of war or the losses to slavery from remaining in the Union, were
necessarily forecasts. To complete a specification of the conditions
which produced the war four additional parameters must be identi-
fied and measured.
C: C is the foreseen probability that armed conflict will occur

given that Lincoln is elected President in 1860.
SL: SL is the expected reduction in the price or present value of
slaves given that Lincoln is elected President. SL, in essence,
relates the vested interest in slavery measured above to the
losses which were anticipated from remaining in the (hostile)
Union.
F: Given that an armed conflict occurs, (C = 1) F is the fore-
seen size of that war. For convenience F is calculated as a
percentage of Wu or We and thus is also a measure of the
anticipated size of the war relative to the actual or ex post
size.
D: Given that an armed conflict occurs (C = 1), D is the antici-
pated probability that the South will lose or be subjugated
and therefore be forced to emancipate its slaves without
compensation. The value of D is developed assuming the
membership of the eleven actual states of the Confederacy.
Of course, C, SL, F and D are not directly measurable and must

be inferred from behavior if they are to be ascertained. Fortunately
such "mind reading" or inference is possible in this case. The year,
and particularly the six months, preceding the onset of war in April
1861 provided an unusually complete forum in which the issues
enclosing these parameters were articulated and acted upon.'8 In
1860 the traditional two-party political alignment in the U.S. frag-
18 Two good descriptions of this important period are Kenneth M. Stampp, And
the War Came (Binghamton, New York: Louisiana State University Press, 1950),
and Bruce Catton, The Coming Fury (New York: Doubleday, 1961).
928 Gunderson
mented into a continuum of four political parties each with-and
largely in response to-distinct views on the future of slavery in
the U.S. In response to Lincoln's election, the lower seven slave
states withdrew from the Union, while the other southern states re-
mained in the Union hoping and searching for some form of feasible
compromise. In all the southern states these choices were widely
reviewed prior to the election and the decisions were reached after
special state referendums and/or conventions. Meanwhile com-
promise proposals were developed both in special committees in
Congress and in a conference of delegates from twenty-one states
held in Washington, D.C. No programs acceptable to both sides
were developed and the Lincoln administration insisted on up-
holding its authority as the federal government in the South. The
South responded by firing on Fort Sumter.
In this context it appears reasonable to assume that each of the
major groups involved in the decision-making had had sufficient
opportunity and reason to appraise future prospects. While they
would obviously advocate different programs depending on their
own individual interests, it does not seem unreasonable to believe
that their (extensive) exposure to the options- each faced could have
led them to similar appraisals of those prospects. In any case, this
study interpolates the expectations of each region independently
within the constraints of the available evidence. This serves as a
safeguard that the assumption of common expectations is not influ-
encing the subsequent findings of the study, but it also serves as a
test of that hypothesis of common expectations as well.
In April of 1861 both the North and the South made the basic
decision that resorting to war was preferable to the alternatives of
compensated emancipation or accepting the status quo-the de-
crease in the present value of their slave holdings within the Union
for the South and the toleration of an offensive institution within the
Union for the North.
In the case of the South the first of these choices is modeled below.
The first inequality (1) expresses the observed judgment of the
eleven states of the Confederacy that the foreseen costs of war are
less than those of compensated emancipation.
T>F-We+.23D (1)
The right hand side of the inequality expresses the two expected
costs of the war, military expenditures (F * We) and the possibility
Civil War 929
that the slaves would be freed by subjugation (.23D). The value of
.23 is the average vested interest in slavery for the eleven states of
the Confederacy (see Table 1). The value of T and We were com-
puted above as .06 and .26 respectively. Thus inequality ( 1) has two
remaining parameters, F and D, which provide a range of "paired"
solutions to the inequality, but cannot, without additional informa-
tion, provide unique numerical solutions for either of them. The
domain of possible solution values is shown by the shaded area in
Figure 1. All pairs of values up to and including the boundary line
are consistent with inequality (1). Of course, it would be desirable
to have additional evidence which would allow us to either solve
individually for values of F or D or to reduce the (shaded) feasible
zone indicated in Figure 1. Such evidence has not yet been
developed but the additional insight it could add to this general
question would certainly make the effort to develop it appear worth-
while. Nevertheless, even without additional development, Figure 1
explicitly articulates some important expectations of the South. It
indicates that the South collectively believed that the size of the war
would be small relative to its actual, or, ex post magnitude. Even
under the extreme expectation that the South could not be sub-
jugated by the war (D = 0), the maximum size of which the South
could have foreseen-as demonstrated by their behavior-is less
than twenty-five percent of the actual size of the conflict.
Inequality (2) expresses the analogous choice for the North. The
North's estimated war costs (F * Wu) are weighted by the inverse of
their expectation of
F
success of achieving teojtetogwfeD a(2)
W. were computed above as .06 and .07 respectively. Inserting those

values into inequality (2) yields a relation between F and D which
the North must have held in making the choice to resort to warfare.
This locus of paired values is illustrated in Figure 2 where the
shaded area represents the possible expected combinations of F and
D which are consistent with the North's behavior. Unlike the
analogous expectations of the South, those of the North are rather
"open ended"; that is, their behavior is consistent with almost any
expectation as to the size of the war up to eighty-six percent of
930 Gunderson
FIGUm 1
POSSIBLE PAIRED VALUES OF F AND D FOR THE SOUTH
Source: Figure 1 is constructed from inequality (1) by calculating the joint values of
F and D for which inequality (1) is satisfied. See text.
actual size depending on their associated expectation as to the likeli-

hood of subjugating the South. Fortunately there is additional evi-
dence which makes it possible to narrow the range of these possibili
ties. At the beginning of the Civil War, the federal government
conducted an intensive process of budget formation which was
designed to project the cost of the war. The Treasury and War de-
partments and Congress all readily agreed that the war should last
less than one year, require 300,000 troops and cost about $265,000,-
000. Against the actual cost of the war of $2,188,000,0,ties-
mate implies an F value of slightly more than twelve percent. The
projection of necessary military manpower relative to the actual
number (somewhat in excess of two million depending upon how
effective strength is measured) yields an estimate quite close to
that provided by the comparison of costs. An expectation of F=
12.2 percent for the North implies that they projected D > 14.3
percent. This is not to say that the y necessarily held dim hopes as to
their chances of subduing the South but rather that given the rela-
Civil War 931
FIGURE 2
POSSIBLE PAIRED VALUES OF F AND D FOR THE NORTH
0 A A0
wen,~_
Source: Figure 2 is constructed from inequality (2) by

