Monday, July 13, 2015

How the North kept the South poor

This 1938 Jackson Daily News article tells the story of how the Southern governors fought to level the playing field with the North when it came to railroad freight rates. The railroad commissions  kept the freight rates very slanted towards the North.  Canada, yes- Canada, enjoyed lower freight rates on railroads than did the South; so slanted weighted against the South were the rates.  Thus a builder in New Orleans could get steel shipped more cheaply from Pittsburgh than he could from Birmingham.

These articles report the Southern governors fighting this unfair advantage while the Northern ones did everything they could to stifle their protests. Too bad equal protection jurisprudence was not as developed as it is today. FDR adviser Harry Hopkins pointed out in 1938 that the South faced freight rates that were 39% higher than the North.  Mr. Hopkins said: 

Later the freight rate structure was planned to clinch the industrial supremacy of the North and East. It still stands, and today's rate differentials penalize both southern railroads and southern shippers. Northern manufacturers have a rate advantage of about 39 per cent over Southern manufacturers who want to ship the same products into the rich and populous North and East. Rest of Mr. Hopkins' address.

 Some may say the South was getting what it deserved after the Civil War.  Put down the vengeance, step back, and think.  This effort by the North to shackle the South was taking place in the 1930's and 1940s,  not the 1870's.  The government would not level the freight rates for another twelve years.  FDR's report on the South stated the South was really lagging behind the rest of the country at all levels. Such destitution should come as no surprise as civil wars destroy countries and the American Civil War was fought almost entirely in the South. How many decades did it take Spain to recover from its civil war?

The South lost billions in capital when the slaves were freed, factories and railroads destroyed, farmland was ruined- all a result of losing.  Such are the ruins of war and is part of the risk one takes when fighting a war. Recovery does not take place overnight.  The carpetbaggers saddled the Southern states with debt and higher taxes. Some will say the South owed the North reparations.  Suppose the South did owe reparations for the costs of the war.  It must be repeated that the articles below are reporting on events in late 1930's, not the 1870's.

The railroad fight took place 75 years after the damn war. Not even Germany was going to be penalized for that long under the Versailles treaty.   It has been 75 years since the Holocaust ended and Germany is in much better shape than the South was in 1938 in terms of poverty, education, and economic development.

 The point of this post is to show that the North was using government policy to intentionally keep Southern industry from growing and thus enriching the businesses of the North. It was the total opposite of the Marshall plan where America rebuilt countries that would one day be economic challengers. The North had a huge lead economically and was determined to keep it.

Disagree with the New Deal, but it must be recognized that FDR was the first national leader to say that America could not progress if the South remained leveled, destitute, and uneducated as he called the South the "Nation's number one economic problem". 

Some will say "The South deserved such suffering for slavery and Jim Crow".*  Such an attitude is short-sighted and creates self-inflicted wounds as the blacks were hurt by this problem as well as the whites and both were hurt for decades. A rising tide lifts all boats and industrialization creates jobs.  The stifling of Southern industry and commerce kept the South poor, depressed the economy, prevented the creation of jobs, and also limited tax revenue that could have been spent on education and infrastructure.  Georgia Governor Ellis Arnall said the unfair rates kept the South as "the economic doormat of the United States as Ireland was of the United Kingdom". 

More information is available in this biography on Governor Arnall. Start in chapter eight.
*Read the story of Georgia Governor Ellis Arnall.  The other Southern Governors gave up the ICC fight by the 1940's.  Arnall was a young, progressive Governor, atypical for the South at the time.  He filed a lawsuit in federal court and took the fight all the way to the U.S. Supreme Court.  The 38 year-old Governor personally argued the case before the Supreme Court and won accolades for his performance before the court.  He won the fight and finally the ICC reversed itself after years of stalling.  Arnall was defeated by Talmadge and would be beaten by segregationists when he ran for office in the 1960's.  He was not their friend.


Anonymous said...

Remind me, was FDR a Democrat or Republican? LOL

Kingfish said...

So does that mean that if FDR saw red and called it red that we should call it blue because he said it was red?

Anonymous said...

35 years ago my history professor at Ole Miss,Dr Kieger introduced me to this subject. He explained the entire program instituted by northern congressmen and industrialists during and after the Civil War which was designed to promote the economic development of the "Prime Region" (the area north of the Ohio and east of the Mississippi Rivers, ie. the Northeast) to the detriment of the West and even more, of the South. Discriminatory freight rates, high import tariffs,and withholding financing for manufacturing, were among the measures implemented. Most of the practices continued until the mid 1930s. That's the main reason most industry in the south started up during and after WWII. When I asked my grandfather (a WWI vet) and father (a WWII vet)they said these things were common knowledge when they were in college.

Railroad Rates and Tariffs said...

Republicans in '38 were Democrats and Democrats in '38 were Republicans. The argument suggested by 10:09 is tired and specious. This kind of BS (railroad rates) is also exactly what gave birth the The Confederacy.

While the top-water sheep among us seem convinced Lincoln's War was about slavery, they have no idea of its real causation.

