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.