F and D for which inequality (1) is satisfied. See text.
tively small cost they expected the war to entail, it would appear
to be their best course of action for any prospect of success down to
as small as 14.3 percent. Actually there is some evidence that the
North was not especially sanguine about its prospects of subduing
the South. Their expectation of D was probably much closer to its
lowest possible bound of fourteen percent than to its maximum
upper bound of one hundred percent.'9
Thus we have implicit expectations as to the size of the war and its
probable outcome for both the North and the South. The striking
feature, however, is how much overlap or congruence there is be-
tween them despite their completely independent derivation. These
interpolated expectations do allow the possibility of divergent
expectations but for the set indicated by the North's behavior (F -
12.2 percent) the two regions have remarkably close appraisals. At
F < 12.2 percent the South would expect D to be less than 12.3
19 Inequality (9) below will show that the North's primary motivation in going
to war was its antislavery sentiment. Several simulations on inequalities (9) and (10)
and variants thereof yield similar implications; namely, that in the probable rang(
of N (the North's antislave preference) of .015 to .04, the feasible values of D an'
bounded by about 20 percent to 50 percent.
932 Gunderson
percent, while for the same value the North would go as low as
14.2 percent.20
Thus, we have developed a set of expectations about the future
of the conflict between the regions which could well have been held
in common by both parties on the eve of that struggle. Furthermore
they pose a group of predictions by which both parties would see
recourse to armed conflict as their best alternative. In other words,
this set of expectations coupled with the observable costs measured
above form a logically consistent explanation of the occurrence of
the Civil War. In essence it says that the war came because both
parties viewed it as their least costly alternative.
While no one has previously come forth with-or at least- has
been widely publicized as propounding-this "total package" of
expectations to explain the Civil War, none of the individual com-
ponents by themselves are completely new. For example, probably
the most important single part of the explanation is the expectation
that the war would only be a small fraction of the size which it
actually became. This, of course, made recourse to war appear
relatively more attractive compared to (correctly anticipated) alter
natives at that time. Some writers have specifically remarked that
perhaps the largest surprise of the war was how large it became.2'
Why the war became so large, much larger than foreseen, is an
issue we shall return to below. Even so, the war which was antici-
pated was not a minor effort. It would have been larger than any
war fought previously by the nation, both by absolute and relative
measures. It would have been much larger than any "police action,"
merely upholding federal laws and protecting government property
in the South. It was several times larger than the magnitude of effort
implied by Lincoln's first call for (75,000) volunteers. The nation
did expect a large Civil War; what it failed to anticipate was a
cataclysm.
It appears that the anticipated size of the war was a major factor
behind the South's optimistic prediction of its success in that con-
flict; that is, the chance of their subjugation (D) at (probably
much) less than twenty-six percent. In an all-out war which match
the entire resources of each region against the other, the South's
20 These values are inferred at a time when the war has begun. Thus C, the fore
seen probability of war resulting from Lincoln's election, is set at one. The value of
C prior to the beginning of the conflict will be estimated later in the paper.
21 See, for example, William and Bruce Catton, Two Roads to Sunter (New
York: McGraw Hill, 1963).
Civil War 933
prospects would dim considerably.22 One piece of evidence that
supports this observation is that the fighting in the first year of the
war approximated the magnitude expected beforehand (F < 12
percent) for the entire conflict. That level of effort, of course, fell
well short of subjugating the South. This is also supported in the
Appendix on the costs of the war. The total costs to each side were
very similiar: $2.19 billion for the North to $2.02 billion for the
South. Whereas more than ninety percent of the costs to the North
were for military resources, almost forty percent of the costs to the
South were damages inflicted on its non-military economy. It seems
not unreasonable to remark that the South was not so much beaten
as exhausted.
Given the above estimates of F and D, it is now possible to make
some estimates of SL, another important consideration in the environ-
ment which produced the war. Inequality (3) below expresses the
observed preference of the South for the costs of the war rather than
the losses to slavery they anticipated by remaining in the Union.
.23SL> F-We +.23D (3)

The left hand side of inequality (3) measures the average vested
interest in slavery for the Confederacy (.23) times their estimate
of the reduction in the present value of slaves if they remained in
the Union after Lincoln's election, (SL). The right hand side is the
cost of the war and is identical to the same component of inequality
(1). Inequality (3) implies that the South expected SL to be greater
than twenty-six percent.
The value of twenty-six percent for SL, the reduction in the value
of slaves within the Union given Lincoln's election, measures the
basic cause of the war. This is the "coercion" to which the south-
erners had frequently objected. It suggests that the Republicans
were not viewed as abolitionists; that is, it was not expected that
the slaves would be freed in the immediate future. It does represent
a sizeable loss in slave values within the Union, however. Lincoln's
election is foreseen as the beginning of an erosion in returns from
bondsmen which is reflected in an immediate $700 million drop in
their present value. This represents a reduction in the incomes of free
southerners ranging from more than ten percent in Alabama to four
22 Richard N. Current, "God and the Strongest Battalions" in David Donald, ed.,
Why the North Won the Civil War (Binghamton, New York: Louisiana State Uni-
versity Press, 1960).
934 Gunderson
percent in Virginia if these respective states were to remain in the
Union.
These results form a consistent, and not unreasonable explanation
as to why the relevant self-interested parties would opt for war.
However, it is desirable-and would be more convincing-if addi-
tional verification of this explanation could be shown. The above
set of costs and expectations, while consistent with the observed
choices considered so far, could be a-typical of the general pattern
prevailing at the beginning of the war. In fact, it will be shown
below that it is quite representative and furthermore it explains some
otherwise puzzling behavior that occurred during the immediate
pre-war period.
For example, consider the decision of the original seven states of
the Confederacy to initiate war by firing on Fort Sumter. This can
be expressed as inequality (4) in which the foreseen costs of re-
maining in the Union (real southern independence is not recog-
nized) exceed the foreseen costs of enforcing southern independence
through war. The left hand side of the inequality represents the costs
of remaining in the Union.
.31SL> FiWe + .31D (4)