Anonymous said...

They should have to pay us reparations.

Anonymous said...

Im with 5:50... "Where's my check?!"

Anonymous said...

Republicans in '38 were Democrats and Democrats in '38 were Republicans.

Woefully incorrect.

Anonymous said...

The recovery from the Civil War lasted almost 75 years. Transportation, electricity and industry were slow to come and this affected black and white alike. Slavery was the root cause of the war but economic rivalry was also a big factor this is why I think the "flag" represented to the vast majority of southerners a symbol of pride that although defeated in war and devastated economically after, the spirt of survival remained strong. Like most wars it was the result of despots, radicals and or politicians and fought by ordinary folk.

Anonymous said...

Well the short-sightedness persists, only now as Southern regionalism. As a teacher with a Master's degree, my failing to local school boards who favor cronyism and nepotism is that I am a transplant from the North. Oh my. And we see what those years of said practices create, near bottom of the heap educational achievement through the South and in my current home state of Alabama. I have seen unintelligent, undereducated teachers chosen instead, some of whom I have worked with directly as a long term substitute when the regular teacher thought it was okay to take extended leave for trifling reasons. It left me me their classes for a complete term and an intern to train. Okay for the school district as I was cheap in the way substitutes are. Even my son, in another field, found it impossible to get beyond lesser qualified "from around here" candidates. So, please, stop the whining and get over it. Just wallow in your continued war, in the illusion of Southern hospitality and gentility and your state welfare statuses. Oh yeah, and tell me about Southern heritage and the confederate flag. Can't see beyond the edge of your own noses or think beyond the ingrained beliefs of ignorance and long ago.

Kingfish said...

Eloquent. Nice even. And it had nothing to do with my post.

Anonymous said...

As a teacher with a Master's degree ...

Damn. Impressive. A Master's degree? Really? Did I mention I am impressed?

Anonymous said...

9:57am - A master's degree? Really? You sure don't write like someone who has a master's degree. I had to read your post four times just to understand what you were attempting (albeit poorly) to communicate. I would be VERY interested to know what school conferred on you that master's degree.

Anonymous said...

I had no difficulty understanding the teacher nor connecting the dots she/he put out there. The problem is likely yours. Quick to blame others has become a lifestyle.

Anonymous said...

Tell us Kingfish, what did Roosevelt do when Governor of New York -- a state with a manufacturing economy that benefited tremendously from this disparity -- to stop this freight rate inequity? How many times as New York's Governor did he speak out against the practice? Why did he wait until 1938 to address it?

Harry Hopkins was Roosevelt's go-to political operative. The need to suddenly "speak plainly and frankly" from Memphis on this issue was more about theatre, venue and politics in the run-up to the 1938 mid-terms (and the designs FDR already had on an unprecedented third term) than it was about delivering a level playing field. By August 6, 1938 Roosevelt was already all-the-way in bed with Northern corporate manufacturing interests and their initial movements to completely bypass the lower cost manufacturing environment in the South through the exploitation of low wage labor in Latin America.

In many respects Roosevelt's support for the northern manufacturers' move to outflank the South set the eventual stage for NAFTA. It is clear what a disaster that has been for Mississippi.

Anonymous said...

9:57 is right about us - we do place more value on being one of us than we do qualifications for the job. However, the same can be said with someone with a southern drawl applies for a job in California or New Jersey. Get over it.

Kingfish said...

So what, 11:22. Is what he and Hopkins said wrong?

Anonymous said...

11:10 am - Asking someone where they got their degree is not "blaming" them. Asking a question is a normal part of our speech and how people communicate.

My point, since you apparently weren't able to connect my dots, was that he/she (while touting their master's degree)was blasting how terrible Southern schools are when his/her writing left much to be desired. Cronyism/Favoritism is not unique to the South. Further, schools all over the country could stand to be improved. I'm a product of all Southern schools, and I don't appreciate him/her trying to depict the problems he/she encountered as unique to the South.

Frank Melton of the Witness Protection Program said...

We all said "The South shall rise again". Well folks, I'm here to tell you that The North is attempting to beat us to it. The current administration is attempting to destroy The South using racial tactics. Oh, the Union Army is on the move, but this time they aren't the ones in blue carrying rifles. They are the Teamsters. That's right. The United Auto Workers. Take a look at where the auto plants that are making money are located in the U.S.---they are in The South. Go research the reason: 1) Land is relatively inexpensive compared to the rest of the Country, 2) There is a large labor pool readily available, 3) The Japanese are very much opposed to collective bargaining, and 4) The South is entirely consisted of "Right to Work" States. For that matter it was only recently in 2012 that Michigan and Indiana became "Right to Work" States.
The auto industry has been a huge economic boost to The South, not just the plants but all those associated with supplying the plants. The UAW has destroyed The North, and they are coming after us now. And that my friends is the bottom line.

Anonymous said...

Inaccurate? No. Way TOO Late? Emphatically yes. Politcally motivated? You betcha. Leveled the playing field at the expense of Northern manufacturers? Not remotely.

