Economic History of the USA
Growth in the Postbellum Economy
Comparison of Capital-Intensive vs. Non-Capital-Intensive Industries in the Postbellum Period
The postbellum period, following the Civil War, marked a significant transformation in the American economy, setting the stage for the rise of both capital-intensive and non-capital-intensive industries. This era, also called the Gilded Age, roughly spanning the 1870s to the early 1900s, had rapid industrialization, expansion of infrastructure, and the concentration of wealth[1]. To research and contrast capital-intensive versus non-capital-intensive sectors in the postbellum period, a mixed-method approach will blend quantitative and qualitative evidence. This methodology looks at both economic metrics and human experiences in postbellum industrial development. Future research should integrate more quantitative methods such as calculating the capital intensity ratio (CIR).[2] The key article “The Macroeconomic Impact of the American Civil War” by Davis and Weidenmier was relevant to examine capital-intensive and non-capital-intensive industries, as shown in the chart below.[3]
The Davis and Weidenmier article focuses on macroeconomic impacts, industrial production, and capital investment patterns. It does not add an empathetic or victim-centered approach. Therefore, more evidence from David Montgomery and his critic Daniel T. Rodgers, and the application of a biblical worldview, described the working conditions of formerly enslaved individuals and wage laborers to develop a humane and faith-based perspective.[4]
Capital-Intensive Industries and Postbellum Industrial Growth
Capital-intensive industries required machinery and infrastructure. Iron, textiles, shipbuilding, and machinery developed unevenly in the North and South.[5] Industrial expansion in the South remained slow compared to the North, where manufacturing benefited from an established financial sector and greater access to capital investment.[6] Southern capital-intensive industries lagged due to war destruction, economic instability, and weak financial institutions.[7] Another factor for the lag was the significant relocation of southern Black workers to the North.[8] Railroads, a cornerstone of capital-intensive industry, expanded significantly, facilitating the movement of goods and labor.[9] Railroad construction itself was capital-intensive, requiring steel, machinery, and significant financial backing. This sector’s expansion created secondary economic booms in industries such as coal mining and iron production.
The shift toward mechanization and centralized production accelerated economic output but also reduced the need for skilled labor.[10] The bar graph from Shen shown below sets a benchmark of 100 on the data from the North. It compares work and wages during the four decades of the postbellum era.[11]
Non-Capital-Intensive Industries and Economic Struggles
Non-capital-intensive industries, including food production and small-scale manufacturing, relied on labor rather than machinery. Small-scale industries struggled to compete with larger, mechanized firms that benefited from economies of scale. Non-capital-intensive industries also included garment work, household manufacturing, and domestic service.[12] In the North, immigration added millions to the pool of available labor for rapid gains in productivity.[13] However, industries recovered slowly in the South, where dependence on agriculture persisted.[14] Rodgers discussed the use of the praise of toil as a protection against moral failures, a rationale used by employers of the formerly enslaved Blacks as an improperly motivated work ethic.[15] Connolly stated that the South’s agricultural society relied “more heavily on work experience than formal education, and its racial discrimination in school resource allocation lowered human capital accumulation of both blacks and whites.”[16] Many formerly enslaved individuals entered tenant farming and sharecropping, systems that kept workers indebted to landowners.[17]
Sharecropping is a system by which a tenant farmer agrees to work an owner’s land in exchange for living accommodations and a share of the profits from the sale of the crop at the end of the harvest.[18]
PBS produced a film “Slavery by Another Name” to document, from 1865 to 1945, chattel slavery came to an end, but new forms of involuntary servitude began and persisted.[19] The film trailer is shown below.
Source: WYCC PBS Chicago. “Slavery by Another Name – Sunday, February 1 at 7pm CT,” January 26, 2015.