The value of .31 is the average vested interest in slavery of these
seven states (see Table 1). On the right hand side of the inequality
FOWL is the foreseen cost of fighting the war while .31D is the
expected reduction to income from slaves in the conflict. (The value
of D is predicated on the act of firing on Fort Sumter pulling the
lower four border states into the war on the side of the Confeder-
acy.23 Inequality (4) is consistent with the (above) solved values for
D, F and SLP Thus the South's decision to initiate warfare can be seen
as a predictable result of their appraisal of the conditions which they
faced.
Inequality (5) expresses the decision of the four lower border
states, Virginia, North Carolina, Tennessee and Arkansas to join the
Confederacy when the war began. These states had previously de-
23 Tle rationale for that assumption is demonstrated in inequality (5) below.
The assumption is not strictly necessary, however, in that there is some "surplus" in
inequality (4) so that D can rise above any values given in Figure 1 for a given value
of F. For example, in inequality (4) where F < 12%, D could rise as high as 16 per-
cent whereas in Figure 1 at that F value it could be no higher than 12.5 percent. Thus,
the original seven states of the Confederacy could "afford to go it alone" in that they
could accept a somewhat higher probability of subjugation if the lower border states
did not join them.
Civil War 935
lined to secede in the aftermath of Lincoln's election, but that
stance was clearly a temporizing device rather than a permanent
commitment to the Union. It was widely recognized that if war did
result they would side with the Lower South.24 Inequality (5),
.17SL + FOWu > FOWc + .17D, (5)
expresses this "either-or" choice in which the middle ground of

equivocation or neutrality was destroyed-as Kentucky quickly dis-
covered. The value of .17 is the vested interest in slavery for Virginia
(see Table I), the state with the lowest percentage of its income
derived from slavery to join the Confederacy. The two components
on the left hand side of the inequality express the costs of remaining
in the Union, the erosion of income from slaves under the federal
government (.17SL) and the foreseen costs of fighting for the North
(F * Wu). The right hand side-which is the cheaper and therefore
preferable option-are the costs foreseen within the Confederacy,
the expected war costs (F * W.) and the losses to income from
slaves (.17D).
Inequality (6) is the counterpart of inequality (5) in that it
expresses the decision of the upper border states (Kentucky, Missour
Maryland and Delaware) not to join the Confederacy. The value of
.10 is the percentage of income derived from slavery in Kentucky,
the upper border state with the highest such vested interest in slav-
ery to so act. As in (5) above, the left hand side of the inequality
expresses the cost foreseen by Kentucky in siding with the Union,
.JOSL + F-Wu < F-We + .1OD (6)

while the right hand side expresses the expected costs in joining
the Confederacy. Inequality (6) is consistent with the expectations
of F. D and SL that were derived above for the South. If we use the
southern estimate of SL-we do not have an observed choice that
allows us to infer that for the North independently--inequality (6)
is also consistent with northern expectations in which D is greater
than 10 percent and F is greater than 8.6 percent. Strictly speaking,
24 This position can be viewed as a statement of fact and/or a bargaining stance
on the part of these states. In the latter case, the threat is aimed at the North in that
it clearly indicates a substantial increase in the South's military capabilities in the
event of war. It also suggests (to the extent that the position is being used as a
bargaining tool) that these states viewed it more likely that war would be initiated
by the North rather than the South. The border states were the one section of the
nation to whom war did not seem the best alternative and thus one of their major
interests would be in preventing it, if possible.
936 Gunderson
this is only a partial test of the val
because there are bounded values and the direction of boundedness
is reversed in this equality. Nevertheless the "boundary" values
expressed in this decision are consistent with the general pattern.
Taken together the two inequalities (5) and (6) provide a convinc-
ing example of the general applicability of the results of this paper.
They show that the individual decisions of Virginia and Kentucky
to join or not to join the Confederacy respectively can be explained
by the relative costs facing each despite the obvious strong pro-
southern sympathies of both.
Inequality (6) also provides supporting evidence for the argu-
ment made above in this study that both regions held similar
expectations as to the relevant factors at the beginning of the war.
The upper border states elected to stay with the Union but held
obvious pro-southern sympathies. Their behavior is consistent with
the expectations that this study has inferred for either the North
or the South. The one exception to this commonality is that the
upper border states can be shown to have held expectations as to
the minimum size of the war and the possibility of southern subjuga-
tion. (The North probably held such expectations also but our
evidence does not allow us to discern that precisely.) This su
stantiates another observation made above that while the ultimate
size of the war was underestimated, it was still expected to be a
major war by previous standards.
All of the above estimates of expectations were developed from
behavior which occurred just as the war was beginning. Thus C,
the expected likelihood of the war occurring was equal to an ex
post value of one. It would be quite helpful to our understanding
of the causation of the war, therefore, if we had some measure of C
in the period when the decisions leading up to the war were made.
One such opportunity is offered by the behavior of the four lower
border states-North Carolina, Tennessee, Virginia and Arkansas-
which (officially, at least) remained in the Union prior to the begin-
ning of the war (C < 1) but joined the Confederacy when warfare
began.
Inequality (7) models the behavior of one of those states, North
Carolina, prior to the onset of the war.
19SL < C (F-W. + .19D) (7)

The value of .19 is the state's vested interest in
Civil War 937
such value within this group

equality is the expected cost to slave holdings of remaining in the
Union. The direction of the inequality sign signifies that that cost is
expected to be less than the alternative of joining the Confederacy
prior to the beginning of the war. The latter comprises the right
hand side of inequality (7). Its major components are the foreseen
probability of war times the (by now) familiar costs of membership
in the Confederacy; the direct war costs (F * We) and slave losses
through subjugation (.19D). Inequality (7) is paired with a (new)
inequality (8) which is North Carolina's decision to join the Con-
federacy as the war began.
.19SL + FOWL > FOWL + .19D (8)
Inequality (8) is simply the counterpart of inequality (5), Virginia's

decision to join the Confederacy at the beginning of the war, except
for the change in the respective vested interest in slavery. Inequality
(7) can be converted into an equivalent inequality (7A) whose
direction of inequality is reversed by changing the signs of all its
terms. If (7A) and (8) are now added, the SL terms cancel and
inequality (7A-8) results.
.19SL> -C (F Wc + .19D) (7A)

F-WU + .19SL > FOWc +.19D (8)
F-Wu > (I -C) (F-Wc +.19D) (7A-8)