The State of New York was a manufacturing colossus. There was no way that Roosevelt would subjugate Northern corporate interests to those of the South. Roosevelt wasn't antagonistic against the South. He was moved by our poverty. But not so moved as to call for the removal of this rate hindrance before his Northern financial backers were ready and moving forward with their alternate plan of using Latin American labor to effectively undercut the developing lower cost manufacturing metrics of the Southern states.

So Yes, as POTUS Roosevelt inactions were wrong. Wrong for allowing Northern corporations to use protective tariffs in the form of freight rates -- a practice that began a decade plus before FDR's presidency -- to keep lower cost Southern produced products from reaching markets. Wrong for not speaking out against the practice while Governor of New York. Wrong for not acting before 1938. And wrong for remaining neutral while Northern manufacturers birthed their movement to bypass the Southern states by moving manufacturing operations to 3rd world countries in Latin America.

More History said...

July 14, 2015: Jerry Mitchell continued his shtick as a one-trick pony.

Anonymous said...

11:22, why would a governor of NY be expected to put his own state's interests behind those of the southern states?

Do you think Phil Bryant should be trying to maximize good outcomes for Pennsylvania?

Anonymous said...

9:57 Why are you here again? You do realize, don't you, Eisenhower's Interstate Highway System connects every state in the Union?

If you're all that qualified I would reckon you'd have no trouble putting your extraordinary talents to use in a very lucrative fashion somewhere where you would feel more at home.

Shorter version: Don't let the door hit 'ya where the good Lord split 'ya.

Shortest version: Buh-bye!

Groucho version: I'm a man of one word: Scram!

Anonymous said...

I recommend this book

Anonymous said...

Did any other nation fight a civil war to end slavery? I don't believe it was needed. Several northern states had discussed succeeding for one reason or another. War was never mentioned. I believe Lincoln could have left the south alone, except as a trading partner, and in time the nation would have reunited peacefully. I think all those people died for nothing.

Anonymous said...

I recommend you learn some HTML.

Anonymous said...

To the school teacher - seems to me we have four major problems with schools in this country. None would be easy to solve politically. The first three could be done, but probably won't. I don't know what we can do about the 4th one.
1. Do away with elected school superintendents. This is more a Mississippi problem than anywhere else. The very idea that your city or county has the best superintendent you could get already living there is crazy.
2. Do away with teachers unions. Enough said.
3. Do away with federal control and/or influence of local schools. I.E. close the Department of Education.
4. For years and years educated women could be nurses or school teachers. When I was in school we had some very smart women working for low pay as teachers. Today those very smart women are doctors, lawyers, engineers, etc. How can we as a society ever afford to pay teachers enough to attract smart people again ? (Not saying all teachers are not smart. But I will say that when I was in college the dumbest people I knew were all studying to be teachers). I don't know how this can be done. My best idea is to have great teachers giving lessons online and use the local teachers to supplement those lectures. Of course this works better with older children than with younger.

Anonymous said...

Hello. I don't usually comment here, but I wanted to respond to this. This is a provocative argument, but ultimately unconvincing. First of all, I see no evidence here that discriminatory freight rates were intended as vengeance against the South. Nothing in the news article or the excerpt from Governor Arnall's biography seems to suggest such a motive. It seems more probable that at this time, the most powerful people in the south were still the planters--and though dissenting opinions no doubt existed among Southern politicians, cotton farming continued to boom into the twentieth century, and as a result wealthy planters saw no need to pursue industrialization. Discriminatory freight rates emerged to protect railroads (read: higher freight rates) from coastal and river steamboats, which had shipped the bulk of cotton before the Civil War and no doubt continued to do so after cotton rebounded. Railroads won out, but the discriminatory pricing prevailed. In the first decades of the twentieth century, a political economy emerged that favored northern industrialists and these favorable rail freight rates could not be so easily dismantled--thus creating an illusion that somehow "the North" was acting in a vindictive fashion, an illusion which is quite convenient for ideologues.

Again, planter elites had no real motivation to pursue industrialization in the agrarian south, especially in places like the Mississippi Delta (I admit I'm less familiar with the specifics of Georgia's trajectory or why Arnall made freight rates his cause.) Much as post-Reconstruction politicians constructed a Jim Crow social system that denied political rights, the same group of elites perpetuated a sharecropping system to guarantee labor from the rural population, many if not most of whom were disenfranchised and black, and could only change their life opportunities by leaving. Certain aspects of the twentieth century US economy certainly did not favor the South, but ultimately very few elites seemed to care about progress.

Anonymous said...

An unconvincing rebuttal. Nobody gives a shit about how frequently you do or do not comment here. Identifying as infrequent means absolutely nothing.

Anonymous said...

Hi! Thanks for taking the time to respond. I'm sorry my comment made you mad. I still don't see a shred of evidence that the North sought "revenge" against the South, though. By the way, this is my second time posting here! I usually don't post here though.

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Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

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Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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