Reconsidering Post-Civil War Economic Development
The historiographical challenge of properly motivating the interpretation of wealth disparities may be met by introducing a biblical worldview. This requires a look at church and charity. The Black church in the South was not merely an artiface, but a real and sacred institution fostering prosocial values, communal uplift, and spiritual resilience.[20] Nevertheless, the rise of Black church autonomy has been attributed by some scholars to a proxy battle for control as Southern religious groups tried to say they were “allowing” freedom of worship at the same time that Northern religious groups saw an opportunity to manipulate the Black church as a victory prize.[21]
The motives of humane and faith-based charity action were also conflicted. Catholic philanthropic strategies opposed the approach of social reformers. The Catholic community urged parishioners to alleviate social distress through the Church’s charitable institutions.[22] Confoundingly, philanthropy by ultra-rich industrialists was often used by them to justify their personal wealth accumulation while not helping address inequality. Therefore, the contributions of church and charity were present at the time but could not immediately fix the economic structures, leaving debates on wealth and labor unresolved.
Conclusion
The plain quantitative data risks bias in interpreting labor systems if persistently framing industrial expansion as progress while downplaying the hardships faced by workers. Economic growth narratives often center industrialists while labor struggles remain secondary. The experiences of laborers, whether formerly enslaved or bound to low wages in industrial or high-labor work, illustrate the uneven distribution of economic gains. Economic progress was not universally shared but concentrated among capital holders. Unlike purely economic interpretations, which reduce religious institutions to extensions of cultural studies, a biblical worldview is necessary but not sufficient as it demonstrates that human heritage cannot be fully understood through the lens of class conflict alone.
Further reading: Saul Friedman, Jews and the American Slave Trade (London and New York: Routledge, 2017).
[1] Joseph Davis and Marc Weidenmier, “The Macroeconomic Impact of the American Civil War” (Atlanta, GA: Federal Reserve Bank of Atlanta, May 22, 2022).
[2] Andreas Chang et al., “The Influence of Debt-to-equity Ratio, Capital Intensity Ratio, and Profitability on Effective Tax Rate in the Tourism Sector,” Journal of Governance and Regulation 12, no. 1 (January 1, 2023): 53–67.
[3] Davis and Weidenmier, “The Macroeconomic Impact of the American Civil War,” 3.
[4] David Montgomery, The Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865-1925 (Cambridge, UK: Cambridge University Press, 1987); Daniel T. Rodgers, The Work Ethic in Industrial America 1850-1920, 2nd ed. (Chicago, IL: University of Chicago Press, 2014).
[5] Davis and Weidenmier, “The Macroeconomic Impact of the American Civil War,” 3.
[6] Ibid., 11.
[7] Ibid., 3.
[8] Montgomery, The Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865-1925, 378.
[9] Ibid., 27; Alfred D. Chandler, “Organizational Capabilities and the Economic History of the Industrial Enterprise,” The Journal of Economic Perspectives 6, no. 3 (1992): 80.
[10] Rodgers, The Work Ethic in Industrial America 1850-1920, 51.
[11] Kevin Shen, “Induced Innovation? A Quantitative Exploration of the Second Industrial Revolution, in the Continental United States 1870 – 1900,” The Lapis, April 13, 2023, Figure 4.
[12] Cecilia Rio, “‘A Treadmill Life’: Class and African American Women’s Paid Domestic Service in the Postbellum South, 1863–1920,” Rethinking Marxism 20, no. 1 (November 30, 2007): 91–106.
[13] William Hutchinson and Robert Margo, “The Impact of the Civil War on Capital Intensity and Labor Productivity in Southern Manufacturing,” National Bureau of Economic Research NBER Working Paper No. 10886 (November 1, 2004).
[14] Davis and Weidenmier, “The Macroeconomic Impact of the American Civil War,” 20–21.
[15] Rodgers, The Work Ethic in Industrial America 1850-1920, 16, 105.
[16] Michelle Connolly, “Human Capital and Growth in the Postbellum South: A Separate but Unequal Story,” The Journal of Economic History 64, no. 02 (June 1, 2004).
[17] American Experience, PBS, “Sharecropping: Slavery Rerouted,” American Experience | PBS, August 16, 2023.
[18] Ibid.
[19] WYCC PBS Chicago, “Slavery by Another Name – Sunday, February 1 at 7pm CT,” January 26, 2015, https://www.youtube.com/watch?v=DVeucPaTr1M.
[20] Mark Noll, “Reconstructing Religion,” The Journal of the Civil War, August 2, 2017, https://www.journalofthecivilwarera.org/forum-the-future-of-reconstruction-studies/reconstructing-religion/.