Inserting the values for F and D from the southern expectation set
produces the result that C > 86 percent. Almost identical results
are obtained from the other three lower border states, Virginia,
Tennessee and Arkansas. Their behavior (interpolated in the same
manner) implies they believed that C was greater than either 85
or 86 percent. Of course, it would be preferable to have evidence
on the value of C from other states or regions, but the structure of
their inequalities does not allow such inferences. Only those pairs of
inequalities which "reverse" can cancel out sufficient variables to
overrule indeterminateness. That does not appear to be a significant
roadblock, however, because these four results have established a
relatively high value for the lower bound of C, thus answering the
most important questions concerning the parameter.
The very large value for C (> 86 percent), the expectation that
warfare would occur given Lincoln's election, is surprising, at least
938 Gunderson
initially. It suggests that the groups involved were fully aware of
the high probability of their actions precipitating war, or more pre-
cisely, that they would have undertaken the actions which they did
even in the face of a very high probability that war would result.
This value, derived from the observable behavior of the participants,
argues that they did not bungle or blunder into war, rather they
took the steps which they did with the obvious recognition that
initiation of warfare was a probable outcome of them-indeed, the
South would have taken this course even if war would have resulted
with absolute certainty.
This general pattern of expectations should be subjected to further
relevant examples of observed behavior and other forms of tests.
There appears to be such an opportunity in the 1860 election results,
for example, where the vote by party, each with fairly well arti-
culated positions on slavery, was correlated by the degree of vested
interest in slavery. Another source of evidence could be the voting
behavior by counties in the secession conventions of the southern
states (see Wooster, footnote 12). Slave prices during the war might
also yield some verification. Slave prices in the border states remain-
ing in the Union could give some evidence on SL while those in the
Confederacy could express D.
Nevertheless, the above results form a robust and convincing
description of the conditions propelling the nation into Civil War.
They assert that, under the general turmoil and conflicting pro-
nouncements surrounding the beginning of the war, a basic common
appraisal of the situation existed. The various parties did not agree
on what action should be taken, of course, but they did appear to
have similar evaluations as to what the underlying circumstances
were. That evaluation is expressed in the expectations developed
above. It explains the actions which the specific groups took in
response to particular circumstances.
It is easy and only natural at this point to second guess the deci-
sions of the respective parties in resorting to war. Given the specific
outcome of the war, it is clear that the South would have gained
from an alternate (peaceful) solution such as compensated emanci-
pation or even unilateral (non-compensated) emanicipation. In
retrospect the North also would have fared better in accepting com-
pensated emanicipation. It is tempting, therefore, to assert that a
number of erroneous predictions caused the Civil War, but that
explanation is suspect. There was, of course, only one Civil War
Civil War 939
and consequently only one set of results against which to judge the
predictions. The basic difficulty is that a single observation is a very
shaky test, with almost no assurance of representativeness. In es-
sence the problem is one which habitually constrains students of
social organizations: it is extremely difficult to reproduce complex
social events and thus evaluate their component parts. Ironically,
what is required to specify whether the actual war was a likely
scenario is a large number of reruns from the same initial circum-
stances. It could well be that such an ideal, multi-observation record
would report that an "average war" was twelve percent of the size
of the historical event and thus the actual war was an aberration, an
armed clash which expanded much beyond where such efforts would
normally stop. On the other hand the actual war may prove to have
been "typical" in terms of size and the contemporaries who fore-
casted only twelve percent of that level simply underestimated the
forces operating to expand the conflict. With the information pre-
sently available there is no way to distinguish whether the Civil War
reflected poor forecasting on the part of the participants or merely
an unlikely historical occurrence.
There are, however, some persuasive reasons to believe that the
participating parties made objective, reasonable predictions about
their prospects in the war before resorting to it but that an unusual
turn of events invalidated their expectations. It does not seem likely
that they were consoling themselves by shading their estimates to
the least costly side. They were simultaneously evidencing the harsh
opinion that there was a very high probability of war occurring.
Furthermore, as indicated above, their actions were consistent with
the expectation of a war larger than any the nation has been engaged
in previously, either by absolute or relative measures. Rather, the
Americans were probably surprised by the first incidence of the
dramatic increase in the scale of warfare (which has become much
more obvious in retrospect). The Civil War has been termed the first
modern war in that it conformed to the recent pattern in which the
entire economy has been mobilized for, and a good part of its re-
sources channeled into the military effort.25
Scholars of the history of warfare are not certain why this sharp
upward jump in the size of military efforts relative to the economies
which supported them occurred at this time. There were, of course,
25 Quincy Wright, A Study of War (Chicago: University of Chicago Press, 1965).
940 Gunderson
improvements in military weapons such as rifling of guns which
increased the costs of frontal assaults and encouraged wider use of
trench warfare. Probably much more important, however, was the
substantial reduction in the cost of interior transportation which
had developed. The introduction of the railroad is widely known,
but far more important were the improvements in internal water-
ways such as canals and steamboats and in the road system.26 These
gains in the capability of moving military resources into battle, as
distinguished from mobility during battle, facilitated putting a larger
portion of the nation's resources into warfare and of bolstering mili-
tary power between battles. There is an obvious contrast between
the Civil War and the American experience in the Revolutionary
War. In the Civil War the fighting spread over the countryside,
which by the standards of that day, had a relatively developed road
and inland water system. So many major battles of the war occurred
at otherwise obscure country hamlets-Sharpsburg, Shiloh, Gettys-
burg, Chickamauga and Appomattox, for example-because roads
capable of conveying major armies intersected there. In the Revolu-
tion, in contrast, the Patroit army was primarily restricted to over-
land movement by Britain's naval supremacy along the coast. Even
if the Americans had wished to field large forces they would have
found it difficult to do so. A large percent of any given stock of re-
sources designated for the war effort would have been expended
moving and supporting the army leaving only a small (net) fraction
available for effective military power. It is easy to sympathize with
the colonists' decision to conduct only a small and occasional war;
they did not receive much return on a dollar spent for war.
In contrast, Americans in the early 1860's received much more
military proceeds for their money. The relative ease with which
allocated resources were delivered against the enemy encouraged,
indeed-because the enemy was likewise motivated-compelled
each side to expand its war effort. If you lower the real price of
warfare, more of that commodity will be purchased.
Whatever the reasons for the war becoming much larger than
originally expected, we can now return to the primary question
addressed in this article: What caused the Civil War? The above
evidence shows that the South's vested interest in slavery is suffi-
cient to explain its decision to go to war. Other reasons could have
28 Douglass C. North, Growth and Welfare in the American Past (Englewood
Cliffs: Prentice Hall, 1974), 2nd. ed., chapter 9.
Civil War 941
reinforced that behavior, but the South's direct economic stake in

