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The question of why so many Southerners are distrustful of Northerners has always been a baffling one to me in one sense.  I was born in East Tennessee and lived there till age 22, so I witnessed this distrust firsthand for most of my developmental years.  It’s more difficult to see this distrust in the wealthier and more urbane parts of the South, such as Atlanta, Raleigh, and Nashville; but you can see it in small towns and rural areas; especially in areas dominated by lower income and working class individuals.

It’s hard to believe that 147 years after the U.S. Civil War, this is still an issue.  If you want to see evidence of this, look no further than the recent GOP primary in South Carolina, where Newt Gingrich brought the trick out of the bag once again.  Newt made sure to channel these historical Southern prejudices and reminded South Carolinians that his challenger, Mitt Romney was, in fact, a Northerner.  Presumably, most South Carolinians that voted in favor of Gingrich did so for more substantive reasons, but the mere fact that the Gingrich organization viewed this as a potentially effective tactic says a lot about the lasting power of this Northern distrust.

It made me ponder the issue.  Why is this phenomenon so powerful?  Once animosity develops, it can linger for generations, but why did Southerners come to distrust Northerners so much in the first place?  The knee-jerk response is, of course, slavery and the Civil War.  Yet, these explanation seem insufficient to me for a variety of reasons.

First off, slavery was legal in all the Northern states at the time the US declared independence from Britain.  Moreover, it remained legal in some Northern states, such as New York, until the 1820’s. Could there really be that much bad blood because the North eventually forced the South to abolish slavery; something that would have almost certainly happened at some point, regardless?

Something else must be afoot.  When did Southerners start distrusting Northerners?  Did it start in the 17th Century, when the states were all British colonies?  There were, of course, some differences back then, and different interest groups disliked or disagree with one another, but I’ve never seen overwhelming evidence of  a deep-seated historical animosity that predates the formation of the United States.

The best theory I can come up revolves around the biggest issue that divided the North and South in the early years of the American Republic.  No, it wasn’t slavery; it was free trade.

Why Trade Poisoned Northern-Southern Relations

The U.S. was founded in the late 18th Century and was initially a confederation of independent states, rather than a unified nation.  These independent states could issue their own currencies, create their own tariffs, and set up their own trade regulations.  There were significant problems with the “Articles of Confederation”, however, and the US eventually adopted the Constitution in 1788.

While there were major benefits associated with this closer union, it also created a few problems.  Since the new Constitution centralized more economic powers at the Federal level, including the power overs trade, tariffs, and customs duties, it effectively provided more power to certain political interests that wished to use this new Federal government to enrich themselves.

Northern industrialists and bankers wanted to make more money and the biggest thing standing in their way was that continent on the other side of the Atlantic:  Europe.  Since European manufacturing was generally more efficient and cost-effective than American manufacturing, powerful Northern interests favored tariffs that would help “protect” their industries.  It was reasoned that this would create more jobs and keep more wealth in the U.S.

1789 was the United States’ first full year under the new Constitution.  It didn’t take long for tariffs to follow.  The second act of Congress that passed was the Hamilton Tariff, which was designed to raise revenue for the Federal government, as well as ‘encourage American manufacturing.’  While this initial tariff was somewhat small, it put the wheels in motion.  Manufacturing capitalists argued that American wages were too high (due to low population) and our know-how was not on par with Europe, so the US needed higher tariffs to compete. Once the Federal government had established control over tariffs, manufacturing interests sought to increase tariff levels higher and higher, so that they would have further trade advantages.

While Northerners argued that this created jobs, it did so at the expense of Southern development.  The more agrarian Southern economy lacked the capital and resources to develop a powerful manufacturing-based economy. What’s more, the tariffs made their goods much more expensive than they would have been otherwise.  The likely result is that the tariffs supported by the more economically powerful North prevented the Southern economy from developing more rapidly, and in a sense, put Southerners at the mercy of Northern industrialists.

Slavery as an Offshoot of Poverty

As I established earlier, slavery was still legal throughout the northern colonies prior to the declaration of independence. Even after the Constitution, slavery remained legal in many parts of the North,  but it slowly began to be abolished in state after state, as a more diversified economy took over.  Meanwhile, the South was paying more for goods and likely receiving less for them in return, as a result of Federal tariffs.  Given this, less capital accumulated in the South, meaning that Southerners’ ability to diversify and expand their economic activities might have been somewhat limited.  The lack of economic progress also deterred higher levels of immigration that made have made manufacturing more feasible.

Don’t forget that the tariffs were, in effect, artificially subsidizing wages in the North, as well.  One of the primary problems with Northern manufacturing was that labor costs were too high compared to continental Europe.  It took waves and waves of immigration before the US would become wage-competitive in manufacturing.  The tariffs, in effect, placed a tax on the Southerners, and redistributed it to subsidize Northern wages.

