Reconciliation & Economics: How the Civil War Still Affects Us


Wheeling, W.Va.:  Suspension Bridge (1849) across  Ohio River's main channel.  The slave market was one block from WWVA  sign.  3/13/12
Wheeling, W.Va.: Suspension Bridge (1849) across Ohio River’s main channel.  The slave market was one block from WWVA sign on right. 3/13/12

          The death of Nelson Mandela on Dec. 5 brought reflections on the reconciliations he advanced in South Africa and on continents far away from Robben Island.

           Without taking away anything from the transformations Mandela achieved, for their own well-being, Americans must ask:

 -Will the century-long trauma of Apartheid take at least as long to heal truly?

 -If so, what are Apartheid’s long-term effects, and how long is ‘long-term’?

 -What does experience tell us about reconciliations of peoples who’ve suffered great hurts through war or genocide?

           For America, the Civil War was our greatest trauma.  On Dec. 20, 1860, South Carolina seceded from the Union, as I wrote a couple of years ago.  The Civil War, I’ve speculated, reverberated for 100 years in the lives of the men who fought it and their children.  And still the differences between the new Solid South and the rest of the country put America at some distance from reconciliation.

          Yesterday I read an interesting academic study that confirms my hunch. 


          ‘Within U.S. Trade, and the Long Shadow of the American Secession’ is by two scholars at the Leibniz Institute for Economic Research at the University of Munich, Gabriel Felbermayr and Jasmin Groschl[1] asks:

But does the long defunct border between the [Confederacy] and the Union still affect economic relations between U.S. states that belonged to different alliances today?  Is the former border still relevant, still divisive, for economic transactions?[2]

 Their analysis indicates, yes.


           Contemporary state-level data show the ‘North-South divide’ quite clearly, both economically and culturally.[3]  Felbermayr & Groschl’s discovery of a ‘Secession effect’ is not surprising, though its dimensions are:

[W]e find a robust, statistically significant, and economically meaningful trade-inhibiting effect of the former border.  …[On] average, the historical border reduces trade … by about 13% to 14%.  In comparison, the Canada–U.S. border restricts trade by 155% to 165% [citations omitted].  …[The] former border between East and West Germany restricts trade by about 26% to 30% in 2004.[4]

 Hence, ‘…historical events have shaped cultural determinants of trade which still matter today.’[5] 

 Our results show that the United States is not a single market, even 150 years after the Civil War. The historical conflict still is divisive today.[6]

 As they later say, ‘…the former border reflects a cultural divide.’[7]


           Cultural divides, Felbermayr & Groschl insist, cannot be wished away:

This is an important lesson for the European integration process, which is more complex [than the post-Civil War reconciliation] due to the lack of a common language, a common legal/judicial system, common regulatory framework, and—most important in our context—the fact that the last huge conflict is not 150 but only 67 years away.[8]

 As for the US:

From a welfare perspective, …it could be that the Secession has had lasting effects on trade costs.  By shaping the distribution of (railway) infrastructure or business networks (production clusters), and more generally, by affecting bilateral trust, South–North trade frictions are still higher than intra-group frictions.  …[It] signals a long-lasting welfare loss due to the Secession.[9]

          Later, Felbermayr & Groschl note: ‘One may conjecture that the Secession has continuing negative effects on the level of trust between market participants.’[10]  Still later,

…one cannot conclude that the Secession has caused the observed border effect in [contemporary] trade data.  Including historical variables that relate to the deep reasons for the Civil War goes some way in dealing with reverse causation.[11]


           ‘Reverse causation … means that the effect has preceded the cause.’  So here, the Secession Effect would have preceded Secession, as it did.

           Why lies in the origins of the lack of trust between cross-Secession border market participants.  The first sentence of Article I section 2.3 of the US Constitution (1787) makes them plain:

[Members of the House of] Representatives and direct taxes shall be apportioned among the several States…, according to their respective numbers, which shall be determined by adding the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three-fifths of all other persons.

           In a fascinating article, Albany Law School Professor Paul Finkelman explains the ‘Three-Fifths Clause: Why Its Taint Persists’.  The clause was the price slave holders extracted for agreeing to the new Constitution.

           At once the ‘Three-fifths clause’ enshrined racial inequality and gave the South disproportionate power.  Slaves had no say in the new government, but they counted in determining who did have a say.  The number of Representatives of the almost entirely free populations in the North were balanced out by the inflated number in the South.