slavery provides a complete explanation by itself. For example, the
South may have also wished to preserve slavery as a device for race
control or they may have wished to reduce federal taxation, but
neither of those reasons or any other is necessary to explain their
resort to warfare.
To complete the specification of the war's causation, it is necessary
to have some evidence on the North's motivation in entering the
conflict. Here again a wide variety of possible explanations have
been proposed, but the plausible hypotheses. fall into two broad
categories, either the defense of the integrity of existing national
institutions (for example, preserving the Union or upholding law
and order) or diminishing that institution specific to the South-
slavery.27 Previous attempts to delineate between these two objec-
tives have been marred by the difficulty of separating the two institu-
tions. The ambiguity is much like that created in the case of the
South where the question was whether slavery was the motivating
issue or merely a code word for a variety of other concerns. The
question for the North is whether they were actually concerned
about preserving the Union-or some set of national institutions sub-
sumed under that name-or whether these were code words for
insisting on a specific type of union in which slavery had been
extinguished. The ambiguity results because if preserving the Union
is the North's objective it probably must destroy slavery to achieve
the former. If, on the other hand, the North's objective is the elim-
ination of slavery it must compel the South to remain in the Union
to enforce that preference. Working with this joint pair of objectives,
27 The basic distinction between the North's possible motives of abolishing slavery
or the preservation of the Union (in the broad context of preserving national institu-
tions) is fairly widely recognized. Attributing the motivation to an aversion to
slavery is generally acknowledged to have begun with James Ford Rhodes. See his
Lectures on the American Civil War, (New York, Macmillan, 1913). The best known
modem articulation of this hypothesis is Arthur M. Schlesinger, Jr.'s "The Causes
of the American Civil War: A Note on Historical Sentimentalism," Partisan Review,
XVI (1949).
Modem historians have given far less emphasis to the importance of preserving
the Union or national institutions than contemporaries at thebegng of the Civil
War. This possible motivation continues to be mentioned in discussions of the ques-
tion even though no specific well-known interpretation gives it substantial emphasis.
A variant of this general explanation has recently emerged, however, underlining a
frequent observation about the question of the Civil War's causation; namely, that
because no definitive answers have been available, old explanations continue to
revive and adapt to new concerns. See Philip S. Paludon, "The American Civil War
Considered as Crisis in Law and Order," The American Historical Review, LXXVII
(October 1972).
942 Gunderson
Northerners had considerable freedom to proclaim either motive,
whatever their true underlying objectives. In practice, therefore,
they could be expected to emphasize the one which they believe
is most acceptable to skeptical listeners-namely preserving the
Union. Thus, for example, Lincoln's statement that he would or
would not destroy slavery depending on whether it preserved the
Union must be treated with appropriate caution. The relevant issue
was the form of union which Lincoln visualized he was preserving.
He may have been leading a war to preserve the Union, destroying
or not destroying slavery as necessary, or he may have been seeking
to create a slave-free Union.
Obviously, the North would choose to preserve the Union and
eliminate slavery from it if both involved no opportunity costs.
There was, however, an implied price for these objectives as the
above exposition has demonstrated. In addition, there was a conflict
or trade-off between the two goals themselves. If the North placed
priority on the preservation of the existing Union, it should suppress
its distaste for slavery and vice versa. Policies designed to further
one of these objectives generally exacerbated conditions for
achieving the other. In the presidential election of 1860, howeve
the North was forced to express its relative valuation vis-a'-vis thes
two goals. We can infer from Lincoln's election and the parameters
which we have developed above what those relative preferences
must have been.
The North's choice of Lincoln in 1860 is modeled in inequality
(9) below.
(1 - C*) N(SL) +C-DN(1) (9)
> (C* C)U+C(1 D)U+C.F-Wu
A number of new terms are introduced in it, which include C*, t
foreseen probability that the South will secede from the Union
given Lincoln's election. CG should be greater than C, the antic-
ipated likelihood that war will result from Lincoln's election. The
terms of the form N(. . .) represent the North's valuation of the
reduction of a given percentage of the present value of slavery.
N(1.0) represents the total abolition of slavery while N(SL) rep-
resents the reduction implied by Lincoln's election for those slaves
retained in the Union. It is assumed that the North's valuation of
slavery's diminution is proportioned to the reduction in its present
Civil War 943
value; for example, N(.25) would equal one quarter of N(1.0). The
North's valuation of the reduction in slave wealth is not necessarily
equal to the slave holders' losses; it can be either larger or smaller.
The term U expresses the North's desire to maintain the govern-
mental structure of the Union in the form which existed prior to
Lincoln's election. Both N and U would be expressed as the perma-
nent reduction in income the North would be willing to sacrifice in
order to achieve these objectives.
The two terms on the left hand side of inequality (9) are the gains
the North would receive from Lincoln's election. There are, respec-
tively, the reduction to slavery from Lincoln's election if the South
were to remain in the Union and the total destruction of slavery if
war were to result and the South be subjugated. The three terms on
the right hand side represent the possible costs of electing Lincoln.
There are, respectively, the disunion resulting if the South should
secede but war not result, the likelihood that war would result with
the South not being subdued, and finally the foreseen costs of war.
Inequality (9) can be rewritten as (9A):
( 1 - C* ) N(S.) + C-D-N( 1) (9A)

> CGtU - C-U + CU - DCU + CFWu
canceling the "C * U" terms and rearranging yields:
(1- C*) N(SL) + C-D(N + U) > C*U+ CFWu- (9A)

We now introduce a new inequality (10):
N+ U > FWu (10)

D
which is a variant of inequality (2) [T > F ] Inequality
(10) says that the North must value the elimination of slaver
the preservation of the Union more than the expected "cost effec-
tiveness" of the war. If both sides of (10) are multiplied by C * D
and the entire inequality is subtracted from 9A the result is:
(I1 C*)N(SL) >C* -U (9A-10)