If the Northern manufacturing interests had won the battle to control Federal spoils, they had little reason to initially object to the South’s slave economy.  The US had some of the most competitively-priced agriculture in the world, due to the large swaths of farmland, and low-cost labor force.  This agriculture benefited Northerners and posed no competitive harm to manufacturing interests. As a result, Southern slavery continued.  And faced with fewer alternative economic avenues, it grew and became entrenched.

In fact, while there were differences of opinion between North and South before American independence, there was a certain bitterness that developed by the mid 19th Century.  Slavery was seen by many of the founding fathers in Virginia as an ‘evil’, with many of them believing it needed to be eliminated at some point.  By the 1830’s, major political figures in the South had begun to tout it as a “positive good”, rather than an evil.  The same way Northerners defended tariffs that redistributed wealth from South to North as “good”, Southerners had become to claim that slavery was “good.”

Our nation always had moral qualms with slavery.  It’s difficult to deny that.  But the Northern states, freed from the economic motivations that kept it in place, began to increasingly question its need and demand its end.  Southerners, who might have rightfully viewed Northern interests as suppressing their economic development and preventing them from expanding beyond an agrarian economy, likely viewed this as another attack of their livelihood.  So the South began to fight tooth-and-nail to preserve the only economic activity it had developed any competitive advantage in: slave-based agriculture.

To underestimate how much this eventually helped lead to the Civil War is a mistake.

Post-Emancipation and the End of Mercantilism

Perhaps unsurprisingly, the post-Civil War South was not any more economically prosperous than the pre-Civil War South.  The south lacked the population and machinery to make manufacturing efficient, and agriculture continued to be the dominant form of economic activity.  The Northern-supported tariffs continued to strangle the Southern economy, and while slavery was eliminated, it was mostly replaced by a system where laborers were probably paid roughly the same equivalent wages.

Of course, blacks were still better off, since they at least now theoretically had the freedom to pack up their bags, and move to the Northern or the rapidly growing Midwestern cities, such as Chicago and Detroit.  But the South itself continued to suffer.

Even by the 1930’s, Southern poverty continued to be a major issue.  But an important shift occurred in that timeframe.  After the Great Depression and the miserable failure of the Smoot-Hawley tariff, national politics began to favor the abolition of tariffs and a shift towards a more free-trade status. And lo and behold, the Southern states began to grow more rapidly in the mid- and late- 20th Century.

Why Did Slavery Die?

So this begs the question, “why did slavery die across the world in the 19th Century?”  It seems silly to suggest that people suddenly became more morally aware to me.  There’s strong evidence that many people in America and Europe always held moral qualms about slavery; but they viewed their economic livelihood as being tied to it.

The development of manufacturing and higher-wealth creation industries that made slavery economically obsolete.  Once that happened in Europe and the Northern U.S., people overwhelmingly began to desire to abolish slavery.

The same process might have occurred more rapidly in the Southern U.S. if it had not been for tariffs that were largely punitive to the South and redistributed wealth to the North..  Even with the abolition of slavery, the Southern U.S. didn’t really began to radically transform until the later half of the 20th Century, after the U.S. had largely abandoned mercantilism as a political policy.

Of course, I’d be a fool if I believed that most Southerners with “Northern distrust” in 2012 had much of an awareness of this full history.  But anger can linger for generations, if conflicts in other parts of the world provide us any indication.  Maybe that’s what’s happening here.  Southerners, who have grown accustomed to seeing Northern policies unfavorably shape their region, passed on their distrust to another generation.  And then that generation passes it onto the next.  With each passing, it gets weaker and weaker, but remnants of it are still there.  Still, I hate to see it pop up, after all these years.

Free Trade, Economic Centralization, and Powerful Interests

Another lesson here might be how large, centralized governments can empower certain interest groups to distort natural economics in order to enrich themselves. Oftentimes, this put entire regions in poverty.

Two places in the world where we might be seeing some of these same dynamics play out right now are in China and the Eurozone.  China has also enacted mercantilistic policies that improve the fortunes of their manufacturers, but do so by impoverishing other people. Certainly, there is more dissent about these issues than many people realize, as a lot of domestic-oriented businesses are also harmed by the PRC’s policies. But it also might explain why China’s cities seem to be generating more and more wealth, while China’s agrarian population seems to make no progress whatsoever.

Another interesting development comes in the Eurozone. We are seeing a very similar dynamic develop where powerful German interests have tended to control the policies, which have weakened Spain, Portugal, and Italy economically.   This is one reason why I believe it’s in the best interests of these nations to leave the Euro, even if it causes near-term pain.  A long-term super-national union is likely to benefit the economic interests of Germany and harm the less wealthy states.

Of course, it’s impossible to know how the Southern U.S. would have developed without the tariffs, but I’d at least speculate that the Southern economy would have grown more rapidly and shifted away from agriculture much earlier than it did, thereby, creating more political pressure to end slavery by the mid 19th Century.  We’ll never know, though.

It does go to show, however, just how important economics is to our everyday lives.