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Problems of the South

David Coolidge

The Social and Economic Problems of the South

How Northern Capitalism Dominates
the Economy of the South

(26 August 1946)

From Labor Action, Vol. 10 No. 34, 26 August 1946, pp. 3 & 6.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In the previous article we asked the question: How did the South come to be what it is? We did not complete the answer to this question. In order to give the whole answer it is necessary to go back to a previous era, long before “Operation Dixie” was ever thought of.

We must begin with the old slave economy of the South. The South is still paying for its two centuries of slave economy. It pays not only by economic poverty but also by its social, political and cultural poverty.

Another pertinent fact about the South is the stubborn attitude of the planters, who really dominate the scene, in refusing to recognize that Negro slavery has passed and that the old dream of a Cotton Kingdom with millions of Negro bondmen was shattered by Northern bayonets. The Southern plantation owners attempt by every means, legal and extra- legal, to revive the slave system or a close substitute.

The “Penny-Wage” System as It Works in the South

In their relations with the Negro toilers, they attempt to maintain a no-wage set-up. or what may be called a penny-wage system. They perpetuate tenant farming, share-cropping and a combination of these with day labor. They operate a creditor and debtor relation through contract labor, “convict” labor, money advances in the no-work season, and peonage, which keep their “hands” tied to the land and powerless to extricate themselves from bondage.

This relationship is the planter’s substitute for chattel slavery and is in fact more profitable. He has no actual cash investment in the worker, as he had in the slave, and therefore has no need to assume responsibility for even the physical well-being of his employees.

The South pays for slavery in still other ways. It pays because of the continued and intensified economic domination of the South by Northern finance capitalism. Northern commercial capitalism established this domination before the Civil War. With the replacement of commercial capitalism by Northern industrial capitalism and the triumph of the North over the South in the Civil War, the road was open for the North to complete its economic conquest of the South.

In his recent book, The Revolt of the South and West, A.G. Mezerick has a quotation from Henry Grady, a leading Southern journalist of 50 years ago. Grady told a story about a “one-gallus” white man who died in Georgia. His gravestone came from Vermont, his coffin from Cincinnati and his burial clothes from Boston and Chicago. All the South furnished for the funeral was “the corpse and the hole in the ground.”

The South could furnish only the corpse and the hole in the ground because after the Civil War it had no capital to develop manufacturing. Northern finance capitalism was interested only in bringing out the raw materials of the South for Northern factories and then shipping these materials back South in the form of durable and consumer goods.

The durable goods were really not sold to Southern enterprisers for use in Southern owned factories, but for use in industrial establishments owned by Northern capitalists. It was and is also true of all the agricultural machinery used in the South.

All The South Has Is the Corpse and the Hole

Northern capitalists have never had to worry about the Southern market because there was no place for the South to buy except in the North. All the South could furnish was the corpse and the hole in the ground. One might say with considerable truth that today the South really furnishes only the corpse because the hole in the ground is dug on land which is probably heavily mortgaged to Northern insurance companies.

It is not true that the South was never interested in industrial development. This interest began to show itself even before the Revolution in the efforts of certain Southerners to overcome the British mercantile system and establish some primitive form of manufacture. These “factories,” of course, were to be operated with slave labor. After the country was independent this effort continued and many slave-operated industries were established. But since a slave is not an efficient factory worker these slave-owning enterprisers tried to reopen the slave trade in order to acquire replacements. Their idea was to keep the slave economy alongside the factory economy. The black slaves were to be confined to the cotton field and the free poor whites were to man the textile mills. Thinking that this was not going far enough, some Southerners proposed a boycott on all Northern manufactured goods. This would merely have buried the corpse naked.

After the Southern rebellion had been crushed, Northern capitalism began ruthlessly to expand. The Republican Party, the Messiah of modern industrial capitalism, established its control over the whole nation. The deal made with the South’s political leaders through the Compromise of 1876, by which federal troops were to be withdrawn from the South in return for votes from Tilden to Hayes, only helped to strengthen the grip of Northern capitalism over the South. After the troops had been withdrawn the South began its efforts to push the Negro back into slavery. Even his few economic and political rights were severely abridged. The “poor white” emerged as the dominant political group, led by a raucous, bestial and ignorant group of political demagogues.

The North Expands While the South Sinks in Poverty

While the North was expanding industrially, the South was sinking further into economic degradation. White immigrants were arriving from Europe to man the Northern economy. Neither the immigrants nor native Northern labor would go South in any number. The South frantically held on to its brow-beaten black semi-slaves and its impoverished, ignorant and embittered poor whites. Hundreds of Negroes and poor whites migrated to the North, where there was a chance to procure some food, clothing and shelter. What went South from the North was northern capital for investment, dilapidated New England textile machinery, evangelists and patent medicine.

The Northern capitalists not only own what there is of Southern industry but Northern bankers and insurance companies hold the agricultural economy in their grip through loans and credit. The North owns the railroads and ships running to the South. Northern capitalists fixed the freight rates on the South’s raw materials. Hence the South could not produce those manufactured articles which give a high profit. The Republican high tariff is of benefit only to Northern capitalism.

The capitalist in the North therefore has a great deal to do with the condition of the masses in the South. Rosenwald and Rockefeller have poured millions into the South for education, but the Sears, Roebuck catalogue beat the Rosenwald schoolhouse into the South by many decades. Rockefeller too has built schools, hospitals and churches but his Chase National Bank, oil, sulphur and gas companies only returned thereby, a small part of what they had extracted from this section.

Mezerick, in the book mentioned above, calls the South “The Land of Plenty – Not to Eat.” A group of Northern manufacturers operating in Alabama published a report saying that it costs more to live in Alabama than in the North. The reason given was that the flour, meal, cereals, milk, cheese, fruit, canned goods and clothing come from the North and West. And yet an industrial worker in Alabama had an annual income of $758 against $1,500 for a Northern worker. This report gave the per capita income of the farm worker in Alabama for the year of the report as $238.

The whole myth about the low cost of living in the South has been destroyed. The Negro woman teacher in Monroe, Ga., explained the situation when being asked how she lived on her meager salary: “It was a combination of living and dying.”

The cost of living in Atlanta, Texas and Norfolk is today higher than in Michigan or New York. And yet, while in 1944 the per capita income for the country as a whole was low enough at $1,117, here are a few samples for the South: Alabama, $635; Georgia, $714; Mississippi, $528; South Carolina, $634, and Arkansas, $601. Florida and Texas had the highest per capita income of any Southern state: $929 and $884, respectively. This was for a peak war year. For 1940, the per capita income of the country as a whole was $575. But for this same year it was only $268 for Alabama, about the same for Arkansas, $202 for Mississippi, $286 for South Carolina, and $413 for Texas.

Per capita income statistics are, of course, deceptive, in that they are only a sort of idealized or hypothetical distribution of the total income payments. But they are extremely valuable for our purposes in that they show the total amount of money available for wages, salaries, dividends and interest. The figures show that the total amount available for distribution in the South is completely inadequate for even half-way human existence. At present the South is only a pretentious slum area. Any state with a per capita total of about $300 for income distribution, including dividends and interest, is in a condition in which starvation wages for all will prevail and semi-slavery and lynching for Negroes will be the rule.

This only underscores again the problem before the Northern labor movement as it moves into the South. In another article I will deal further with the absentee ownership in Southern capitalism, showing how Northern and Southern capitalism are related, who are the Southern leaders of this unified capitalism and how Northern capitalists support the Southern political, economic and social regime.

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