Inequality (9A-10) expresses the North's tradeoff between its de-
sire to eliminate slavery and to preserve the Union. Fortunately the
parameters of that relationship are of a form which is reasonably
944 Gunderson
quantifiable given the previous results of this study. CG must be
greater than or equal to C. For the border states we know that C >
85 percent, and, by that measure C' must also exceed 85 percent.
Even if the North had a lower expectation of C' and C than the
South, the C' term by itself tends to favor the view that the North
was motivated by antislavery rather than pro-Union sentiments.
Only when the North's expectation of C' falls as low as fifty percent
would that term's contribution to inequality (9A-10) make Union
sentiment as large as that for the diminution of slavery.
Similarly, we have no direct measure for the North's valuation of
the reduction in slavery implied by Lincoln's election [N(SLI)], but
the evidence available favors the predominance of antislavery opin-
ion. The South indicated that it believed that Lincoln's election
would reduce the present value of shares by more than twenty-six
percent. The North-or more specifically the Republican party-in-
sisted that while it believed that slavery must be eventually elimi-
nated, it did not foresee immediate or even short term abolition of
slavery. Given the prevailing interest rates of the day, it seems un-
likely that northern preferences expressed in Lincoln's election
would reduce the present value of slavery by much more than the
twenty-six percent value foreseen by the South. If we use these
values of C' and SL available, inequality (9A-10) becomes:
.046N > U. (9A-10)
In other words, northern prefer

more than twenty times as strong
one sense this is not surprising, s
gests a preference for diminishin
Yet the overwhelming magnitude
least in isolation. It suggests that th
the Union was merely a superfici
nation they desired. It helps to place several events in perspective:
why, for example, the South was so certain that Lincoln's election
was aimed at their slave holdings and why, also, the North aggres-
sively pursued the seceding South rather than allowing them to go
in peace.
In sum, the weight of the above evidence places strong, primary
emphasis on antislavery as the motivation which caused the North
to go to war. This, combined with the demonstration above that the
South's behavior can be entirely explained by its respective vested
Civil War 945
interest in slavery, allows us now to claim that the study has pro-
vided strong evidence that the Civil War was caused by slavery.
True, it was the North's views about slavery clashing with the
South's large vested interest in the institutions coupled with the
appearance of military action as the least cost solution of the conflict
to both regions which explains the war. Without slavery as an initi-
ating condition, however, the other components of the explanation
are superficial, although, perhaps, other scholars can assemble evi-
dence which shows that some friction or collections of frictions other
than slavery had sufficient force to energize a comparable mecha-
nism and can thereby be said to have caused the war.
In any case, that is a challenge for further scholarship and exist-
ing scholarship will certainly recognize that it has been challenged.
To the extent that the results of this study are convincing it is ap-
propriate to adopt a new view of the behavior of Americans at the
beginning of the Civil War. It is that Americans-of the North,
South, and Border States as individuals or in groups-made reason-
able evaluations of the prospects which they faced and then took
those actions, however novel, least costly to themselves. And if the
Civil War stands as the great American tragedy it is the circum-
stances, not the behavior of the participants which made it so.
Slavery represented an unusually large conflict of interests, much
larger than existing institutions could have resolved.
It has been common for previous evaluations of this question to
look for what went wrong during this period. Thus such designa-
tions as conspirators, extremists, agitators and incompetent leaders
have been frequently heard. These epithets all share the implicit
assumption that what was called for was moderation and adherence
to existing institutions. If, as the above discussion suggests, the dif-
ficulty lies in the inappropriateness of the existing framework then
such behavior should more properly be called innovative, foresighted
and cooperative. It should be a tribute to that generation of Ameri-
cans that they were able to develop unconventional responses to
deal with those unusual circumstances.
GERALD GUNDERSON, Mount Holyoke College
APPENDIX I
SLAVERY AS A LEGAL INST[TUTEON
Slavery, of course, had existed as an institution long before it was

established in the American colonies, but the conditions were favorable
946 Gunderson
enough for its existence that it would
was generally a scarce resource in the colonies and thus was restricted
to uses in which it was relatively productive. Employing slaves was a
way of substituting relatively less expensive capital resources for labor.
Slave labor was particularly useful in crops such as tobacco and later
cotton in which existing technology required large amounts of (other-
wise expensive) labor in simple repetitive tasks. There was a slave trade
already in existence on the Atlantic Ocean whose participants naturally
sought more sales and thus it was almost certain that slavery would be
introduced into America.
In the eighteenth century some slaves were held in almost all colonies,
but a very distinctive regional pattern of slave holding was beginning
to develop. Slavery disappeared from northern states and thereafter was
limited to states south of the Mason-Dixon Line. Some have argued that
the reason for this was economic, that slavery was more profitable in the
South. As an institution for organizing the provision of labor services,
slavery probably was relatively more useful (compared to alternative
institutions such as indentured servants or hired hands) in the South,
but that in and of itself does not explain why it existed only in the South.
Neither, do similar traditional explanations such as the longer growing
season in the South nor the unadaptability of slave labor to industrial
tasks appear to account for this complete disparity. In southern crops,
such as cotton, labor requirements during the peak periods of activity
(particularly harvesting), not the total length of the season, were the
effective constraint on the amount of output. Although the proportion
of slaves employed outside of agriculture in the South was small, there
were, nevertheless, significant numbers successfully performing such
functions as craftsmen, railroad hands, construction workers and factory
operatives. In short, economic reasons did not in themselves appear suffi-
cient to have excluded slavery from the northern states.
It seems clear that any advantages to the employment of slave labor
in the northern states were overruled by local objections to the propriety
of the institution.28 Between the Revolution and 1800 most northern
states enacted legislation which, aided by public disapproval, drove
slavery into oblivion. Northerners collectively decided that their objec-
tions to the ethics of the institution outweighed its net advantages in
providing labor services. Southerners obviously made the opposite deci-
sion and they reaffirmed that choice periodically until the Civil War
wrested the decision from their hands. In the 1830's, when stirrings of
abolitionist sentiment appeared in the South as well as the North, the
social organization of the South suppressed its local critics. Later as
the expression of northern disapproval of the South's peculiar institution
grew, southerners constructed their justifications and returned the attack.
They may or may not have sincerely believed their pronouncements but
that distinction is not important to this investigation. Slavery's continu-
28 Kenneth Stampp, The Peculiar Institution: Slavery in the Ante-Bellum South