           Add to that another great Constitutional compromise, on the equal representation of states in the Senate, and the South’s control over the national political process was nearly complete.  Hence, the signposts marking the highway to civil war:  the Compromise of 1820, the declaration of war on Mexico, the Fugitive Slave Act, the Kansas-Nebraska Act….

           The forty-year struggle over whether to admit more slave states was not just about the legislative branch.  Since the number of electors each state has in the Electoral College depends on its number of Representatives, the South dominated the Presidency from Jefferson until Lincoln.


           Leaving aside the moral issue of slavery (which Prof. Finkelman does not), the lack of trust created by the Constitution’s structural imbalance of power must have produced the Secession Border Effect long before South Carolinians began bombarding Ft. Sumter 152 years ago.

          Through the end of their war to preserve the right to enslave, the South spoke in terms of its ‘peculiar institution’.  The term is apt and accurate.

           The South’s ‘peculiar institution’ wasn’t merely one man’s right to own other humans.  It was a complex, opaque culture with rules and standards which Northeners could not accept when they could understand them.

           For instance, a Southerner slandered by a social inferior could attack him and even kill him.  So on May 22, 1856, two South Carolina Representatives found US Senator Charles Sumner at work at his desk on the Senate floor.  After saying two sentences to Sumner, Preston Brooks struck Sumner’s head with a cane and kept beating him until he was all but dead.  Brooks accomplice, Laurence Keitt, held off rescuers with his pistol.[12]

           Brooks became a hero across the South.  In the North, the poet and journalist

William Cullen Bryant of the New York Evening Post, asked, “Has it come to this, that we must speak with bated breath in the presence of our Southern masters?…  Are we to be chastised as they chastise their slaves? Are we too, slaves, slaves for life, a target for their brutal blows, when we do not comport ourselves to please them?”[13]


           ‘It is no wonder’, Prof. Finkelman writes, ‘that the great abolitionist William Lloyd Garrison considered the Constitution “a covenant with death, and an agreement in Hell.”’  Garrison used those words at an anti-slavery rally on July 4, 1854, just before he put a match to a copy of the Constitution.  As it burnt, he ‘cried out: “So perish all compromises with tyranny!”

           Felbermayr & Groschl’s Secession Effect has a history as long as our Constitution’s, at the least.  The struggles between the Confederate states and the Union states that have continued since Appomattox have hardly wiped away the distrust of the Antebellum years.  It is only remarkable the effect is a small as it is.

           How Americans might realise the vision of Nelson Mandela, I don’t know.  It is so comfortable to persist in the pursuit of power, of dominance, and in the delusion of racial superiority.



          H/T:  Andrew O’Connell, an editor with the Harvard Business Review Group and the author of Stats and Curiosities from Harvard Business Review, contributes to the invaluable HBR Blog Network where he called my attention to this important article.

           1.    Their article appears in the Western Economic Association International’s refereed journal, Economic Inquiry, for January 2014.  The authors’ first language evidently is not English.  Though they write quite serviceably, they make some incorrect word choices, as in ‘contemporaneous’ for ‘contemporary’, ‘Confederation’ for ‘Confederacy’.  In quotations, I have left their choices in place except where it affects their point.  (Here, I make the ritual lament about the disappearance of editors.)  I must also note that I lack the training to understand their statistical analysis which comprises half the paper.  I have dealt only with their prose.

           2.  Gabriel Felbermayr & Jasmin Groschl, ‘Within U.S. Trade, and the Long Shadow of the American Secession’, 52 Economic Inquiry 382 (2014) § I.  As this paper is 22 pages long in the journal and is not paginated on the web, for ease of checking sources, I will refer to its sections in these notes.

           3.  Id.

          4.  Id.  See also § III.A.

          5.  Id.

           6.  Id.

           7.  Id., § III.D.

           8.  Id., § I.

           9.  Id.

           10.  Id., § III.D.

           11.  Id., § V.B.

           12.  David Herbert Donald, Charles Sumner [1960], vol. I (New York:  Da Capo Press, 1996), pp. 288ff.  This is one of the great American biographies.  The Wikipedia entry, ‘Charles Sumner’, is quite good.

           13. Wikipedia entry, ‘Charles Sumner’, quoting William E. Gienapp, The Origins of the Republican Party, 1852-1856, (Oxford University Press, 1988), p. 359.