[21] Timothy “Ashton” Reynolds, “Broken Households: Black and White Baptists and Methodists in Transition in Post-Emancipation Texas” (History Theses and Dissertations 8, Southern Methodist University, Dallas, 2019), 37.
[22] Mary J. Oates, “Catholic Philanthropy in America Curriculum Guide #4” (Center for the Study of Philanthropy at the Graduate School and University Center of the City University of New York, 1999),16.
Bibliography
American Experience, PBS. “Sharecropping: Slavery Rerouted.” American Experience | PBS, August 16, 2023. https://www.pbs.org/wgbh/americanexperience/features/harvest-sharecropping-slavery-rerouted/.
Chandler, Alfred D. “Organizational Capabilities and the Economic History of the Industrial Enterprise.” The Journal of Economic Perspectives 6, no. 3 (1992): 79–100. https://www.jstor.org/stable/2138304.
Chang, Andreas, Meiryani Meiryani, Ujang Sumarwan, Theresia Gunawan, Sonnya Rahma Devi, Samukri Samukri, and Gazali Salim. “The Influence of Debt-to-equity Ratio, Capital Intensity Ratio, and Profitability on Effective Tax Rate in the Tourism Sector.” Journal of Governance and Regulation 12, no. 1 (January 1, 2023): 53–67. https://doi.org/10.22495/jgrv12i1art5.
Connolly, Michelle. “Human Capital and Growth in the Postbellum South: A Separate but Unequal Story.” The Journal of Economic History 64, no. 02 (June 1, 2004). https://doi.org/10.1017/s0022050704002736.
Davis, Joseph, and Marc Weidenmier. “The Macroeconomic Impact of the American Civil War.” Atlanta, GA: Federal Reserve Bank of Atlanta, May 22, 2022. https://www.atlantafed.org/blogs/-/media/CFBC939B67FA46169DA711319F15FDD2.ashx.
Friedman, Saul. Jews and the American Slave Trade. London and New York: Routledge, 2017.
Hutchinson, William, and Robert Margo. “The Impact of the Civil War on Capital Intensity and Labor Productivity in Southern Manufacturing.” National Bureau of Economic Research NBER Working Paper No. 10886 (November 1, 2004). https://doi.org/10.3386/w10886.
Montgomery, David. The Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865-1925. Cambridge, UK: Cambridge University Press, 1987.
Noll, Mark. “Reconstructing Religion.” The Journal of the Civil War, August 2, 2017. https://www.journalofthecivilwarera.org/forum-the-future-of-reconstruction-studies/reconstructing-religion/.
Oates, Mary J. “Catholic Philanthropy in America Curriculum Guide #4.” Center for the Study of Philanthropy at the Graduate School and University Center of the City University of New York, 1999. https://www.gc.cuny.edu/sites/default/files/2021-05/FG_small_CatholicPhilanthropyinAmerica.pdf.
Reynolds, Timothy “Ashton.” “Broken Households: Black and White Baptists and Methodists in Transition in Post-Emancipation Texas.” History Theses and Dissertations 8, Southern Methodist University, Dallas, 2019. https://scholar.smu.edu/hum_sci_history_etds/8.
Rio, Cecilia. “‘A Treadmill Life’: Class and African American Women’s Paid Domestic Service in the Postbellum South, 1863–1920.” Rethinking Marxism 20, no. 1 (November 30, 2007): 91–106. https://doi.org/10.1080/08935690701740046.
Rodgers, Daniel T. The Work Ethic in Industrial America 1850-1920. 2nd ed. Chicago, IL: University of Chicago Press, 2014.
Shen, Kevin. “Induced Innovation? A Quantitative Exploration of the Second Industrial Revolution, in the Continental United States 1870 – 1900.” The Lapis, April 13, 2023. https://thelapisucl.wordpress.com/2023/04/13/induced-innovation/.
WYCC PBS Chicago. “Slavery by Another Name – Sunday, February 1 at 7pm CT,” January 26, 2015. https://www.youtube.com/watch?v=DVeucPaTr1M.