(New York: Knopf, 1956).
Civil War 947
ance in a given region required general local sympathy and southern
verbal defenses should be understood as a necessary part of that support.
Slavery was a yes or no proposition, without halfway positions. Either
it was upheld or it would not survive. Critics of slavery pointed to the
small numbers of slaves transported into Kansas and New Mexico as
evidence that slavery could not be profitably conducted there even if
allowed. That misses the point, however. Unless potential slave holders
in such areas were convinced that slavery would be generally accepted
there, which obviously did not appear likely, slaves would not be im-
ported in any number.
The states of Delaware and Maryland in the antebellum period provide
another example of the erosion of the institution of slavery when it is
given less than full-fledged support. In 1790 slavery was clearly well
established in both states. Slaves constituted fifteen percent of the pop-
ulation in Delaware and thirty-two percent in Maryland. This latter
fraction equaled the relative slave holdings of Virginia, North Carolina
and Texas at the beginning of the Civil War. But Delaware and Mary-
land were located at the margin where the conflicting views of the North
and the South interacted and the resulting local environment had suffi-
cient skepticism about slavery to send it toward long-term extinction.
By 1860 slaves constituted only two percent of the population of Dela-
ware and thirteen percent of Maryland. Of course, part of this decline
can be explained by exports of slaves to the expanding slave holding
regions to the south and southwest. A significant part of the reduction
of slave population in these states, however, resulted from emancipation
of slaves and that fraction was strongly correlated with the attitude
toward slavery in the particular state. From 1790 to 1830, for example,
more than one-half of the reduction in the slave population in Delaware
and more than one-third in Maryland was accomplished by emancipation.
In contrast, less than fifteen percent of the slaves taken out of the slave
population of Virginia and only two or three percent in the Carolinas
were given their freedom.29
William Calderhead provided another example of the erosion of slavery
in Maryland when he noted that slaves in that area sold for only four or
five times their hire rates (see footnote 29). This is well below the ratios
prevailing in the other slave states.80 The value paid for the future ser-
29 These estimates of emancipation rates are constructed by assuming that the
slave population would have grown at an average rate of twenty percent per decade
approximating that for all slaves in the nation during that period. Any shortfall from
this forecast would be explained by exports of slaves or emancipation. The division
between these two alternatives can be made from the census figures for free blacks
reported in Negro Population, 1790-1915, Department of Commerce, Bureau of the
Census (Washington: G. P. O., 1918) p. 57. This pattern of relative emancipation
among states appears to continue in the 1830 to 1860 period, but because free blacks
then constituted a large portion of the Negro population, possible variations in their
population growth on migration make such an estimation procedure less reliable.
This finding is verified by William Calderhead, "How Extensive was the Border
State Slave Trade?" Civil War History, XVIII (March, 1972).
30 See, for example, Table 5 by Robert Evans Jr. as quoted in Fogel and Engerman,
"The Economics of Slavery," p. 325.
948 Gunderson
vices of the slave-that is, his purchase price-was discounted relative
to the other slave states because of the restricted future of slavery in
Maryland. Slaves were frequently sold with the restriction that they
were not to be subsequently resold out of state or they were sold for a
specified period of future service, in effect, gradual emancipation. Slaves
in Maryland, therefore, were valued at discounts of from twenty-five to
fifty percent less than in the other slave states (for a given level of cur-
rent productivity) because of local doubts about the institution of slav-
ery.
The Maryland pattern provides an illustration of the effect which
northern hostility could have on the value of slaves in the South.8' Anti-
slavery opinions considerably milder than those held by the abolitionists
were sufficient to provide a discount on slavery within a framework of
national influence on the institution. And given the huge amount of
wealth which the South had vested in slavery it took only a small per-
centage discount on slavery's future to indict large losses on-and there-
fore force defensive reactions by-the South. As shown above, the
percentage losses implied by Lincoln's election for slave values in the
U.S. was almost certainly less than that evidenced in the case of Maryland
yet the aggregate threat was sufficient to prompt reactions of secession
and possible war.
APPENDIX II
THE COSTS OF THE WAR
Records of the Confederacy are notoriously uneven, reflect

of that short-lived government. Nevertheless, it does appear possible to
make reasonable estimates of the cost of the war to the South. Direct
military costs were estimated by the real value of revenue to the Con-
federate government.32 These were raised primarily through loans and
issuance of money. That total was deflated by the gold premium on
Confederate dollars33 to adjust for price changes after 1860 and by
seven percent annual interest charge to equate that series of yearly ex-
penditures to a common base in 1860.
31 The same phenomenon was also evident during the war. When Union armies
occupied Confederate territory, slavery in that locality simply began to dissolve.
Slaves deserted their masters and clung to the military as a refuge. This occurred from
the very first hostilities, well before the Emancipation Proclamation and it occurred
even in the slave states such as Maryland and Missouri which officially remained in
the Union. Whatever motivated the North to subjugate the South, either the desire
to end slavery or the preservation of the Union or some combination thereof-an
issue we shall examine below-northern armies marching across the South would
inevitably destroy slavery in the process.
82 Richard Cecil Todd, Confe erate Finance (Athens: University of Georgia Press,
1954): Loans, pp. 82-84; notes, pp. 119-120; tariffs and taxes, p. 156.
33 Todd, Confederate Finance, pp. 72, 114.
Civil War 949
CONFEDERATE REVENUES
Year Loans Money Issues Taxes & Tariffs Total

1861 $181 million $ 311 million $20 million $512 million
1862 3 140 - 143
1863 208 518 90 816
1864 320 456 90 866
Current Gold Premium Real Value

Dollars (1860 = 100) Capital Charge (1860 prices)
1861 $512 million 110 1.07 $435 million
1862 143 200 1.15 149
1863 816 1000 1.23 67
1864 866 2000 1.31 13
$644 million
The Confederate government had unpaid debts of about $500 million

at the end of war34 equal to about $20 million in 1860 prices. Even when
the government had paid for the materials they acquired they usually
did so at "official prices," well below the true market value of goods.85
This study estimates that an average of such expropriation equaled forty
percent of the true market value of the goods (therefore two-thirds of
the "official price") or $443 million in 1860 prices. The destruction costs
of the war to the South were estimated at one-quarter of the value of
land, buildings and business inventories during 1861, or $445 million in
1860 prices.86
The implicit costs of conscription were estimated by using the price
paid for a substitute during the war37 times one-half of the estimated size
of the Confederate armed forces.38 Prices approached $400 (in 1860
prices) per substitute during 1863, but the average value was undoubtedly
less than that for the approximately 900,000 men who served in the Con-
federate armed forces, because many served only as local or state militia.
An estimate of $300 per man for 450,000 servicemen equals $135 million.
The costs of the federal blockade to the Confederacy is estimated by
assuming that one-half of the (peacetime) value of the cotton crop was
lost for three years. Thus four million 500-pound bales valued at 10 cents
per pound for each of three years were valued at $600 million. One-half
of this amount equals $300 million, possibly an overstatement because
34 E. Merton Coulter, The Confederate States of America 1861-1865 (Binghamton,

N.Y.: Louisiana State University Press, 1950), p. 172.
35 Coulter, Conferedate States, pp. 251-254; Todd, Confederate Finance, pp.
165-171.
36 Coulter, Confederate States, p. 199.
37 Albert Burton Moore, Conscription and Conflict in the Confederacy (New York:
Macmillan, 1924), p. 30.
38 Moore, Conscription, p. 358. The true economic cost of military conscription is
the difference between the amount the military pays the draftee and the amount it
would be required to pay him to volunteer for the military in the absense of the
compulsion of conscription. The price of a substitute approximates this difference
because it expresses the amount an individual is willing to pay to retain his civilian
status.
950 Gunderson
blockade running, domestic manufact
to reduce these losses.39
In addition part of the cost of the b
(see below) and Europe in the form of
The war costs to the Confederacy were:
Direct military costs $ 664 million

unpaid debts 20
expropriation 443
property destruction 455
military conscription 135
blockade disruption 300
$2,017 million
Federal military expenditures40 discounted

Wholesale Price Index4, and a seven percent
Calendar Military expenditures Wholesale price

Year in current prices (index 1860 = 93) 1860 value
1861 $ 226 million 89 $ 221 million
1862 571 104 444
1863 763 133 432
1864 1042 193 383
1865 624 185 228
$1,708
In addition, the Un
of the South equal
million (in 1860 prices).
The federal armed forces enrolled a total of 2.2 million men during
the course of the war.42 While the North did utilize military conscription,
it relied on it relatively less than the South did. Thus a cost of $150 per
man-half the cost of conscription in the South for regular military
personnel-was employed. The conscription costs for the North were
therefore $330 million and the total costs of the war to the North were
$2,188 million in 1860 prices.
One would be foolish to claim that these estimates are exactly accurate.
There are a variety of influences which could either overstate or under-
state the individual components of these calculations. Fortunately, efforts
are being made to provide more precise values.43 Nevertheless, it does
not now appear likely that such efforts will substantively change the net
costs presented here. More importantly, the basic results of this paper are
not very sensitive to such variations. A large part of such revisions would
simply be absorbed in F, the foreseen size of the war.
39 Coulter, Confederate States, chps. X, XII and IX.

40 Historical Statistics of the U.S. (Census Bureau, 1960), Series Y 350-356, p. 719.
41 Historical Statistics, p. 115.
42 Ibid., p. 735.
43 Goldin, "The Economics of Emancipation."

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Economic History Association

The Origin of the American Civil War

My thanks, without implication of responsibility for remaining errors, go to Galen

5 Claudia Dale Goldin, "The Economics of Emancipation" THE JOURNAL OF Eco-

8 Richard A. Easterlin, "Interregional Differences in Per Capita Income, Popula-

9 Robert Evans, Jr. "The Economics of American Negro Slavery, 1830-1860,"

Proportion of Net Yearly Earnings Net Yearly Earnings

* Old South: Delaware, Maryland, Virginia, North Caroli

(1) (2) (3) (4) N

Alabama $75 45% $50 $ 70 42%

a Excludes counties which later formed West Virginia.

10 Gerald Gunderson, "Southern Antebellum Income Reconsidered," Explorations

example, for the mid-point of the locus of F and D combinations, D A 13.3%,

Wu, We, and the vested intere

C: C is the foreseen probability that armed conflict will occur

Of course, C, SL, F and D are not directly measurable and must

W. were computed above as .06 and .07 respectively. Inserting those

actual size depending on their associated expectation as to the likeli-

Source: Figure 2 is constructed from inequality (2) by

.23SL> F-We +.23D (3)

.31SL> FiWe + .31D (4)

.17SL + FOWu > FOWc + .17D, (5)

expresses this "either-or" choice in which the middle ground of

.JOSL + F-Wu < F-We + .1OD (6)

19SL < C (F-W. + .19D) (7)

such value within this group

.19SL + FOWL > FOWL + .19D (8)

Inequality (8) is simply the counterpart of inequality (5), Virginia's

.19SL> -C (F Wc + .19D) (7A)

F-Wu > (I -C) (F-Wc +.19D) (7A-8)

25 Quincy Wright, A Study of War (Chicago: University of Chicago Press, 1965).

reinforced that behavior, but the South's direct economic stake in

( 1 - C* ) N(S.) + C-D-N( 1) (9A)

(1- C*) N(SL) + C-D(N + U) > C*U+ CFWu- (9A)

N+ U > FWu (10)

which is a variant of inequality (2) [T > F ] Inequality

(I1 C*)N(SL) >C* -U (9A-10)

.046N > U. (9A-10)

In other words, northern prefer

Slavery, of course, had existed as an institution long before it was

28 Kenneth Stampp, The Peculiar Institution: Slavery in the Ante-Bellum South

THE COSTS OF THE WAR

Records of the Confederacy are notoriously uneven, reflect

Year Loans Money Issues Taxes & Tariffs Total

Current Gold Premium Real Value

The Confederate government had unpaid debts of about $500 million

34 E. Merton Coulter, The Confederate States of America 1861-1865 (Binghamton,

Direct military costs $ 664 million

Federal military expenditures40 discounted

Calendar Military expenditures Wholesale price

39 Coulter, Confederate States, chps. X, XII and IX.

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(1- C) N(SL) + C-D(N + U) > CU+ CFWu- (9A)

(I1 C)N(SL) >C -U (9A-10)